Aldar bullish about growth of fee-based businesses amid international expansion ambitions

Developer is currently managing around Dh2bn in assets owned by third parties, its chief executive says

Aldar's headquarters in Abu Dhabi. The company said there has been a focus on horizontal development in the emirate. Victor Besa / The National

Developer Aldar Properties expects its fee-based revenue to increase as it expands its asset management business amid growing profitability.

The company manages about Dh2 billion in assets owned by third parties and is “taking on more asset management” projects, chief executive Talal Al Dhiyebi told Bloomberg TV yesterday.

Aldar Development, the unit responsible for developing its 7,500-hectare land bank in Abu Dhabi, also reported strong growth.

“Our development unit, which is normally more cyclical compared to our asset management [business], right now gives a very strong recurring income,” said Mr Al Dhiyebi.

He said cash collection for the developer remained strong.

The strength of Abu Dhabi’s economy and the fundamentals of its property market helped Aldar buck the trend and grow its development business despite a tough year for the property market.

“The story in Abu Dhabi has been [of] well-balanced demand and supply. There were pockets of oversupply in some areas ... [but] we have seen a big shift in Abu Dhabi towards horizontal development,” said Mr Al Dhiyebi.

He said some research reports revealed that the prices of villas and town houses had increased last year.

“I think one’s ability to swap different locations and different products and really focus on the customer can ... drive results.”

The company’s leadership position and its “diversified business model” allowed it “to see these pockets of demand early on”, he said.

Aldar Properties, the UAE's biggest listed developer, revamped its business last month and now operates on a model where a parent company oversees its core development and investment businesses.

Chief executives were appointed to run each of the core divisions.

Jonathan Emery heads Aldar Development, which has three subsidiaries: Aldar Projects, Aldar Ventures and Aldar Egypt.

The projects arm is responsible for delivering the company’s own communities and its fee-based development management services, including government housing and infrastructure projects worth Dh45bn.

Aldar Ventures seeks new business opportunities while the Egyptian arm will be responsible for the developer’s expansion into the North African country.

Aldar Investment, headed by Jassem Busaibe, manages a Dh16bn portfolio of recurring income assets. Its subsidiaries include Aldar Education, Aldar Hospitality and Leisure and Aldar Estates.

The Abu Dhabi developer, which reported a 28 per cent increase in fourth-quarter net profit to Dh729 million, said on Sunday that revenue at its development unit rose by 53 per cent to Dh1.59bn. A 65 per cent increase in property sales at its projects on Saadiyat Island and Yas Island underpinned the revenue growth.

Aldar’s chief financial officer Greg Fewer said the new Egyptian unit reflects a “statement of intent from our side that Egypt is a particularly interesting market".

“We are spending a lot of time with our network, and there is an abundance of opportunity” for Aldar to develop property in Egypt, he told an online media briefing yesterday.

Mr Fewer said Aldar would look to invest “meaningful capital into the opportunity set” that emerges from the Arab world’s most populous country. He declined to give further details.

Aldar, whose property management unit Provis bought Asteco earlier this month for an undisclosed amount, will continue to look for more acquisitions, said Mr Fewer.

“Acquisitions are a core part of our business ... core to the asset management business to churn capital – sell assets at good prices and redeploy capital to create growth opportunities,” he said.

“Having disposed of Dh1bn of assets at the tail end of 2020, we have definitely allocated capital to invest in acquisitions both in our market and in Egypt.”

The company sold the Abu Dhabi Golf Club Complex and the Westin Hotel to an unnamed buyer for Dh180m, an increase of 13 per cent on the price it paid for the asset as part of a wider deal with Abu Dhabi's Tourism Development Company two years ago, it said in a statement in December.

Aldar does not need to raise capital given the strength of its balance sheet but it is “constantly monitoring the market” for fundraising opportunities, said Mr Fewer.