Aldar Properties plans to press ahead with the construction of 7,300 homes in the capital over the next five years, confident that the fundamentals for growth in Abu Dhabi will not be severely hampered by lower oil prices.
The Abu Dhabi-listed company said yesterday that it was pressing ahead with its existing strategy to develop projects on Yas Island, Raha Beach and Shams on Reem Island.
The price of Brent crude has halved since last summer amid a glut of supply, mainly from North America, and concerns for the global economy. The lower oil price is expected to delay large government projects and reduce demand for housing in energy exporting countries across the region.
Last month, the IMF lowered its growth forecast for the UAE to 3.5 per cent from the 4.5 per cent estimate it made in October.
“We are comfortable with the fundamentals which make the economics of this city work and we’re not amending our plans,” said Greg Fewer, Aldar’s chief financial officer. “Of course we will be monitoring population levels closely, but right now we’re satisfied with what we are seeing.”
Harshjit Oza, the assistant director for research at Naeem Brokerage, said: "Falling oil prices are one of the things to look at over the long term but we believe that the market has overplayed the negatives for Aldar."
The company saw its share price fall as oil prices crashed at the end of last year, falling to Dh1.98 on December 16 from Dh4.12 on September 18, before recovering slightly to hover about the Dh2.5 mark.
Aldar, which announced a slight dip in 2014 full year profits yesterday, remained upbeat about its prospects for this year, predicting that it would grow its recurring revenue portfolio by at least half over the coming 12 to 18 months.
Full-year profits attributable to owners of the company slipped 0.4 per cent to Dh2.23 billion from Dh2.24bn the previous year – something the company put down to the effects of a one off accounting gain in 2013 from its merger with rival Sorouh.
Revenue for last year increased 21 per cent to Dh6.55bn from Dh5.38bn the previous year as the company benefited from handing over most of the 3,500 apartments in its Gate Towers development on Reem Island to individual buyers and the Abu Dhabi government.
For the final quarter of the year, Aldar reported that profit attributable to shareholders stood at Dh696.47 million, up from Dh432.6m the previous year.
At the same time revenues for the period fell to Dh1.27bn from Dh1.32bn. Recurring revenues in the three-month period increased 19 per cent to Dh701m from Dh591m a year earlier after it opened the 235,000 square metre Yas Mall in November.
Aldar said that the mall was now fully let with "the majority" of shops now trading.
“The story here is that our recurring revenue asset base is starting to rent up to become fully leased. This is high profit margin business. The average gross profit across our recurring revenue base in the investment properties is 70 per cent plus,” Mr Fewer said.
“2013 is a hard comparison. That was a year when we took a one time accounting gain of Dh2.59bn for the merger which contributed to the Dh2.2bn profits.
“So the Dh2.2bn that we’re delivering now to shareholders is all the more impressive because it has come exclusively from delivering units and renting assets. And so it is of a much higher quality than the earnings from previous quarters,” he said. Aldar also announced a dividend of 9 fils per share – up 29 per cent on the previous year.
Naeem’s Mr Oza said: “The 2013 full year results were affected by one-off items, so it would be unfair to compare this year with last year in a lot of ways.
“It is much more telling to look at the specifics in the results,” he said. “It seems that Q4 was not that great for Aldar in terms of figures, but then when you look at the fact that they finally opened Yas Mall which is likely to boost revenue going forward, the picture looks more appealing.”
Aldar shares rose 0.39 per cent in trading to close at Dh2.59.
lbarnard@thenational.ae
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