National Bonds to offer up to 4% profit in 2017, says CEO

Company plans to develop and rent out residential projects for recurring revenue

Image used for illustrative purpose.

Image used for illustrative purpose.

National Bonds Corporation, a Shariah-compliant saving and investment company in UAE, will offer nearly the same profit rate for 2017 as in the previous year, its chief executive said.

"At the moment, we are aiming to offer profit rate at nearly the same level as 2016 because we see increasing interest rates in the market and want to be competitive," Mohammed Qasim Al Ali, CEO of National Bonds, told Khaleej Times in an interview.

National Bonds offered up to four per cent in annual returns for 2016 to bondholders.

Al Ali said the company would invest Dh900 million to develop real estate projects in the UAE this year, with the first project being launched in Reem Island, Abu Dhabi. The second project will come up in Satwa near City Walk, with both targeted at the upper middle class.

In order to ensure a consistent flow of revenue, National Bonds plans to rent out the new developments rather than sell it, Al Ali said.

"2018 will witness our first project in Abu Dhabi on Reem Island for Dh800 million. Called Reem Tower, it's a 40-storey project housing 330 apartments targeted at the upper middle class because it a niche luxury property. We will rent it because the sales market is flat at the moment. We have to be flexible to create steady income," Al Ali said.

Reem Tower construction will start in mid-2018 and take two years to complete. Five companies are bidding for the contract and the winner will be announced in June 2018.

"We have also bought three plots to develop a project near City Walk, Dubai. The single building project will house 147 units aimed at white-collar workers. This will also be rented out in order to diversify our portfolio," he added.

National Bonds will soon invite bids for the Dh100 million project and will award the contract in March-April. It is slated to be complete in 14 to 16 months, Al Ali said.

The company recently acquired a new mall in Dubai Investment Park at a cost of Dh64 million and has rented it out to a retailer.

"This was the first commercial asset we bought as we changed our strategy. When the market is going through a correction, especially rentals, we opted to secure a long-term adjustable lease. This strategy is paying off well," said Al Ali.

Top buyers
National Bonds has 824,000 subscribers from over 200 nationalities. It rewards buyers with prizes worth Dh37 million annually. UAE citizens make up 23 per cent of subscribers while Arab expatriates contribute 24 per cent. Asians contribute about 40 per cent, with Indians topping the list followed by Pakistanis and Filipinos.

Last year, National Bonds raised over Dh2 billion, with total assets reaching Dh6 billion.

"We have funds worth of Dh6 billion from our bond holders and it generates enough cash to self-sustain. We hardly borrow from banks," Al Ali said.

Because of the highly liquid nature of business as customers can redeem bonds after one month, National Bonds keeps about 63 per cent of funds in liquid form, he added.


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