Aldar, Abu Dhabi biggest listed real-estate company, on Monday unveiled a Dh10 billion master plan for a new mixed-use project called Alghadeer located close to the Dubai border.
The 3-million-square-metre scheme is an extension of the company's existing Alghadeer neighbourhood near the Kizad Free Zone, Dubai’s Al Maktoum International Airport and the Expo 2020 site. The project will be Aldar’s first foray into a residential price bracket “even more affordable” than what the Abu Dhabi developer has tapped recently in response to a three-year oil slump that has tightened budgets and pushed-down property prices.
“We promised the market [two years ago] we would focus on affordable housing and saw some niche pockets of opportunity including our Water’s Edge and The Bridges schemes – for which there has been strong demand and we will continue to develop them,” Talal Al Dhiyebi, chief executive of Aldar, told reporters in Abu Dhabi.
“However, we also saw opportunities in an even more affordable sector. There has definitely been a softening [of prices] at the premium end and it is our duty to satisfy the market’s needs."
Aldar has priced units at Alghadeer “aggressively” in response to market conditions, he said, with prices for maisonettes – two storey homes where each floor is leased as an individual apartment – starting from Dh290,000 and townhouses from Dh899,900. A handful of detached villas will be priced between Dh1.4 million and Dh1.6m each. The first phase of 611 homes will be marketed off-plan at this week’s Cityscape Global exhibition in Abu Dhabi and is scheduled for completion in 2021. A construction tender is expected to be issued in October.
Average apartment and villa rents in Abu Dhabi declined by 10 per cent and 7 per cent year-on-year last year as the impact of low oil prices caused a slowdown in the UAE property market, while apartment and villa sales prices declined 10 per cent and 4 per cent, according to consultancy Asteco's fourth quarter 2017 market update.
Rents are forecast to drop by 4 to 7 per cent this year – a slower pace than last year as market sentiment improves on the back of stabilising oil prices and increased government spending, broker Core Savills said in a report earlier this month.
[ Abu Dhabi rental declines to slow in 2018, says Core Savills ]
[ Aldar fourth quarter profits fall 80 per cent on asset management charge ]
[ Aldar and Emaar shares climb after Dh30bn strategic alliance ]
Aldar, which reported an 80 per cent drop in fourth quarter 2017 profits on a one-time charge related to its asset management business, last month entered into a strategic partnership with Emaar Properties, Dubai's biggest listed real-estate developer, to develop certain schemes. Mr Al Dhiyebi said Aldar was “open to collaboration” with Emaar wherever there was mutual benefit, but that there were currently no talks ongoing with Emaar to jointly develop Alghadeer.
Aldar will fund the scheme through a combination of internal reserves and bank financing, but the chief executive would not reveal the planned debt-to-equity ratio.
“The vast majority of the scheme will be financed through proceeds from sales,” he said. The developer is required to finance at least least 20 per cent of each phase before construction begins – Dh200m each in this case – under UAE real-estate laws.
Aldar does not issue bonds to support project financing, but it intends to refinance a non-project specific US$750m (Dh2.75bn) sukuk due to expire later this year, Mr Al Dhiyebi added.
Aldar said its existing Alghadeer community is 90 per cent occupied and comprises 2,130 completed homes first brought to market in 2014. The broader masterplan comprises a further 14,408 units – 1.3 million square metres of built-up residential space in total – including 449 villas, 2,174 townhouses and 11,784 maisonettes, delivered over a period of 15 years across three or four phases.
The second phase of 682 homes will start around six months after the completion of the first phase, subject to progress on sales, with the total investment value of those two phases reaching around Dh1.2bn, Mr Al Dhiyebi said.
The project sits close to the border of Abu Dhabi and Dubai within Aldar’s Seih Al Sdeirah landbank. As well as residential units, the master plan contains office space, retail space, hotels, schools and community amenities including a neighbourhood farm called Harvest with leasable allotments for growing fruit and vegetables, a dining outlet called The Hub, and a training and workshop facility called The Studio. There are also an equestrian centre, running tracks, swimming pools and gardens.