Property

Aldar profits fall close to 80% as market slows

Aldar Properties saw its profits fall by 78.2 per cent in the second quarter compared to the same period last year.

Bradley Hope

28 July, 2009

ABU DHABI // Aldar Properties saw its profits fall by 78.2 per cent in the second quarter compared to the same period last year, down to Dh253.8 million (US$69.1m), as the company weathered a protracted slowdown in the market. Most of the profit for the quarter was from previous sales that are being recognised now that homes are being delivered. The largest developer in Abu Dhabi had no sales of land or units in the quarter and a Dh22m operating loss, said Shafqat Malik, the chief financial officer.

"The short term is very challenging," Mr Malik said. "That is why we are making sure we are managing our resources and the execution of the projects over the next three to six months. In the medium to long term, we are very positive about the fundamentals of Abu Dhabi." Mr Malik said the company's liquidity position was strong, especially after raising Dh4.59bn with a corporate bond. The company now has Dh13.9bn in cash and bank balances.

He also said that despite the slow market, Aldar had sold units worth about Dh200m in the first six months of the year and would be recognising the revenue in future quarters as it delivered the units. Buyers of Aldar's properties were having some difficulty in paying their instalments on time, Mr Malik said. Between 10 and 15 per cent of the money owed to the company was overdue. Ahmed Ali al Sayegh, the chairman of Aldar, said the financial results of the quarter showed "the resilience and underlying financial strength of the Aldar business model".

Over the next six months, the company is scheduled to pass several milestones, including the delivery of the Yas Island facilities and hotels in time for the inaugural Abu Dhabi Formula One Grand Prix. One big issue that could affect property developers is the valuation of their land bank, which amounts to millions of square metres for developers like Aldar. Analysts say that companies may have to take impairments on these assets because prices have dropped precipitously.

In a statement yesterday, Aldar said its net asset value had increased by 5.1 per cent to Dh16.85bn in the first half of the year, compared to the same period last year. Revenue for the first half of the year for the company was Dh1.1bn, with profit of Dh1.14bn. The value of developments under Aldar's shares shed Dh0.09 in trading yesterday, closing 2.2 per cent down at Dh4. @Email:bhope@thenational.ae

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Industry: Digital receipts, finance, blockchain

Funding: $4 million

Investors: Privately/self-funded

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Coffee: black death or elixir of life?

It is among the greatest health debates of our time; splashed across newspapers with contradicting headlines - is coffee good for you or not?

Depending on what you read, it is either a cancer-causing, sleep-depriving, stomach ulcer-inducing black death or the secret to long life, cutting the chance of stroke, diabetes and cancer.

The latest research - a study of 8,412 people across the UK who each underwent an MRI heart scan - is intended to put to bed (caffeine allowing) conflicting reports of the pros and cons of consumption.

The study, funded by the British Heart Foundation, contradicted previous findings that it stiffens arteries, putting pressure on the heart and increasing the likelihood of a heart attack or stroke, leading to warnings to cut down.

Numerous studies have recognised the benefits of coffee in cutting oral and esophageal cancer, the risk of a stroke and cirrhosis of the liver. 

The benefits are often linked to biologically active compounds including caffeine, flavonoids, lignans, and other polyphenols, which benefit the body. These and othetr coffee compounds regulate genes involved in DNA repair, have anti-inflammatory properties and are associated with lower risk of insulin resistance, which is linked to type-2 diabetes.

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Rory Reynolds

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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