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Aldar Properties should find it easy repeating the 2022 growth story. Image Credit: Shutterstock

Incorporated in 2005, Aldar Properties, which now comes with a market cap of Dh37.5 billion, has created a unique business model.

Comprising two core operations, Aldar has a large and diverse income-generating investment portfolio and a development business of eye-catching destinations and overseeing these.

Aldar Investment holds over Dh32 billion in assets, including commercial properties and hospitality. On the other hand, the Aldar Development’s expertise lies in creating iconic, integrated, and thriving communities within Abu Dhabi.

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The company has been in the headlines for a stellar 2022 performance, the entry into the Ras Al Khaimah, and the planned one in Dubai. There was also recent acquisitions of Al Fahid Island in Abu Dhabi and a new waterfront development in Ras Al Khaimah.

Aldar’s strengthening base

The development business witnessed the highest-ever annual group sales of Dh14.4 billion, double that in 2021 and quadruple the 14-15 year average of $1 billion of annual sales before 2020. This impressive performance was driven by strong resident and investor demand across existing inventory, new launches in Abu Dhabi, and contributions from Egypt.

The total UAE sales increased by 52 per cent year-on-year to a record Dh11 billion, thanks to nine new developments launched in the the UAE, including Louvre Residences Abu Dhabi, Grove Views, Saadiyat Lagoons, and Yas Golf Collection. In addition, Aldar Properties completed over 13 transactions worth Dh11.3 billion in 2022, which included resorts, land and a mall in Ras Al Khaimah, super-premium office towers in Abu Dhabi’s Al Maryah Island, and even some islands.

Entry into Dubai

In collaboration with Dubai Holding, Aldar has entered Dubai’s thriving real estate market, with plans to develop new communities across three locations spanning 38.2 million square feet. The phased launch will begin in 2023, providing a fresh and distinctive product offering, allowing Aldar to target a broader and more diverse customer base.

Stunning 2022 performance

Aldar’s annual net profit for 2022 increased by 35 per cent to Dh3.1 billion while revenues surged 31 per cent to Dh11.2 billion. The gross profit margin remained slightly higher year-on-year at 37%, and the company reported a 31 per cent increase in gross profit to Dh4.7 billion.

These figures demonstrate significant demand for both ready and offplan properties in Abu Dhabi and will encourage Aldar to maintain its ongoing expansion. In addition, sales from international customers reached Dh1.8 billion, highlighting the sustained appeal of Aldar’s expanding offerings.

Compelling outlook

At the start of 2022, Apollo Global Management invested Dh5.1 billion in long-term institutional capital into Aldar. It set the tone for the company’s accelerated implementation of its transformational growth strategy, encompassing significant expansion across sectors and geographies. Additionally, Aldar is contributing Dh5 billion in equity capital to finance potential transactions.

Furthermore, Aldar has a strong liquidity position, with Dh6.5 billion in available cash and Dh4 billion in committed, undrawn facilities.

Aldar’s 10-year dividend CAGR of 10 per cent demonstrates a consistent ability to generate long-term and sustainable shareholder value through continued investment-led growth and cash returns. This equates to a total dividend payout of Dh1.3 billion in 2022 and Dh10 billion over the last decade.

The development revenue backlog of Dh17.6 billion also set a new record, boosting the platform’s revenue visibility and predictability over the next 2-3 years, allowing it to meet its sales guidance of Dh15 billion to Dh17 billion in 2023 and achieve an adjusted EBITDA of between Dh2 billion and Dh2.1 billion.

Longer term prospects are promising due to the strategic approach and access to a 69 million square metre land bank.

The real estate sector in the UAE appears attractive given the exponential growth trajectory in Dubai (where annual real estate transactions surpassed Dh500 billion dirhams for the first time in 2022), as well as the forthcoming gaming resorts in Ras Al-Khaimah.

The current 12-month dividend yield for Aldar stands at 3.14 per cent, and the return on equity is at 10.12 per cent.