ABU DHABI: 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 percent from its peak in 2008 after a bubble burst in the wake of the global financial crisis, with Aldar receiving around $10bn 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 percent, 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 Dh453.4m ($123.4m), 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 6 percent to Dh1.72bn, with recurring revenue 22 percent higher year-on-year at Dh497m thanks to its hospitality and investment property portfolio.
The results boosted Aldar’s share price, which was up 3.1 percent 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 Dh1.5bn and Dh1.6bn of net recurring revenue in 2016, he added. Reuters
