Dubai: Aldar Properties will pursue land sales aggressively to investors, including to those foreign buyers and institutional funds that have never had exposure in Abu Dhabi’s freehold space. It was last month that Abu Dhabi allowed foreign investors to have full ownership of land in designated zones.
“Freehold titles are being issued under the law – and we intend to hit a rich vein of demand that’s building up for land in Abu Dhabi,” said Greg Fewer, Chief Financial Officer at Aldar. “We have these plots all over our land bank, including at Saadiyat, which remains the most desirable – and still under-developed - destination in Abu Dhabi. Freehold land sales are hitting the sweet spot in Abu Dhabi.”
Talks are on with institutional buyers now that the freehold law has given helped give more clarity. Aldar has also opened a sales centre in Dubai to reach out to buyers and convince them to start expanding their outlook to Abu Dhabi as well. More so, given the changes that have been brought in for real estate investments and residency visa issuing.
Aldar recorded first quarter revenues of Dh1.76 billion in the first three months, a gain of 20 per cent from a year ago. Net profits, however, lagged, down 26 per cent to Dh493 million. This the company says stems from “legacy” factors, as it winds down on completing infrastructure projects for the Abu Dhabi Government.
Freehold titles are being issued under the law — and we intend to hit a rich vein of demand that’s building up for land in Abu Dhabi.
These funds were recognised as “other income” over the last two years. “The final handovers of these infrastructure projects are taking place; but if we strip off this element, attributable net profit would be up 4 per cent to Dh553 million,” said Fewer.
On the revenue side, Aldar continues to pull in the heavy numbers. Offplan-led sales were up 49 per cent in the first quarter to Dh1 billion. And boosted the development revenue backlog – the remaining payments due on sold properties – to Dh4.3 billion, as of end March.
On another key indicator, Aldar continues to be solid – of properties that it has launched to date, 80 per cent have found buyers.
The details related to its joint venture with Emaar are still being shaped internally, with the CFO declining to go into project specifics and when those are to be revealed. The scope and “spirit” of the JV could extend to markets beyond Abu Dhabi and Dubai, but Fewer was not offering any specifics. “It will give us an opportunity expand into markets within our network of influence,” he added.
Aldar does not plan to call in any debt funding for the immediate future. It is targeting Dh2.75 billion in capital expenditure for this year and the first-half of the next, for which the funds are secured, the CFO said.
But land is where the action will be hotting up in Abu Dhabi’s real estate market. For Aldar, the sales spike has continued into the second quarter.
“Our strong sales reinforce Abu Dhabi’s favourable supply and demand dynamics as seen with Alreeman and Lea (the two projects during the quarter),” said Talal Al Dhiyebi, CEO, in a statement. Our strategy is optimised to take advantage of the opportunities stemming from pro-growth government initiatives.”
Aldar’s portfolio retains robust health – as of March 31, nearly 80 per cent of all its units in development have found buyers. The development revenue backlog (funds coming in from properties sold) was at Dh4.3 billion.
There was a 94 per cent bump in net operating income during the first three months compared with a year ago, which was also helped by Abu Dhabi hosting the Idex defence exhibition.
* Aldar expects to generate an additional Dh100 million in annualised net operating income from its full ownership in Etihad Plaza and Etihad Airways Centre. This was done through a Dh1.2 billion non-cash transaction that “unwound three existing joint venture agreements with Etihad”. In March, Aldar also sold Al Murjan Tower for Dh289 million for an implied 6.6 per cent yield, as part of its strategy to “realise value and redeploy capital in new high-potential opportunities”.