Aldar Properties, Abu Dhabi's largest developer, has reported a profit of Dh1 billion (US$272 million) for last year, down from Dh1.75bn in 2008. The company lost more than Dh500m in the final three months of last year as soaring costs for opening the key Yas Island project and massive revaluations of its portfolio bit deep into the bottom line. Aldar reported losses of Dh562m in the fourth quarter. Properties under development lost Dh520m of their value in the final quarter of last year while the cost of opening Yas Island wiped another Dh170m from the books.
The company also revealed it has Dh10.3bn of cash on the balance sheet to help it get through the remainder of the downturn. "That gives us the firepower - for another 12 to 18 months," said Shafqat Malik, the chief financial officer of Aldar, adding that the company was reviewing its options for further bond issuances, sales or reducing its expenditures to make it through the slow market. Prices in the capital have dropped by as much as 50 per cent in some areas and buyers have avoided off-plan homes because of a lack of confidence in the ability of developers to deliver on time.
Jones Lang LaSalle, the property consultancy, estimates that just half of the 90,000 homes expected to be finished by 2013 are stalled, and that there is a funding gap of more than Dh50bn for these projects to begin. "I think the challenge for master developers like Aldar and Sorouh is ensuring that those people who they've sold land plots to can actually complete and deliver them," said Chet Riley, an analyst at Nomura Securities.
Sorouh Real Estate, the second-largest developer in Abu Dhabi, announced that its profits had dropped by almost 40 per cent to Dh28.1m in the fourth quarter of the year, compared with the same period in 2008. Aldar's shares shed Dh0.11, or 2.7 per cent, in trading yesterday, closing at Dh3.90. The stock has improved by 64.5 per cent in the past year. The company has sold a large portion of its signature Yas Island project, including the Formula One Grand Prix circuit, to the Abu Dhabi Government.
Mr Malik said the asset sales were part of a "wider economic diversification of Abu Dhabi". "We sold a number of things, including the internal roads, vacuum systems, the marina, the yacht club - and the racetrack," he said. @Email:firstname.lastname@example.org