Real Estate

Aldar forecasts $5.4bn by 2028 from Dubai partnership

February 10, 2023, 10:18 AM

Woman, Human, Building — Aldar's Louvre Abu Dhabi Residences, scheduled for completion in 2025, is just one of the major developments announced by Aldar in the past year

Abu Dhabi’s biggest developer reports 27% rise in net profit for 2022
Deal to build 9,000 homes in Dubai should add $5.4bn to bottom line
Dubai commercial offices and expansion in Saudi and Egypt next on list

Aldar, which entered into a joint venture with Dubai Holding for the first time this month to build homes in the emirate, is looking for other opportunities in Dubai.

The developer’s chief financial and sustainability officer Greg Fewer said it was likely to look at investment opportunities in commercial offices and logistics property “in the next 12 to 24 months”.

“Dubai is a super-important market for us and we see lots of growth there,” he said.

Earlier this month Aldar teamed up with Dubai Holding, an investment vehicle partly owned by the Government of Dubai, in a joint venture to build 9,000 homes across three prime locations in the emirate.

The partnership is expected to significantly boost Aldar’s bottom line.

“Just in terms of this development project with Dubai Holding we will generate well over AED20 billion [$5.4 billion] of gross development value,” Fewer said.

“And it’s important to note that this is not a large land bank that will sit undeveloped for some time – we plan to launch new projects in Dubai in 2023.

“So the AED20 billion, plus sales, will start to accrue from next year and we see that playing out over the next five years.”

Formal Wear, Tie, Accessories — Greg Fewer, chief financial and sustainability officer at Aldar Properties. Picture: Aldar

Aldar posted a 35 percent increase in its full-year profit for 2022, driven by strong sales in a buoyant UAE real estate market.

Net profit rose to a record AED3.1 billion ($844 million) in the 12 months to the end of December, from AED2.33 billion a year earlier, the Abu Dhabi Securities Exchange-listed company said in a statement on Thursday.

Revenue and rental income for the period rose 31 percent year-on-year to AED11.2 billion, and Aldar recorded its highest ever annual group development sales of AED14.4 billion, it said.

The company made AED11.3 billion of acquisitions in 2022 – a total of 13 transactions across the logistics, commercial, retail, education, and hospitality sectors.

In addition to its activity in Egypt, Saudi Arabia and other markets, Aldar expanded geographically across Dubai, Ras Al Khaimah and Abu Dhabi.

Major developments announced in the past year in Abu Dhabi alone include Saadiyat Yas Gate, Saadiyat Lagoons, Saadiyat Island’s Grove District and Louvre Abu Dhabi Residences.

The developer has allocated AED5 billion of surplus equity capital to help fund a “strong pipeline of value-accretive acquisitions”.

As part of this Aldar will “continue to assess more opportunities in the jurisdictions it operates in” – most notably in Saudi Arabia and Egypt, Fewer said.

“We’ve been pretty consistent about it – we like Saudi, we like education, we like commercial offices, we like residential, and residential to let; and in Egypt we like off-plan sales. So those are the asset classes we see growth opportunities in.”

Aldar RAK — Aldar is building 2,000 residences on Ras Al Khaimah’s Al Marjan Island. Picture: Aldar

The recent lifting of Covid restrictions in China is also “extremely significant” for Aldar, as it will boost tourism and property sales, with a direct positive impact on the company’s hotels, malls, and retail business, Fewer added.

“The timing is perfect for us because we are seeing Abu Dhabi emerge into the spotlight for global real estate investors.

“China has been closed and now we see it reopening with a lot of pent-up savings, pent-up travel and investment demand, and we’re ideally positioned to take advantage of that.”

Fewer added: “About a third of our sales in the UAE are effected through non-UAE nationals – international expats, and investors – that’s the highest level we’ve ever seen and we see a lot of further upside in that.”

Aldar would consider more fundraising through bonds or sukuks, or leveraging with bank loans, as it acquires more assets in the market in future, the chief finance officer added.

The company on Thursday recommended a dividend of AED0.16 per share, representing a total dividend payout of AED1.3 billion in 2022.

Aldar’s chairman Mohamed Al Mubarak said: “The UAE economy is demonstrating remarkable stability in the face of global economic headwinds, with the country forging a confident path as a premier investment, business and lifestyle destination.

“Against this backdrop, real estate market fundamentals remain robust, underpinning Aldar’s bold steps to play a pivotal role in the sustainable development of the sector and the wider economy.”