DUBAI (Reuters) -Aldar Properties will hold off any further investments in Egypt until conditions there stabilise, a senior executive said, as the Abu Dhabi real estate developer reported a 22% jump in first quarter profit on Wednesday.
Aldar, along with Abu Dhabi fund ADQ, acquired about 85.5% of The Sixth of October for Development and Investment (SODIC) shares in 2021 for 6.1 billion Egyptian pounds ($198 million), which at the time was worth about $387 million.
The investment in SODIC was to serve as a platform to expand the company’s real estate portfolio in Egypt.
On Tuesday, SODIC reported a 17% decline in net profit in the first quarter from the same period in 2022, and said it had cancelled 21% of gross contracted sales in the quarter.
“We are taking a very cautious approach to launching projects,” Faisal Falaknaz, Aldar’s acting chief finance and sustainability officer, said in a media call.
“We are not putting any more money into the business until things stabilise further,” he said, adding the company remained positive on Egypt in the long term.
Aldar issued a bourse statement later on Wednesday to reaffirm its commitment to being a long term investor in Egypt.
Companies from the Gulf have been eyeing expansion opportunities in Egypt which offers a big market for their products and services. Last April, ADQ bought stakes worth around $1.85 billion in Egyptian firms.
However, persistent economic and financial pressures are leading some investors to pause their Egypt plans.
Aldar, whose projects and assets are primarily Abu Dhabi- based is also seeking to expand in Saudi Arabia, Falaknaz said, considering potential opportunities in Riyadh and Jeddah and across all asset classes.
He said the company would only tap debt markets opportunistically, and was in a comfortable liquidity position, with 6.1 billion dirhams in free cash and 4.4 billion dirhams available in undrawn facilities.
Aldar reported net profit of 836 million dirhams ($228 million) in the first quarter, up 22% year on year, while revenue rose 14% to 3.1 billion dirhams.
Increased demand from overseas and resident expatriate buyers resulted in record quarterly development sales of 4.5 billion dirhams.
($1 = 30.7500 Egyptian pounds)
($1 = 3.6720 UAE dirham)
(Reporting by Rachna UppalEditing by Mark Potter)