Work under way on an Aldar project. The real estate developer was forced to sell numerous assets to ease its burden of debt amid tough operating conditions in Abu Dhabi’s real estate market. Image Credit: Gulf News archive

Dubai: Aldar Properties says that changing market conditions have provoked the layoff of 24 per cent of its workforce.

A company spokesman told Gulf News that 105 employees were informed yesterday that they would lose their jobs and were given until the end of the week to leave.

"It is obvious that we are experiencing a difficult climate and to be able to function we need to be able to ensure that we have the right skills set and that we can have sustainable revenue and growth at all levels," an Aldar spokesman said yesterday.

"This is not about cutting costs. It is about making sure that the company structure is appropriate to market conditions and is the way it needs to be so we can move forward."

While Aldar itself is not experiencing any delayed projects, the spokesman said, analysts have warned in recent weeks that the property market in the emirate is slowing down.

Not surprising

Speaking about yesterday's announcement, Saud Al Masoud, a real estate and construction analyst with Rasmala, said that the move was not a surprise.

"Twenty-four per cent is a meaningful cut, but perhaps necessary to align with level of operations and business activity. The Abu Dhabi property sector is likely to remain subdued for the foreseeable future, hence these steps are not surprising," he said.

Another analyst, who wished to remain anonymous, added: "It makes sense given that [the] Abu Dhabi government is seeking to delay or slow down projects — so developers will not require so many construction staff."

Last week the Tourism Development and Investment Company (TDIC) announced that its three flagship museum projects on Saadiyat Island would be delayed, just weeks after the developer cancelled a major construction contract for the Frank Gehry-designed Guggenheim Abu Dhabi.

Meanwhile, a report issued by Arqaam Capital claimed that UAE developers were set to experience a difficult quarter as cut-throat price competition and a scale-down in government plans hit ongoing projects.

Aldar is due to publish its third quarter results on Thursday, but in the second quarter they posted a net profit of Dh127.3 million in the three months to June against a loss of Dh475.3 million in the same period last year.

The Abu Dhabi government rescued Aldar in January with a multi-billion dirham support package that enabled it to continue with various projects.

The company was forced to sell numerous assets including Ferrari World, the world's largest indoor theme park, to ease its burden of debt amid tough operating conditions in the capital's real estate market.

Focus on value

In a statement yesterday, Aldar outlined plans to "reorganise and re-focus the company's business development efforts to deliver and increase the value of existing development projects and investment properties explained that the cuts followed a review of the company's operations.

"Aldar undertook a comprehensive review of the organisational structure of the business to realign the company to meet its objectives of sustainable revenue growth and recurring profitability.

"As a result of this review process, a number of new functions have been created, some functions have been expanded while other functions have been scaled back," the statement said.

Ali Eid Al Muhairi, chairman of Aldar Properties, added that all employees who have been terminated will receive appropriate support.

"I would like to extend my gratitude and warmest thanks to our colleagues who will be leaving us for their commitment and contribution to the company over the last few years. We will ensure the transition goes as smoothly as possible and that everyone receives the best possible support."