Aldar Properties tripled first quarter profit as the developer handed over new homes and built public sector infrastructure. Abu Dhabi’s biggest developer said net profit for the first three months of 2014 stood at Dh453 million, an increase of 194 per cent compared with the same period a year ago. Revenues rose 6 per cent to Dh1.7 billion.
Aldar attributed much of the profits surge to its ongoing programme of infrastructure sales to the Abu Dhabi Government. The company said the Government had paid it Dh3.5bn in contractual payments over the period for building infrastructure in the Shams area of Reem Island, allowing it to repay Dh2.8bn of company loans.
Like many property developers in the UAE, Aldar expanded rapidly in the boom and was hit hard by the global financial crisis, prompting the Abu Dhabi Government to initiate four separate asset purchase plans with the company. Under the agreements the Government purchases infrastructure assets from Aldar as the company completes them.
But Aldar also reported a 22 per cent increase in recurring revenues to Dh497m from its hospitality and investment portfolio following its merger with Sorouh last summer and from an upswing in the residential leasing market. Aldar reported that it had leased 63 per cent of its 1,537 flats at its Al Rayyana scheme on Abu Dhabi mainland.
It wants to increase profits from its vast leasing portfolio of rented housing, hotels, shops and offices to between Dh1.5bn and Dh1.6 bn each year by the end of 2015. Aldar has also benefited from an increase in the number of property handovers and sales it had completed to both the Government and to private buyers.
The company has handed over 814 units at the 3,533 apartment Gate Towers development and 371 of the 375 flats in its Tala Tower scheme, both of which are located on Reem Island.
It said that sales prices for completed properties had increased by 9 to 10 per cent over the three months.
“We’ve sold 1,200 units across all our developments to customers and we’ve sold 941 to the Government. And as those units come in they are proportionally getting handed over to everybody,” said Greg Fewer, Aldar’s chief financial officer. “Most of the units were sold to other people over the quarter and not just the Government.”
The number slightly missed analyst handover expectations, the investment bank Arqaam Capital said in a note. However, it added that its full year outlook for sales remained “intact”.
Aldar shares rose 3.87 per cent to close at Dh4.03.
Aldar, which will on Saturday start selling off-plan property for the first time since the global financial crisis at its Al Hadeel scheme on Raha Beach, plans to launch at least two new projects every six months.
It plans to add mid-market homes to its portfolio.
“Predominantly the market that is growing now is residential,” said Gurjit Singh, Aldar’s chief development officer. “We will be developing lifestyle developments but we will also look at building homes for mid-income professionals, those who earn anything between Dh20,000 and Dh30,000 a month. Not many developers are focused in this area.”
lbarnard@thenational.ae
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