With $100bn worth of real estate developments planned, project delivery is key for the UAE developer.
Aldar Properties has the largest portfolio of projects in Abu Dhabi, and with 34 square kilometres of land available for development, one of the largest land banks in the Gulf. It is working on two of the emirate’s largest real estate projects - the $40bn Yas island and the $14.7bn Al-Raha beach - and is preparing to launch other major schemes, such as the redevelopment of Mina Zayed on Abu Dhabi island. It is also planning projects overseas through Al-Maabar, a joint venture of Aldar and fellow Abu Dhabi-based real estate firms Al-Qudra Real Estate, Sorouh Real Estate and Reem Investments.
Despite working on a portfolio of nearly $100bn worth of projects, Aldar is still a relative newcomer to the regional real estate sector. It was incorporated by the government in late January 2005 with Ahmed Ali al-Sayegh as company chairman, a position he still holds today.
On 5 April 2005, it listed on the Abu Dhabi Securities Market. Following the initial public offering, the company is now owned by several Abu Dhabi-based institutional investors including government-backed institutions such as Mubadala, Abu Dhabi Investment Company, Abu Dhabi National Hotels Company, National Corporation for Tourism & Hotels, and the National Investor, together with more than 17,900 other investors.
When it was created, Aldar inherited the $1.2bn redevelopment of Abu Dhabi’s central market and in February 2005 launched its second project, the $14.7bn Al-Raha beach, at the time the emirate’s biggest real estate development. It was also appointed by Abu Dhabi government-owned Mubadala Development Company to build the Imperial College London Diabetes Centre building.
Aldar has continued to launch projects at regular intervals over the past three years, teaming up with third-party developers for some of the buildings and housing complexes. It has joint ventures with Etihad Airways and with Abu Dhabi-based Investment Holdings at Raha beach, one with Dubai-based Zabeel Investments on Yas island, and another with the National Corporation for Tourism & Hotels for the Coconut island project.
When chief executive officer (CEO) Ronald Barrott joined the company in 2006, he was quick to move on the issue of procurement to ensure delivery of Aldar’s projects. “Commercially, we have addressed those issues and you will see Aldar doing things in a completely different way from other developers in the marketplace,” he told MEED shortly after joining the company.
Six months later, Aldar formed a joint venture with UK-based Laing O’Rourke to act as contractor and construction manager on the Al-Raha beach project. At the start of 2008, it formalised a similar joint venture with Belgium’s Besix for the construction of the Ferrari World theme park on Yas island.
It has also signed up a range of brands including Movenpick Hotels & Resorts, Marriott, Accor, Banyan Tree, Intercontinental, Ritz Carlton and Oberoi to operate the 32 hotels it has under development, and has established an alliance with US-based Warner Bros Entertainment to build a theme park, hotel and jointly-owned multiplex cinemas. In May 2007, it launched Aldar Academies to increase the number of schools in Abu Dhabi and operate schools at its developments.
Aldar’s number one priority is delivery. With $100bn worth of projects under development, the challenge that lies ahead is substantial. However, it is confident that with its joint venture partners, it will be able to deliver its projects on time.
At the same time, Aldar continues to plan new projects. It has formally launched Mina Zayed, or Al-Falah villas, in Abu Dhabi, and consultants dealing with the company report that more projects are in the embryonic stages.
Aldar’s ambitions are not limited to Abu Dhabi. It has a project in Southern Johor in Malaysia, and earlier this year it launched the Abu Dhabi plaza project with Al-Maabar in Astana, Kazakhstan.
The company is considering options to develop projects in other markets and is also interested in any possible acquisitions that would give it more international reach, although it denies reports that it is looking to acquire a major developer in the UK.
Aldar got off to a stuttering start. Projects such as Al-Gurm had overly ambitious completion dates, work on Mina Zayed was moving ahead before details of the port relocation had been finalised, and the redevelopment of the central market was radically redesigned.
Over the past two years, it has adopted a more measured approach and has pioneered new procurement methods with its contracting joint ventures. But it still has a lot of work to do. Laing O’Rourke and Besix may bring construction management and contracting resources to the deal, but they do not fulfil all of Aldar’s contracting requirements. To some extent, the company is still at the mercy of the market.
Like other government-backed developers, Aldar continues to benefit from cheap land that can be sold on for enormous profit. In 2007, it reported a $1.8bn paper profit from land appreciation. More tellingly, its revenues are starting to generate operating profits, which from a net loss of $45m in 2006 rose to a $32.7m net gain in 2007, with revenues increasing from $51.1m to $334.1m in the same period.
In terms of developing its schemes, the early signs are positive. Dubai-based contractors that previously stayed away from the capital are now moving to Abu Dhabi, and Aldar has been the most popular client to work for. If it can tempt more companies to take the journey south to Abu Dhabi, together with more international contracting firms, it should be able to avoid the capacity crunch and deliver its projects on time.
Date established: 2005
Main business sector: Real estate development
Headquarters: Abu Dhabi
Main business region: Abu Dhabi
CEO: Ronald Barrott
Aldar’s Five biggest projects
Yas island: 24.8 million sq m
Al-Raha beach: 5.6 million sq m
Al-Gurm island: 1.8 million sq m
Al-Raha gardens: 1.1 million sq m
Al-Ruwais: 0.5 million sq m
sq m=square metres. Source: Aldar Properties
Q&A Ronald Barrott, CEO
Ronald Barrott is chief executive officer (CEO) of Aldar and a building engineer by profession, with more than 37 years experience in the construction and development industries. This includes eight years as a managing director and 14 as CEO and chairman.
You have been at Aldar for more than two years. What have you achieved since you joined?
With the full support of the board and the vision and direction of the Abu Dhabi government, we have turned Aldar into what it is today: an inter-national public company in all respects.
That means international corporate governance, transparency, disclosure, financial reporting, and everything you would expect to find in any FTSE 100 company.
That has been demonstrated by investment reports from Goldman Sachs, Merrill Lynch, HSBC and Credit Suisse, and puts us in a club of one in real estate in this part of the world.
Have there been many changes within the company over the past two years?
The company has gone through a restructuring so that it is fit and ready to meet the demands of its ever-growing portfolio of projects.
It has been a busy two years but we now have businesses in place to support the property business, covering property management, asset and fund management and facilities management.
What are Aldar’s ambitions?
Aldar’s aim is to respond to the commercial needs of Abu Dhabi. The emirate has developed a vision based on a sustainable economic model.Growing businesses need to be populated, and these people need homes. The days of expatriates who stayed for three to five years are long gone. Today people travel the world and see this place as a home and a place that can provide a career path.
And what is important to those people? Managed communities with education and healthcare. We have addressed education with Aldar Academies, which will develop 22 schools as part of our totally integrated development model.
Do you have plans to develop overseas?
With Mubadala, we have a project in South Johor, a 25-minute drive from Singapore, and in Kazakhstan we have a similar project to our central market development here in Abu Dhabi. We will expand overseas further in due course, and the way the market is going, I expect oppor-tunities will be forthcoming.
Has Aldar worked independently or does it rely on partners to help it achieve its aims?
The business is large, and we have established businesses to support the core business. Aldar Laing O’Rourke and Aldar Besix, for example, help control the principal elements of our masterplans, while at the same time setting standards for the design and construction. It gives us speed to market.
We also have joint ventures with Tabreed for district cooling, a readymix joint venture, a telecoms joint venture with Siemens and Etisalat, together with several others.
You still tender work where you feel it is applicable. What are your thoughts on the current state of the market?
The prices we are seeing do not resemble the work that contractors are doing.
Labour conditions are a major challenge for the contractors working on your projects. Is Aldar doing anything to help?
We have temporary facilities that are better than most of the permanent facilities that currently exist in this country. We want a happy labour force who want to work. It is critical that you get that right.
What is your biggest challenge going forward?
For companies of this nature, the main challenge is resource. My responsibility is to make sure it can handle growth in a controlled manner. It is not just managing our own people - they cannot do everything. We need to have the right partners in place so that we can deliver. That is what it is all about.
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