Sale of Dh2.4bn ‘Water’s Edge’ project will begin at Cityscape Global in Dubai
Aldar targets middle-income buyers with new Yas Island development
Aldar Properties, Abu Dhabi’s largest listed real estate developer, announced yesterday the launch of its second project this year targeting middle income end-users and investors. The company is hoping the revived interest in mid-market properties will help boost its revenues.
The Water’s Edge development on Yas Island will include 2,255 homes available for purchase to all nationalities. The project will go to the tendering stage soon, with construction expected to commence in the fourth quarter of this year and handovers scheduled to begin from 2020.
Aldar will finance the Dh2.4-billion project from its balance sheet and has no plans to raise debt to fund the construction.
“We have a healthy cash position of around Dh5bn right now and together with the proceeds from sales, we will finance it,” sais Talal Al Dhiyebi, Aldar’s chief development officer.
The new development launch comes as Aldar’s finances have come under pressure due to softening economic conditions in Abu Dhabi.
The developer reported a 5.2 per cent decline in second quarter net profit to Dh620m as revenues for the period dropped to Dh1.35bn from Dh1.69bn in the same period of 2016.
Aldar, however, struck an optimistic tone in its results for the mid-market segment, noting that the April launch of its mid-market project, The Bridges, generated about Dh600m in new sales, with the development selling out within three weeks of going on sale.
“The middle income sector has been the strongest part of the residential market in the UAE for the past few years, as there remains a large number of potential buyers who can not afford the luxury product being delivered,” said Craig Plumb, the head of Mena research at Jones Lang LaSalle.
“Aldar has been one of the developers seeking to target the middle-income sector, with the launch of the Bridges project on Reem Island at Citiscape in April 2017.”
The company is hoping for a similarly enthusiastic response to its Water’s Edge development. It will release about 300 units to investors at Cityscape Global in Dubai on September 11, and expects the project to generate 8 per cent to 9 per cent rental yields upon completion.
“We are extremely confident about the appetite for middle income projects in Abu Dhabi,” Mr Al Dhiyebi said.
“We are confident that for the value of the property and the amenities that you get, it will be attractive for both investors and end-users.”
The developer will sell only about 892 units to the public, while the remaining will be added to its leased residential portfolio to strengthen recurring revenue lines. With the launch of the new development, Aldar’s portfolio of under construction units will rise to more than 5,000 units on Yas Island alone.
The master development comprises 13 buildings, and will be a short distance away from attractions on the island including Yas Mall, Ferrari World and Yas Marina Circuit.
Yas Island will soon be home to the Dh12bn South Yas development, which will incorporate the twofour54 campus being developed by Aldar, and will also welcome Warner Bros World Abu Dhabi in 2018 and Sea World in 2022.
The theme parks on Yas have performed well and are expected to continue doing well with the addition of new attractions, said Mohamed Al Mubarak, the chief executive of Aldar.
“[The] theme parks are property of Miral, but speaking on their behalf we have seen some extremely strong sustainable numbers. We have seen Ferrari World sustaining good daily numbers and we have had a very strong Eid [holiday season],” he said, adding that parks in Dubai and Abu Dhabi can both benefit from “large-scale theme park connectivity”.
“I think there’s a massive opportunity [for connectivity]. They are literally 30 minutes away from each other,” said Mr Al Mubarak, adding that the infrastructure is available and mass transportation in the future could allow better and quicker connectivity between the two emirates.