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Aldar plans to build 1,000 units in Abu Dhabi as net profits surge

Aldar Properties aims to develop 1,000 new apartments across Abu Dhabi from Al Bateen to Raha Beach.

Abu Dhabi’s only major listed property developer said it would start to sell the new units in the first half of this year – 500 of them on Yas Island, 250 at Raha Beach and another 250 at Al Bateen Peninsulas.

The developer yesterday disclosed full-year profits of Dh2.25 billion, 67 per cent higher than a year earlier, before it merged with its rival, Sorouh.

The results missed expectations because of previous project delays.

Aldar said that the largest of its three new developments would be located close to Aldar’s Yas Mall, which is due to open in November. It will be the company’s first private housing scheme on Yas Island, which is also master planned by Aldar.

The new Raha Beach scheme is set to be located close to Aldar’s Al Bandar complex, while the Al Bateen Peninsula scheme will be on an island close to Abu Dhabi, the developer said.

“We could be selling any one of these developments at Cityscape Abu Dhabi in April. All three could be there if we see that appetite is increasing,” said Gurjit Singh, Aldar’s chief development officer.

“In the coming months you will see how people move away from renting because the rent cap is off. People are starting to think where they will put their equity – to rent or into a piece of real estate to stay in immediately – or to stay in three years’ time when they can accumulate sufficient capital. The public should watch this space because Aldar is going to come in with some very attractively priced real estate,” he said.

Aldar added that it was also set to start work on a national housing scheme to be known as Zone K on Yas Island on behalf of the Abu Dhabi Government, which it said would help Yas Island reach a “critical mass”.

Shares in Aldar fell 4.23 per cent to Dh3.4 as the company reported a fourth quarter net profit of Dh427 million, a 79 per cent increase on the same period the previous year, before Aldar merged with Sorouh, but still falling short of analysts’ expectations.

“Handovers at national housing projects, namely Watani (703 villas), Sila’a (448) and Ghuraibah (600) were delayed until the first half of 2014. Management previously guided for the handover of 3,000 units in the fourth quarter of 2013 in a number of projects that by our estimates could have contributed about Dh4.5bn in revenues,” said Mohammad Kamal, an analyst at Arqaam Capital. “The delivery of these units is consequently rolled forward to the first half of 2014 once building completion certificates are finalised.”

During the year, Aldar said that it had handed over 199 flats at its newly completed 3,533-flat Gate Towers scheme on Reem Island in Abu Dhabi, and that it had leased out 36 per cent of its 1,537 Al Rayyana development on the Abu Dhabi mainland, which had been evacuated after a courtyard collapsed in 2012.

“We expect to sell only about 250 units on the open market,” said Greg Fewer, Aldar’s chief financial officer. “We’re actually going to be holding back some sale product because we prefer to have these in the leasing portfolio. In Abu Dhabi the gross yield is between 7 and 7.5 per cent. That’s attractive.”

Aldar said that despite delaying the planned opening date for its Yas Mall shopping centre by eight months to November to coincide with the Abu Dhabi Formula One race, retailers had committed to lease more than 80 per cent of the 2.5 million square foot mall and that handover of shops to tenants for fit-out had begun.

“The construction completion will happen earlier this year on time, on plan and on budget,” said Mr Fewer. “It’s actually marginal how much the extra cost is not to have opened. We’ve done the analysis – what it costs versus what we think the tangible and intangible value preservation side of that equation is and we’ve made our decision.”

Aldar said that it was “well positioned” to manage Dh7.9 billion of debt that is due to expire this year.

“We’ve got Dh8.3bn of cash and available liquidity set up already on the balance sheet as of the end of the year, so we’re well positioned to manage this year of maturities,” Mr Fewer said.

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