Dubai: Abu Dhabi’s Aldar Properties is considering new territories — Dubai and Saudi Arabia — as well as the new categories of industrial and logistics assets to widen its revenue sources.
Dubai would be an obvious move given its joint venture with Emaar, announced earlier this year.
The details regarding the alliance — committed to taking on Dh30 billion worth of projects — are being “finalised”, according to Greg Fewer, chief financial officer at Aldar.
As per the initial plan, Aldar and Emaar will cooperate on a project apiece in Dubai and Abu Dhabi, at the Emaar Beachfront in Jumeirah and on Saadiyat Island.
But going further and into new property categories makes for interesting times at Aldar.
Warehouses and logistics bases in Abu Dhabi tops the list of diversification opportunities, as does a move into data centres given the local economy’s growing reliance on digitisation.
No specific timelines were given, but Fewer said these would “light up” new income generating lines for the developer, which had until now focused on the big-ticket residential, malls, offices and hotel concepts. “The are some sectors attractive from a growth perspective and we will pursue those and others,” he added.
Aldar on Thursday announced gross profits of Dh581 million for the third quarter, made out of revenues of Dh1.5 billion. On a quarter-on-quarter basis, the third quarter brought better tidings on the profit side.
In Q2 18, it had reported Dh445.2 million; but there is still some way to go to catch up with the Dh715 million from the first quarter.
Aldar’s revenues have remained more or less constant in each of these quarters, at Dh1.5 billion. Aldar’s officials were quick to point the consistency on the numbers being generated.
In a statement, Talal Al Dhiyebi, CEO, said: “Our financial results for the quarter reflect the solid performance of our two core businesses, with gross profit steady year-on-year.”
Net profit for the third quarter was Dh420 million, an erosion from the Dh601 million last year. This, Fewer said, had to do with the burden of higher interest rates and the fact that this year, Aldar had less of the infrastructure-related handover jobs it does for the Abu Dhabi Government.
“That’s (infrastructure works) winding down,” said Fewer, which raises the need to tap into new income possibilities such as industrial real estate and new markets.
The latest net profits were also affected by higher depreciation charges, related to the acquisition of land and projects on Saadiyat Island from TDIC in late June.
The TDIC deal “significantly expands our revenue producing assets and marks the first time for Aldar into Saadiyat Island,” said Fewer. “The land and projects we acquired will provide excellent returns.”
For the near-term, Aldar will continue to generate the bulk of its profits from the asset management side. It makes up two-thirds of the gross profit and more than half of the current revenues.
This, Fewer said, marks Aldar’s transition from a pure-play developer reliant on project launches to an “asset manager”.
As for the development business, it contributed Dh1.5 billion via off-plan sales in the year-to-date in what remains a tight market for off-plan sales.