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In an exclusive interview with PW, Mohammed Al Mubarak, CEO of Aldar Properties, reveals the secret behind the company’s strong performance in the second quarter (Q2) and says Aldar’s balance sheet gives it great confidence in periods of uncertainty. Here are the excerpts.
You have managed to outperform the market by registering a good performance in Q2, 2016. What are the factors behind this performance?
Aldar’s strong results for the quarter are evidence of the progress we have made in developing our business into a more mature and sustainable development, investment and real estate management company. On the development side, we saw an exceptional response to the launch of Yas Acres, our Dh6-billion golf and waterfront development on the northern shores of Yas Island, which we launched in April. Our asset management business continues to contribute healthy recurring revenues with strong occupancy rates across our portfolio of residential, commercial, leisure and retail assets.
We believe there is still ample demand for high-quality products and our strategy for creating desirable destinations and sustainable communities in prime locations in Abu Dhabi is working.
Tell us about your key ongoing projects and their status? Do you plan to launch any new projects later this year?
Aldar has multiple projects ongoing at any one time across our diversified portfolio, and in line with our development guidance, we are committed to launching 1,500 units per year.
In addition to Yas Acres, our residential development projects on Yas Island include West Yas, Ansam and Mayan, all of which are key to Yas Island’s role in shaping the new Abu Dhabi. We are on track to deliver Ansam, our residential apartments on Yas Island, and Al Hadeel, our waterfront apartments on Al Raha Beach during the course of 2017.
Are you planning to cancel, scalebackor postpone any planned projects?
We believe the fundamentals of the Abu Dhabi property market are robust; a sentiment that has been confirmed by the strong sales demand for Yas Acres, which incorporates 1,315 villas and town houses on Yas Island.
After the launch in April, we have almost sold out the first and second phases, and as a result we are bringing forward the launch of the next phase ahead of the original schedule to satisfy demand. At Mayan, more than 75 per cent are sold across the first five buildings.
Do you reckon there will be enough uptakes for your new inventories, given the slowdown in the market?
We are still seeing demand in the emirate for high-quality developments in sought-after locations with luxury lifestyle amenities nearby. Despite some macroeconomic headwinds, the core Abu Dhabi property market remains stable and mature. We are seeing evidence of a flight to quality among property purchasers, which is driving demand for preferred locations within the emirate.
Additionally, foreign direct investment is expected to increase steadily and we have seen evidence of increased interest from foreign investors in the first phase of Yas Acres sales where twothirds of all sales were from non-UAE nationals.
What are the growth prospects and challenges of the Abu Dhabi market?
The Abu Dhabi real estatemarket has matured over the past eight years and we are now seeing a stabilisation. This has been aided by the introduction of a real estate law, which helps create a more professional and regulated property market. We continue to see opportunities for high-quality products at the right price. There has been a significant amount of investment, increasing its desirability for residents and tourists alike and Aldar is a central facilitator in this transformation.
One of the factors that helpedmitigate theeffects of low demand was the limited new supply during the first twoquarters. With the market expected to see moresupply, canyou register strong performance in the coming quarters?
Aldar has developed a reputation for building highly desirable destinations and communities such as Yas Island, Al Raha Beach and Shams Abu Dhabi.
We are continually evolving our sales approach and have set up a dedicated sales centre for Yas Acres. The immersive experience that we have sought to create helps prospective buyers gain a sense of what it will be like to live in Yas Acres.
Our healthy balance sheet gives us great confidence in periods of market uncertainty and the recent upgrade by S&P Global Ratings reflects our financial strength.
With the Abu Dhabi government expected to continue with its austerity measures due to low oil prices, do you think the market will possibly slide into a more difficult phase in coming quarters?
Oil price doesn’t dictate our business strategy, but we continually plan for all scenarios. Occupancy in our retail, commercial and leisure properties is in line or above that of 2015 and occupancy in our hotels business is ahead of the Abu Dhabi market.
Aldar recorded more than Dh1 billion in sales in the second quarter of 2016, mainly driven by the huge demand for Yas Acres. This brings our total sales for 2016 to more than Dh2 billion, supporting our confidence in the resilience of the Abu Dhabi market.
What would you like the government or industry players to do to revive sales and demands?
The government of Abu Dhabi has led the successful diversification of its economy and has been a driving force in the maturation of the property market. This has resulted in a growing population and with it, continued strong demand for high-quality homes, offices and leisure destinations. Initiatives such as the recently implemented Abu Dhabi real estate law show the government is committed to a fair and transparent property market, encouraging local and international investment alike.
Source: Syed Ameen Kader, Special to PW