UAE firms hold majority shares of Egypt’s SODIC, Aldar postpones further investments in Egypt

UAE firms hold majority shares of Egypt’s SODIC, but Aldar says it won’t put any more money in for now

In a recent development, Aldar Properties, an Abu Dhabi-based real estate developer, has announced that it will hold off any further investments in Egypt until conditions in the country stabilize. This comes as Aldar reported a 22 percent jump in first-quarter profit.

Aldar, along with Abu Dhabi fund ADQ, acquired about 85.5 percent of the Sixth of October for Development and Investment (SODIC) shares in 2021 for 6.1 billion Egyptian pounds ($198m). The investment was seen as a platform to expand the company’s real estate portfolio in Egypt.

However, SODIC recently reported a 17 percent decline in net profit in the first quarter and canceled 21 percent of gross contracted sales. Faisal Falaknaz, Aldar’s acting chief finance and sustainability officer, stated, “We are taking a very cautious approach to launching projects…We are not putting any more money into the business until things stabilize further.” Despite this, Aldar remains positive about Egypt in the long term.

Companies from the Gulf region have been looking at expansion opportunities in Egypt, given the country’s large market potential. ADQ, for example, bought stakes worth about $1.85bn in Egyptian firms last April.

While Aldar is also considering expansion opportunities in Saudi Arabia, including in Riyadh and Jeddah, it stated that it would only tap into debt markets opportunistically. The company reported a net profit of 836 million dirhams ($228m) in the first quarter, with a 22 percent increase year-on-year, and record quarterly development sales of 4.5 billion dirhams ($1.23bn) due to increased demand from overseas and resident expatriate buyers.

Despite the decision to hold off on further investments in Egypt for now, Aldar reaffirmed its commitment to being a long-term investor in the country. The news reflects the cautious approach some investors are taking in light of economic and financial uncertainties in Egypt.