(Adds details from media call, property data)
By Stanley Carvalho
ABU DHABI, May 15 (Reuters) - Abu Dhabi’s largest developer Aldar Properties reported a 5 percent rise in first-quarter profit on Tuesday, beating analysts’ forecasts but mostly due to revenue from a stake sale.
The property market in United Arab Emirates remains under pressure as a slowing economy in the last two years has depressed values and rentals, but Aldar said it was optimistic about sales of properties under development.
“We continue to see an active and healthy off-plan market,” Greg Fewer, Aldar’s chief financial officer, said on a media call, adding that the recent acquisition of some assets in Abu Dhabi would add to the company’s earnings.
Off-plan market refers to the sale of a property before construction has been completed.
Still, Aldar’s revenues in the first quarter were virtually flat at 1.50 billion dirhams versus 1.58 billion dirhams a year ago, but gains of 30.3 million dirhams from the disposal of a local district cooling joint venture lifted its attributable net profit to 669 million dirhams ($ 182.2 million) in the three months ending March 31, 2018.
SICO Bahrain and EFG Hermes forecast that Aldar, developer of Abu Dhabi’s Formula One circuit, would make a net profit of 593.28 million dirhams and 602.53 million dirhams respectively.
Aldar’s Gulf peers in Dubai, Emaar Properties and DAMAC Properties have also been hit by weak sentiment in Gulf property markets.
Property consultancy JLL said in its first quarter report that prices for prime villas in Abu Dhabi declined 14 percent from a year earlier and prices for apartments dropped 10 percent year-on-year. (bit.ly/2wIV3W5)
Deteriorating sentiment and lower transaction volumes have driven these falls with average prices expected to fall further in 2018, it said.
State-linked Aldar agreed this month with Abu Dhabi’s Tourism Development & Investment Company (TDIC) to acquire real estate assets worth 3.7 billion dirhams. The cash transaction is expected to close in the second quarter 2018, Fewer said.
Aldar has a capital expenditure programme of 5.4 billion dirhams for the next two years and could increase this, it said earlier this year. The company is also on track to “successfully” refinance its dollar sukuk due in December, Fewer said. In March, Aldar won approval from shareholders to increase foreign ownership in the company to 49 percent from 40 percent. Currently, foreign ownership in Aldar is about 26-27 percent, Fewer said. ($1 =3.6730 UAE dirham) (Reporting By Stanley Carvalho; Editing by Saeed Azhar and Susan Fenton)