Aldar Properties PSJC (“Aldar”), today reported a 21% year-on-year increase in revenue to AED 2.01 billion in the second quarter of 2020, due to a strong performance from the development business. Net profit for the second quarter increased 2% from the previous year to AED 484 million.
Revenue growth was driven by robust demand for its prime developments and infrastructure-enabled land, while Aldar continued to earn steady fee income from its third-party development management business. The Abu Dhabi real estate market is being underpinned by government incentives for home buyers, fiscal stimulus measures and programmes to promote private sector growth.
Talal Al Dhiyebi, Chief Executive Officer of Aldar said, “Aldar’s highly sustainable and diversified business model is demonstrating strong earnings power even in a challenging global macro-economic environment.
Abu Dhabi’s real estate fundamentals remains well supported. The market benefits from well managed supply and a strong investor base is displaying confidence and fueling demand for quality developments in prime locations.
Aldar’s development business had a stand-out quarter, adapting quickly to arrange innovative financing packages and to roll out digital solutions, ensuring service excellence for our customers. This drove growth in revenue and profits, and strong cashflow generation.
Our prime investment properties continue to perform solidly, and as the most efficient platform for real estate ownership in the region, we are looking at attractive opportunities to expand our diversified portfolio.”
Business and financial update
Aldar’s Development Management business recorded AED 1.27 billion in development revenues in the second quarter, an 83% year-on-year increase. The growth was driven by strong progress at projects under development, robust inventory sales and the company’s fee-based business, including the AED 5 billion of contracts with the Abu Dhabi Government announced in 2019.
Despite deferral of new project launches, second quarter development sales stood at AED 505 million, on account of strong inventory sales at Nareel Island and Yas Acres, as well as sales of land plots on Saadiyat Island. Investments towards the digital transformation strategy have yielded substantial benefits enabling uninterrupted sales, customer inspections and handovers to continue virtually.
The Asset Management business reported a 21% year-on-year decline in net operating income (NOI), with hospitality and retail properties temporarily closed for much of the period. Occupancy rates across the investment properties portfolio, which includes residential, retail, and commercial assets, stood strong at 88%. While Aldar-owned hotels were unavailable for commercial activity during most of the second quarter, they were provided to the government for quarantine purposes to support national efforts to combat Covid-19.
Meanwhile, the Adjacent Businesses segment saw a stable profit performance during the quarter, despite the challenging environment and temporary school fee reductions. The businesses, which include Aldar Education, property management firm Provis, facilities management company Khidmah and Saadiyat Island district cooling assets, have expanded significantly over the past several years and now make a significant contribution to Aldar’s revenue and profit mix.
Aldar sustained a healthy financial position with access to AED 5.9 billion of free cash and undrawn, committed credit facilities as at 30 June 2020, following payment of Aldar’s 2019 dividend of AED 1.14 billion in April 2020. Debt levels across both Development Management and Asset Management remained well within the company’s established debt policies.
