Abu Dhabi’s Aldar And Sorouh Report Drop In Q1 Revenues

Abu Dhabi’s Aldar Properties, set to come together in a state-backed merger with Sorouh Real Estate, reported lower quarterly earnings on Tuesday in a fresh indication of continued weakness in the UAE capital’s property sector.

Aldar, Abu Dhabi’s largest developer and builder of the Formula One race track, said on Tuesday that both its quarterly revenue and net profit fell by more than half.

Sorouh, which will delist from the Abu Dhabi bourse in June and merge with Aldar, reported a quarterly profit rise of 21.6 per cent largely due to reversal of contingencies on some completed projects.

Its revenue in the three months to March 31 fell by more than a third to Dhs632.2 million.

Shares of Aldar and Sorouh were down 3.3 per cent and 1.6 per cent respectively on the Abu Dhabi bourse at 0615 GMT.

“The market is seeing continuous supply (of properties) but it is controlled and managed in phases to help the market absorb the supply,” said Sorouh’s chief operating officer Gurjit Singh.

The company is on track to deliver 7,000 units by end of 2014.

Developers in Abu Dhabi are struggling to emerge from the property market collapse in 2009, when prices dropped by nearly 50 per cent from its peak in 2008.

Aldar was rescued with government aid of over $10 billion. In return, it sold assets to the government including the Ferrari World Theme Park.

In a state-backed move to consolidate, the two developers decided to merge operations in March to create a real estate entity with assets in excess of $13 billion.

Aldar made a quarterly profit of Dhs154.3 million compared with Dhs478.2 million in the prior-year period.

Revenue for the quarter slumped to Dhs1.6 billion compared to Dhs3.6 billion in the first quarter of 2012.

Meanwhile Sorouh, the smaller company among the two, reported a profit of Dhs101.6 million compared with Dhs83.6 million during the same period in 2012.

This was largely due to other income of Dhs36.6 million, which the company said was a reversal of contingencies on certain completed projects.

Sorouh’s revenue for the quarter dropped 35 per cent to Dhs632.2 million.