Aldar increases marketing spend as profit falls

Abu Dhabi developer Aldar boosted its spending on marketing in the second quarter as profits declined amid a tough regional property market. (Reuters)

LONDON: The Abu Dhabi-based property developer Aldar ramped up its marketing spend in the second quarter of the year in an effort to bolster declining revenues and profits.
The company posted a 5.6 percent decline in quarter-on-quarter net profit in its results published on Thursday. Revenue also dropped by 20 percent to 1.35 billion dirhams ($367.6 million) in the second quarter, according to the company statement.
Net profit was 620.2 million dirhams in the second quarter, down from the 657.4 million recorded in the same quarter last year.
Marketing expenses increased to 23.04 million dirhams in the second quarter of the year, compared to 6.17 million dirhams spent in the same time period last year.
The higher expenses were due to “increased spend promoting Aldar properties throughout the region, particularly Saudi Arabia,” the developer said.
The company has also heightened its focus on mid-income residential property buyers. In April, Aldar launched its 1,272 unit, 1.3 billion dirhams mid-market residential development, called The Bridges, on Reem Island in Abu Dhabi.
“The unprecedented response to The Bridges, which sold out in a matter of weeks, showcases the opportunities presented by the mid-market and supports our strategy to continue to focus on this segment,” said Mohammed Khalifa Al-Mubarak, CEO of Aldar Properties.
The project contributed to Aldar’s 1.8 billion dirhams of development sales value in the first six months of 2017.
“Overall market uptake of mid-market residential product is strengthening, in contrast to high-end product,” said Mohammed Kamal, research director at Arqaam Capital.
“This should bode well for sales growth continuity and volumes at Aldar, improving earnings visibility going forward. Taking cues from Dubai, we see far more price and yield consciousness on the part of buyers in Abu Dhabi, in contrast to previous cycles. Developer margins should continue to normalize in the medium term as a result,” he said.