Aldar Sees Project Completions Driving Revenue Growth
Now Reading
Aldar Sees Project Completions Driving Revenue Growth

Aldar Sees Project Completions Driving Revenue Growth

Aldar launched three new developments worth Dhs5 billion last month and said it was exploring 23 property projects.

Gulf Business

Payments for completing projects should drive revenue growth at Aldar Properties in the next two quarters, as the largest property developer in Abu Dhabi benefits from a rebound in the local real estate market, its finance chief said.

Abu Dhabi’s real estate market slumped by about 50 per cent from its peak in 2008 after a bubble burst in the wake of the global financial crisis, with Aldar receiving around $10 billion of government support in exchange for assets to help manage a significant amount of debt taken on in the boom years.

There was also a government-backed merger between Aldar and Sorouh Real Estate, completed last year, which brought together the two main developers in the emirate to cut costs and support Aldar’s financial position.

Prices rebounded strongly last year, rising some 25 per cent, on the back of a series of market-boosting measures by the government including the scrapping of annual rent caps.

That was reflected in Aldar tripling its first-quarter net profit to Dhs453.4 million ($123.4 million), well ahead of the forecast from brokerage SICO Bahrain, as project competitions – which usually lead owners to settle the full cost – and sales of developments boosted revenue.

Revenue for the quarter jumped six per cent to Dhs1.72 billion, with recurring revenue 22 per cent higher year-on-year at Dhs497 million thanks to its hospitality and investment property portfolio.

The results boosted Aldar’s share price, which was up 3.1 per cent at 0840 GMT against a flat Abu Dhabi market.

Payments for completing projects would continue to drive earnings, Greg Fewer, chief financial officer at Aldar, told reporters on a conference call, adding revenue from the sale of 1,400 units would also accrue over the next two quarters.

Beyond that, revenue growth would come from assets due for completion including the Yas Mall – a 2.5 million square foot retail complex set to open in November – and some residential projects that could add between Dhs1.5 billion and Dhs1.6 billion of net recurring revenue in 2016, he added.

Last month, Aldar launched three new developments in Abu Dhabi worth Dhs5 billion and said it was exploring 23 real estate developments, excluding government projects, as conditions in the local market rebounded.

Fewer said the majority state-owned developer would continue to focus on reducing debt, having paid off Dhs2.8 billion – around 20 per cent of its gross debt – since the start of 2014 using contractual payments from the government of Abu Dhabi.

“We are significantly deleveraging the business and managing debt to our targeted levels. We also have ample cash and liquidity,” Fewer said. Aldar was still due Dhs6.7 billion from the Abu Dhabi government for asset sales and infrastructure works and had Dhs9.7 billion in cash available at March 31.

Aldar has Dhs6.1 billion of outstanding debt due by the end of 2014, including a $1.25 billion bond maturing this month.

The firm, builder of the emirate’s Formula One race track, was still hunting for a new chief executive following its merger with Sorouh, Fewer said.


Scroll To Top