Aldar eyes expansion into Egypt and Saudi Arabia as profit rises
The company posts 5% rise in Q2 profit on back of strong sales
Aldar Properties is looking at expanding into Egypt and Saudi Arabia as Abu Dhabi's largest developer reported a 5 per cent jump in its second quarter net profit on the back of strong sales.
“We are continuing to assess opportunities in both, as and when relevant transactions materialises, we should update the market,” said Aldar’s chief financial officer Greg Fewer in an earnings call with the media on Thursday. “Each of those places are very interesting, very dynamic and very different real estate markets,” he added, without divulging further details.
Aldar Properties, behind mega projects such as the Formula One race circuit on Yas Island, on Thursday said second quarter net profit attributable to the owners of the company jumped 5.4 per cent to Dh470.4 million from the year earlier period. The rise in net profit was in line with an estimate by investment bank EFG Hermes.
The biggest listed developer in Abu Dhabi saw revenue in the second quarter climb 10 per cent to Dh1.66 billion, boosted by rising sales and strong development activity. The company's stock price is up 42 per cent so far this year, outperforming the general market and other listed UAE real estate developers.
“There is an upswing in sentiment towards Abu Dhabi's real estate market with the recent announcement of our Dh9bn worth of development projects since the start of 2019,” said Talal Al Dhiyebi, chief executive of Aldar Properties. “Those, coupled with government initiatives to spur economic growth, are having a positive multiplier effect on the wider Abu Dhabi economy and stirring confidence.”
Revenue in the first six months of the year surged 15 per cent to Dh3.4bn from the same period a year earlier. Profit for the first half of the year, however, dipped 8 per cent to Dh1.02bn from the year earlier period.
Off-plan development sales in the first half of the year surged 78 per cent to Dh1.9bn compared with the same period a year ago, the company said. Second quarter off-plan sales increased year-on-year 129 per cent to Dh853m, primarily driven by the successful launches of Lea and Alreeman II, as well as sales on existing projects under development including Yas Acres.
“We are a market that is benefiting from fiscal stimulus and we are seeing benefit of that stimulus materialising in our numbers and in our portfolio,” Mr Fewer said.
“There is a stimulus programme of both Adnoc capex programme as well as Ghadan 21. We are seeing that benefit in improving investors sentiment, is reflected in our off plan sales growth year-on-year. And our commercial occupancy remains strong with 92 per cent.”
Abu Dhabi's government is currently implementing Ghadan 21, the three-year Dh50bn stimulus plan to boost economy growth and improve standards of living. The government also introduced freehold titles for foreign buyers within investment zones in Abu Dhabi earlier this year, which is expected to have a positive impact on the real estate sector.
Occupancy across Aldar’s investment property portfolio which includes retail, residential and commercial units, remained resilient at 90 per cent, with the hospitality portfolio recording 77 per cent occupancy in the first half of 2019.
In July, Aldar was awarded contracts worth Dh5bn from multiple Abu Dhabi government entities to deliver three projects in the capital as the emirate continues to spend on infrastructure and economic development schemes.
The asset management division of Aldar also acquired full ownership of Etihad Plaza and Etihad Airways Centre in March.
The Abu Dhabi-based developer is planning to launch new projects in the second half of this year to carter to the demand of mid-market segment and upper mid segment, Mr Fewer added.
Updated: August 8, 2019 03:34 PM