DUBAI: Abu Dhabi's Aldar Properties reported a 36 percent rise in first-quarter net profit on Thursday as costs fell and earnings from its rental business surged.

Aldar, like other developers in the United Arab Emirates such as Dubai's Emaar Properties, has diversified its income away from property sales and into recurring revenue businesses — such as residential, office and retail rentals, plus hotels and hospitality.

This has helped mitigate volatility in the country's real estate sector — which has gone from boom to bust to boom again — and Aldar has now reported rising profits in seven out of the last eight quarters.

It made a net profit of AED618 million ($168.3 million) in the three months to March 31, it said in a bourse statement. That compared with a profit of AED453.4 million in the corresponding period of 2014.

Analyst SICO Bahrain had forecast Aldar — builder of Abu Dhabi's Formula One circuit — would make a quarterly profit of AED509.2 million.

Aldar's first-quarter revenue fell 19.5 percent to AED1.38 billion, year-on-year, but its quarterly gross profit margin rose to 47 percent, from 20 percent.

The higher margin was due to "a significant improvement in the quality of our earnings", Chief Financial Officer Greg Fewer said. "This is set to continue," he added.

Quarterly gross profit from recurring revenue jumped 61 percent to AED368 million.

Aldar's first-quarter revenue included AED579 million from property development and sales, AED453 million from investment properties — residential, office and retail rentals — and AED157 million from its hotel business.

Direct costs dropped to AED737.5 million, from AED1.37 billion in the prior-year period.

The company's borrowing costs fell to an average of 2.75 percent, from 5 percent a year earlier, Fewer said, after it paid off some debt and ratings agencies upgraded the company.

This enabled finance charges to fall 59 percent quarter-on-quarter, Fewer said. The company booked property sales and reservations of AED1.2 billion in the first quarter.