Aldar Properties Pauses Further Investments in Egypt Amidst Market Conditions

Aldar Properties, the Abu Dhabi-based real estate developer, has announced its decision to postpone additional investments in Egypt until market conditions stabilize, according to a senior executive. The move comes as Aldar reported a notable 22 percent increase in first-quarter profit.

In 2021, Aldar, in collaboration with Abu Dhabi fund ADQ, acquired approximately 85.5 percent of Sixth of October for Development and Investment (SODIC) shares for 6.1 billion Egyptian pounds ($198 million). This strategic investment aimed to serve as a foundation for expanding Aldar’s real estate portfolio in Egypt.

However, concerns arise as SODIC disclosed a 17 percent decrease in net profit for the first quarter compared to the same period in 2022. Additionally, the company reported the cancellation of 21 percent of gross contracted sales in the quarter.

Faisal Falaknaz, Aldar’s Acting Chief Finance and Sustainability Officer, expressed a cautious approach to launching new projects in Egypt during a media call on Wednesday. He stated that the company would refrain from allocating further funds until the business environment stabilizes. Despite the current caution, Aldar remains optimistic about Egypt’s long-term prospects.

In a subsequent bourse statement, Aldar emphasized its commitment to being a long-term investor in Egypt. The company’s decision reflects a broader trend of Gulf-based firms exploring opportunities in Egypt’s vast market. However, economic and financial challenges in the region are prompting some investors to reassess their plans.

While Aldar’s primary focus is on Abu Dhabi-based projects and assets, the company is exploring expansion opportunities in Saudi Arabia. Falaknaz mentioned potential ventures in Riyadh and Jeddah across various asset classes.

Aldar aims to leverage debt markets opportunistically, emphasizing its comfortable liquidity position. The company reported 6.1 billion dirhams ($1.6 billion) in free cash and 4.4 billion dirhams ($1.2 billion) available in undrawn facilities. In the first quarter, Aldar’s net profit reached 836 million dirhams ($228 million), marking a 22 percent year-on-year increase. The robust performance was driven by a 14 percent rise in revenue, reaching 3.1 billion dirhams ($844 million), attributed to heightened demand from overseas and resident expatriate buyers, leading to record quarterly development sales of 4.5 billion dirhams ($1.23 billion).

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