Union Properties Clarifies 'Takaya' Project Valuation
Union Properties PJSC provides clarity on the valuation of its ambitious 'Takaya' project, addressing discrepancies in cost and value estimates.
Summary
Union Properties PJSC addresses discrepancies between the estimated project value and construction cost of the 'Takaya' project, explaining their strategy to retain ownership of some units to boost recurring income.
Union Properties PJSC, a leading real estate developer in the United Arab Emirates, has recently issued a supplementary disclosure clarifying the valuation of its much-anticipated 'Takaya' project. This announcement comes in response to inquiries regarding the differences between the project's estimated value of AED 2 billion and its construction cost of AED 1.15 billion, as stated in previous disclosures.
The company's latest communication highlights that the construction cost of AED 1.15 billion only accounts for the expenses directly related to building the project. This figure excludes additional expenses such as marketing, sales, management, overheads, and financing, which are integral to the overall project valuation.
Union Properties emphasizes that the total project value of AED 2 billion, as mentioned in their press release, reflects the complete value of the project, encompassing all associated costs. The company's current strategy involves retaining ownership of certain units within the 'Takaya' project rather than selling the entire development. This approach is aimed at increasing the company's annual recurring income, thus providing a sustainable revenue stream.
From an investment perspective, this strategy of retaining ownership can be viewed as a prudent move in the current real estate market. By holding onto some units, Union Properties can capitalize on rental income, which may offer more stability compared to the fluctuating sales market. However, potential investors should consider the company's overall financial health and market conditions before making any decisions.
Given the company's strategy and the current market environment, it may be advisable for investors to hold their positions in Union Properties. This recommendation takes into account the potential for steady income from retained units and the company's efforts to enhance its recurring revenue streams.
In conclusion, Union Properties' clarification on the 'Takaya' project valuation provides valuable insight into the company's strategic direction. As the real estate market continues to evolve, Union Properties appears committed to leveraging its assets for long-term growth and stability.
Source
Summary
The letter, dated October 11, 2024, from Khaled Chaaban, Board Secretary of Union Properties PJSC, addresses an inquiry regarding the discrepancy between the estimated project value of AED 2 billion mentioned in a press release and the project cost of AED 1.15 billion stated in a disclosure. The letter clarifies that the disclosed project cost includes only construction-related expenses, excluding additional costs such as marketing, sales, management, overheads, and financing. The total project value reflects the entire project, and the company's current strategy is to retain ownership of some units to increase annual recurring income, rather than selling the entire project. Therefore, the project's value should not be calculated simply by adding construction costs and estimated profits.
