The Abu Dhabi developer Aldar Properties compensated for a drop in government income in the first quarter of this year by boosting property and land sales.
In a statement to the Abu Dhabi bourse on Tuesday, Aldar said that profit attributable to shareholders stood at Dh636 million in the first three months of this year, 2 per cent lower than the year-earlier profit of Dh649m.
The result beat analysts’ expectations and lifted Aldar’s shares.
The shares closed up by 1.8 per cent on Tuesday after rising as much as 2.3 per cent in intraday trade.
For the quarter, Sico Bahrain had forecast that Aldar would make a net profit of Dh509.07m, EFG Hermes forecast Dh600m and NBAD Securities, Dh561 million.
Aldar said the reason net profit fell in the latest quarter was that in last year’s first quarter it had received a profit boost from Dh219 million in government grants for building infrastructure assets, which were not repeated this year.
Aldar’s gross profit – which does not include government contributions – was Dh753m, an increase of 39 per cent compared with the Dh542m it made in Q1 2016.
Revenue grew by 28 per cent to Dh1.58 billion, driven by revenue booked on developments under construction and land plot sales.
Aldar said that it had sold more than Dh100m of land plots to investors and developers in various locations across Abu Dhabi. The developer declined to say exactly how much land it had sold during the quarter.
Aldar also said that it had agreed off-plan sales with customers that would eventually be worth Dh1bn during the quarter, mostly at its West Yas and Yas Acres projects on Yas Island.
“We have a tremendously active portfolio of off plan development,” said Greg Fewer, chief financial officer at Aldar.
“When we grow our gross profits in the way that we have, it’s a reflection of our strong sales and it’s a reflection of the construction activity we are seeing across our portfolio on site. In addition it’s a reflection that we have a very large and very valuable land bank in Abu Dhabi, which investors are showing increasing interest in,” he said.
Sanyalak Manibhandu, the head of research at NBAD Securities, said it was maintaining its buy rating on the stock and might raise its forecast for the stock price.
“Aldar’s revenues include Dh534m in property development and sales,” Mr Manibhandu noted. “Included in this is Dh120m in land plot sales which account for half of the favourable variance in the top line.”
Aldar’s jump in revenue comes despite a series of dismal market reports by property brokers reporting that house prices and rents in Abu Dhabi are falling as the city is hit by large-scale company lay offs and government cut backs following falls in the global oil price.
Last week, CBRE reported that residential rents fell 8 per cent in the first three months of the year compared with the same period a year earlier while office rents are 5 per cent lower.
But Aldar said that by tapping into demand for smaller, cheaper off-plan apartments in Abu Dhabi, it had been able to find buyers for the first three towers it plans to develop at its The Bridges project on Reem Island.
“From Aldar’s point of view we consider it exceptional demand [at The Bridges],” said Talal Al Dhiyebi, the chief development officer at Aldar. “For the first time in many years we are reaching out to that affordability level. There are still lots of people in Abu Dhabi who are employed in various sectors who are within that price point. So we’re tapping into that segment which exists in the market.”
In February, Aldar said that it expects property sales to fall this year to about Dh3bn, from Dh3.5bn in 2016, as the company focuses on building mid-market homes.
Aldar received the promise of billions of dirhams from the Abu Dhabi government after the global financial crisis. The company said that payments are still being made by the government in return for the company building infrastructure at government developments.
lbarnard@thenational.ae
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