| 13 November, 2017

Aldar Properties to buy 21-storey tower in Abu Dhabi

Property firm says deal for International Tower at Capital Gate district will conclude this year

First phase of Water’s Edge development sold out days after launch

First phase of Water’s Edge development sold out days after launch

Aldar Handout via Thomson Reuters Zawya
Aldar Properties has announced that it is buying International Tower, a 21-storey, 41,000 square metre commercial office building in Abu Dhabi's Capital Gate district.

The tower, which was developed by IndustRE, a property fund managed by SinoGulf Investments, was completed in 2012.

Speaking on a media call discussing Aldar Properties' third quarter results, the company's chief financial officer, Greg Fewer, said that a binding sales and purchase agreement for the tower had been signed, but he declined to discuss the terms of the deal until it completes, which is expected to be by the end of the year.

Fewer said that the tower was "directly adjacent to our first acquisition in the commercial office space" – the Daman House office building which it bought early last year and which is fully occupied. The company did not say how much of International Tower is currently occupied.

Jassem Busaibe, Aldar Properties' chief asset management officer, described International Tower as "a very good Grade A building acquired, hopefully, at a very good entry price".

Earlier, Aldar Properties had announced that its chief executive, Mohamed Khalifa Al Mubarak, is being appointed as chairman, and that chief development officer Talal Al Dhiyebi is becoming chief executive with immediate effect. Al Mubarak replaces former chairman Abubaker Seddiq al Khoori, who became chairman following the merger between Aldar Properties and Sorouh Real Estate in 2013.

Aldar Properties reported an 18.5 percent drop in third quarter net profit to 601 million UAE dirhams ($163.6 million), and a 27 percent drop in revenue to 1.38 billion dirhams.

Fewer said that the comparative figures for 2016 had been inflated by a sale of land at Al Raha Beach as part of an agreement with the Abu Dhabi government undertaken back in 2010/11.

"Excluding the effects of this one-off transaction, Aldar has delivered a 27 percent increase in revenue to 1.38 billion UAE dirhams and a 38 percent increase in gross profit to 588 million dirhams this quarter," he said.

The company's development business achieved sales of 604 million UAE dirhams during the quarter - mainly as a result of the sell-out of the first phase of its 2,255-unit, 2.4 billion UAE dirham Water's Edge project. However, this was about 40 percent lower than the 1 billion UAE dirhams worth of development sales in the same quarter last year.

Recurring revenue was in line with last year at 360 million UAE dirhams, and Fewer said that occupancy rates for its office and residential portfolio was over 90 percent, with residential occupancy increasing by 1 percent to 91 percent.

"That's the first time in a number of quarters that we've seen an increase in occupancy across our residential portfolio, so we think there are reasons to be optimistic about what we are seeing in the Abu Dhabi market," he added.

Year-on-year net profit for the nine-month period is 9 percent lower at 1.86 billion UAE dirhams, while revenue is almost 11 percent lower at 4.31 billion UAE dirhams.

According to property consultancy JLL's Abu Dhabi Q3 market summary, which was released last month, vacancy rates in Abu Dhabi's prime office market increased by 2 percent year-on-year to 22 percent of available stock. Vacancy rates are also likely to edge up further, with 170,000 square metres of new space due to be delivered by the end of this year.

"Demand for office space remains limited, with some companies downsizing to smaller units," the report said.

© ZAWYA 2017