Aldar Properties <ALDR.AD>, the largest property developer in Abu Dhabi, on Thursday reported a 30 percent fall in third-quarter profit due to higher costs and the lack of government infrastructure contracts that benefited earnings a year ago.
The state-owned builder of Abu Dhabi’s Formula One circuit made a net profit attributable to owners of 421 million dirhams ($114.7 million) in the three months ended Sept. 30, its financial results showed.
That compared with a net profit attributable to owners of 598 million dirhams in the same period a year earlier.
Revenues in the third quarter totalled 1.5 billion dirhams, up 8 percent year-on-year.
Costs were 916 million dirhams in the quarter versus 792 million dirhams in the prior-year period, while depreciation and amortisation was 65 million dirhams compared to 40 million dirhams.
The higher costs related to Aldar’s acquisition of assets worth $1.01 billion earlier this year from Abu Dhabi’s Tourism Development & Investment Company.
“The one-off costs have been loaded into this quarter but depreciation will roll into the next quarters,” Greg Fewer, chief financial officer said on a conference call with reporters.
A sluggish economy in Abu Dhabi partly due to lower oil prices has hit the real estate in the last two years. The government announced a 50 billion dirham stimulus plan in June.
Aldar has previously taken on infrastructure projects on behalf of the Abu Dhabi government, which helped to boost its revenues.
Despite the challenges in Abu Dhabi’s real estate market, Aldar remains bullish, given the recent government initiatives to bolster the economy, Fewer said.
As well as the 50 billion dirham stimulus plan there have been amendments to the federal law to create more longer-term residences.
“We are more focused and encouraged by the foundations of strength rolling in the economy,” he said.
Aldar also plans to acquire some data centre assets on the back of the rise of e-commerce and digitalisation of the economy, Fewer said.
ABU DHABI (Reuters)