Aldar eyes rentals, smaller projects post-merger

Aldar Properties, Abu Dhabi’s biggest real estate developer, will focus on rental income and smaller projects instead of large developments in order to avoid the risk of becoming overstretched again, a senior executive said. Majority state-owned Aldar piled on debt after being tasked with building trophy assets for the Abu Dhabi government, including a Formula One circuit, the Yas Island entertainment district and lavish waterfront developments. Then the company and other developers were hit hard when a property bubble burst in 2008-2010, pushing real estate prices down by more than 50%. The government stepped in with a $10bn rescue for Aldar and last year moved to merge Aldar with smaller rival Sorouh Real Estate to create a business with $13bn of assets. The post-merger firm will focus more on earning income from malls, hotels and other rental properties which it owns, along with building small phased developments, Gurjit Singh, the company’s Chief Development Officer, told the Reuters Middle East Investment Summit last week. “We are looking at a larger and more expansionary recurring income theme,” Singh said. “We have refocused ourselves on very small phased developments. Whatever Aldar did in the past, in terms of creating destinations, is now providing a multiplier effect by improving value of locations for us and the end user.” Aldar’s strategy mirrors that of many other property firms in the wake of the UAE’s property market crash, which pushed Abu Dhabi’s neighbour Dubai close to defaulting on its debt. Dubai’s largest developer Emaar Properties, for example, has shifted some focus from residential projects to retail and hospitality sector business that generates rental income.