Aldar Properties said on Tuesday that it expects earnings from property sales to fall this year as the company focuses on building mid-market homes.
Abu Dhabi’s largest listed developer forecasts about Dh3 billion worth of sales in 2017, down from Dh3.5bn in 2016.
Aldar said that it continued to expect to launch about 1,500 units a year into the market, but added that this year it would focus on building mid-market housing at its Reem Island and Yas Island communities.
“We are still seeing strong demand in the affordable housing segment and there is low penetration in terms of what is being offered,” Talal Al Dhiyebi, Aldar’s chief development officer, said.
It also reported that fourth-quarter profit declined marginally as it faced “headwinds” in the emirate.
Aldar’s net profit for the final three months of 2016 dipped 1 per cent to Dh728 million from Dh735m a year earlier as the company reported a “softer operating market”.
Aldar also reported that revenues for the quarter increased 27.3 per cent to Dh1.4bn from Dh1.1bn a year earlier.
“We are seeing some headwinds in the market right now,” said Greg Fewer, Aldar’s chief financial officer.
The company made provisions and impairments of Dh100m during the fourth quarter of 2016 owing to falls in the market value of the company’s recurring revenue portfolio.
Aldar’s rental portfolio includes its 235,000 square metres Yas Mall, nine hotels, nearly 5,000 homes and more than 200,000 square metres of offices spread across Abu Dhabi.
Aldar said that occupancy at Yas Mall stood at 94 per cent, while the company’s residential portfolio was 92 per cent occupied – something Aldar described as “a strong performance in the face of a challenging macroeconomic environment”. The company’s office portfolio was 95 per cent occupied, while hotel occupancy stood at 77 per cent.
“All in all these were a pretty strong set of results with full- year results beating analysts’ forecasts,” said Majd Dola, an analyst at Al Ramz Securities. “Property prices in Abu Dhabi have dropped in 2016 and we are expecting further dips in 2017, so it is normal for developers to make these sort of provisions in this situation.”
For the full year Aldar said that net profit grew 8.6 per cent to Dh2.78bn from Dh2.56bn a year earlier. The company said that revenues for the year grew 36 per cent to Dh6.23bn from Dh4.58bn a year earlier.
Aldar shares closed on Tuesday up 0.39 per cent at Dh2.58.
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lbarnard@thenational.ae
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