Real Estate

Aldar’s Egyptian sales unhindered by war and economic risk

April 30, 2024, 4:09 AM

Construction work at Egypt's new administrative capital. Real estate 'is a very strong inflation hedge', says Aldar's Faisal Falaknaz

Egypt expansion unaffected
$1bn in sales forecast over two years
Developer ‘extremely optimistic’

Real estate developer Aldar says geopolitical and economic volatility is not affecting its expansion in Egypt.

The Abu Dhabi-listed company acquired its Egyptian subsidiary Sodic in December 2021. Since then, sales have risen by more than 50 percent on a dollar-basis, Faisal Falaknaz, Aldar’s chief finance and sustainability officer, told reporters on Monday.

“What has proven over the past few years is that real estate is a very strong inflation hedge,” Falaknaz said. “We remain extremely optimistic for the long-term prospects of that market.”

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In March, Egyptian authorities devalued the pound and raised interest rates to secure $8 billion from the International Monetary Fund amid massive inflation and an economic crisis that is being exacerbated by the Israel-Hamas war and its impact on shipping through the Suez Canal.

Alongside the IMF support, Egypt is receiving $35 billion from UAE sovereign wealth fund ADQ – the largest foreign direct investment in the country – as part of a deal to build a city along the Mediterranean coast.

ADQ claims that Ras El Hekma will be “competing with the most important cities of the world” by 2052, but plans for its development remain vague, industry professionals told AGBI in March.

Aldar’s Sodic announced last week that it would develop its third Nobu-branded hospitality project in the country.

“The recent developments we’ve seen in Egypt, whether on the ADQ side or the IMF side, have been quite positive,” Falaknaz said.

“I’m not an economist, so I cannot comment on where forex goes, but we remain very optimistic on the outcome.”

Aldar's Faisal Falaknaz said overseas buyers were becoming homeowners in Abu Dhabi — Aldar’s Faisal Falaknaz

On Monday Aldar reported net profit growth of 88 percent for the first quarter of 2024 and said it remained committed to its push outside of its traditional Abu Dhabi-base toward Dubai, Ras Al Khaimah and London, as well as Egypt.

The company is slated to log nearly $1 billion in sales in the next two to three years from projects in Egypt, according to Falaknaz.

Its backlog in the country “remains strongly profitable due to the efforts from the management team there to hedge both from the revenue and cost side”, he said.

In the first quarter of this year, Sodic brought in AED166 million ($45 million) in revenue and AED97 million in sales, Aldar said on Monday.