Abu Dhabi’s Aldar Properties Q2 net profit up 9.7%

Aldar Properties reported a 9.7 per cent rise in second-quarter net profit on Tuesday, as the state-linked builder of Abu Dhabi’s Formula One circuit shook off concerns about a softening market by posting higher revenue.

The net profit of Dhs 657.4m ($179m) in the three months to June 30, disclosed in a bourse filing, was the eighth successive quarter of rising earnings for the firm. It made Dhs 599.2m in the year-earlier period.

SICO Bahrain forecast Aldar would make a quarterly profit of Dhs 384.1m.

The result comes against a backdrop of negative indicators about the health of the Abu Dhabi market.

Last week, two consultancies said there were initial signs in the second quarter of price declines in the residential market despite new supply being at an all-time low, as job cuts at state-owned companies weighed on demand.

This came after comments in late May from a senior Abu Dhabi government official that the state may consider stepping in as the emirate’s property market was over-supplied.

However, Aldar remained bullish in its outlook, retaining its guidance to construct 1,500 residential units this year.

“There is still demand in Abu Dhabi for the right product and the right location,” Talal al-Dhiyebi, the firm’s chief development officer, said on a media conference call.

Aldar’s second-quarter revenue was Dhs 1.7bn, up from Dhs 1.11bn a year earlier as it made more than Dhs 1bn of off-plan sales. The firm did not provide a comparative sales figure.

The company, in which state-owned fund Mubadala Development Co. is the largest shareholder, has been seeking to generate more revenue in recent quarters from retail and hospitality assets to offset property market fluctuations.

The performance of these assets, which includes the mega mall on Yas Island, was stable in the second quarter of 2016.

Occupancy levels in the approximately 5,000 residential units which the company rents out dropped a “couple of percentage points” to 96 per cent, although income from these properties rose year on year due to higher blended rents, Chief Asset Management Officer Jassem Saleh Busaibe said on the call.

Chief financial officer Greg Fewer added on the same call that Aldar had agreed with banks to extend maturities on some of its Dhs 6bn of debt. Further details would be announced later on Tuesday.