Sorouh reviews new projects amid market slowdown

PROJECT DELAY: Abu Dhabi's Sorouh is delaying new projects and concentrating on sales on its current developments. (Getty Images)

Sorouh, Abu-Dhabi’s second largest developer, has revealed it is reviewing new projects until sales on current developments are completed.

Speaking on the sidelines of the Abu Dhabi Real Estate and Investment Show (IREIS), chief property development officer Gurjit Singh told Arabian Business: “Why would we want to launch something when the market is stressed out? It is prudent for developers to exhaust current stock before launching new ones.”

Gurjit, who oversees a $19 billion portfolio in the UAE and abroad, declined to give details about new projects.

He added: “The projects we haven’t launched yet will be more meticulously and better planned, they will have a sharper focus on cost management.”

Although analysts feel the Abu Dhabi property market will perform better than neighbouring Dubai this year, the UAE’s richest emirate has not been immune from the international crisis.

Singh said property prices in Abu Dhabi were down 10-15 percent compared to this time last year and that he expected values to slide a further five percent in the next six months.

Limited supply and high demand would continue to push rents up, which were 20-25 percent higher than Dubai, Singh added.

Emaar chairman Mohamed Alabbar said on Monday real estate prices in Dubai could fall on average by 20 percent.

While stressing that Sorouh had raised enough funding to complete all developments currently under construction, Singh said the company could look to raise debt this year.

“We will borrow from the banks and go to the debt markets as and when we need. It will be challenging as the global financial markets are still quite stressed.”

In July the developer issued four billion dirhams ($1.08 billion) worth of Islamic bonds to finance its Shams Abu Dhabi and Saraya projects-both parts of the company’s massive 633 hectare scheme on Al Reem Island.

Singh dismissed recent speculation as "rumour" that Aldar, the largest developer in Abu Dhabi, was mulling a merger with Sorouh.

He also stressed the developer would not be making any layoffs.

“We are concentrating on the single entity called Sorouh and delivering value for our shareholders,” he said.

Sorouh has a property portfolio of $70 billion and employs around 300 staff.

The group is behind a number of large-scale community projects including the $25bn Shams Abu Dhabi and Alghadeer, a development that will house 18,000 residents when it is completed in 2012.

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