The books now look promising for Abu Dhabi’s Tourism Development & Investment Company
TDIC (Tourism Development & Investment Company) might have reported a net loss of AED1.27bn ($346m) in 2011, but this was primarily due to a paper write down. The books now look promising. The company’s portfolio of operating assets was valued at approximately AED9bn in 2011, up 147 per cent from AED3.64bn in 2010. With many of its residential projects coming to fruition last year, sales of these properties totalled AED2.1bn, with the company claiming it had more than AED2bn in cash available at the end of the year.
Ahmed al-Fahim, executive director of marketing, communications, sales and leasing at TDIC, says this, combined with strong cost control, meant the company was on track to show positive gross earnings in 2012 for the first time in its six-year history.
Abu Dhabi’s real estate and hotel sectors – the foundations of TDIC’s business – are both becoming increasingly competitive due to a surge in property supply over the past 18 months. Combined with relatively weak demand, this surplus has reduced rents and hotel rack rates compared with the boom years.
In the first quarter of 2012, 2,900 additional residential units were completed in Abu Dhabi according to US property consultant Jones Lang LaSalle, taking total residential stock to 199,800 units. Although a large proportion of the residential pipeline announced prior to 2008 has been delayed, the aggregate supply could still reach 238,000 units by the end of 2014. In addition, average residential asking prices within investment areas dropped by 4 per cent in the second quarter, to AED10,500 a square metre, representing a 51 per cent decline from the peak of AED21,500 in the fourth quarter of 2008.
Despite the property supply boom, a modest upswing in the real estate market, along with the continued increase in leisure and business visitors to Abu Dhabi, will contribute to the success of TDIC’s developments.