Aldar Properties Q2 net profit up 9.7% despite property slowdown in Abu Dhabi

Aldar's Shams development on Reem Island. Christopher Pike / The National

Aldar Properties said on Tuesday its second-quarter net profit rose by about 10 per cent despite a slowdown in the Abu Dhabi property market.

The capital’s largest listed developer said net profit for the three months ending June 30 rose by 9.7 per cent, when compared with the same period a year ago, to Dh657.3 million. The result beat a forecast by investment bank Sico Bahrain.

The profit came on the back of an improvement in company revenue, which jumped 52 per cent to Dh1.69 billion, up from Dh1.11bn a year ago.

Aldar said off-plan housing sales during the quarter exceeded Dh1bn, similar to the previous quarter, driven by Dh940 million of off-plan property sales at its 1,315 villa Yas Acres project and 800 apartment Mayan scheme, as well as Dh90m from its 1,017 villa West Yas project, which is only available to Emiratis.

The company did not give a comparative off-plan housing sales figure for the second quarter of last year. It said it intended to push ahead with plans to build 1,500 new homes a year despite a general slowdown in the Abu Dhabi housing market caused by the oil price slump and job cuts in the oil and gas and construction sectors.

Aldar’s direct costs also increased to Dh1bn this year from Dh612m last year, as the company pushed ahead with construction on projects including at Yas Acres, 540 Ansam apartments and 800 Mayan flats on Yas Island, and 233 apartments and eight town houses in Al Hadeel at Raha Beach.

“There is still demand for the right property at the right price in Abu Dhabi,” said Talal Al Dhiyebi, Aldar’s chief development officer. “It’s not easy right now, you have to work hard, but the Abu Dhabi market has resilience.”

Last week the property broker JLL reported prime sales prices in the capital had fallen by 5 per cent in the second quarter to about Dh15,200 per square metre, as transaction volumes stalled.

“These research reports are generic and across the whole market,” Mr Al Dhiyebi said. “We look at our portfolio and it is outperforming the market.”

Aldar said profit from its rental portfolio, which includes thousands of homes, shops, offices and schools, increased by 12 per cent during the quarter to Dh382m.

“Aldar’s results slightly outperformed our expectations,” said Majd Dola, a senior analyst at Al Ramz Securities. “The company surprised us with slightly better revenues from its property development business and slightly lower growth than expected from its recurring revenues portfolio. We don’t see that continuing in the future.”

The company said its trophy shopping centre, Yas Mall, the second largest mall in the UAE, had a trading occupancy of 98 per cent.

Aldar also reported that occupancy levels at its portfolio of 5,000 rented flats in Abu Dhabi had fallen slightly to 96 per cent, as the company experienced the effects of job cuts in Abu Dhabi’s oil and gas sector.

However, it said the income generated by the portfolio had increased slightly over the same period, as the company continued to increase rents for existing tenants.

It said it was “relatively insulated” from the effects of widespread job cuts because about a third of its rented housing portfolio was leased through bulk deals with large employers.

Aldar said housing rents for the coming quarters would be “looking at a flat scenario”.

The company said occupancy rates for its hotel portfolio slipped to 76 per cent for the first half of the year, down from 79 per cent at the end of last year.

Aldar shares closed on Tuesday at Dh2.76, down by 2.13 per cent in Abu Dhabi.

Follow The National's Business section on Twitter