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Thu 24 Apr 2008 10:22 AM

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Abu Dhabi boom drives profits

Sorouh, Aldar announce triple-digit revenue growth from epicentre of emirate's real estate action.

Sorouh Real Estate and Aldar Properties, the two biggest property developers in Abu Dhabi, said first-quarter profit about tripled on higher sales in the United Arab Emirates capital.

Net income in the three months to March 31 at Sorouh -- the smaller of the two by market value - surged to 361 million dirhams ($98.31 million), or 0.14 dirhams per share, from 114 million dirhams, or 0.04 dirhams per share, in the year-earlier period, it said in a statement on Thursday.

Revenue more than doubled to 624 million dirhams from 280 million dirhams, mainly after selling land at its Shams residential and commercial project on the Abu Dhabi island of Reem, where it converted the ownership structure to freehold from leasehold, it said.

"We believe profits are sustainable because we have this change in property law where leasehold can become freehold, and sales would increase revenues," Sorouh Chief Financial Officer Ala Khanak told newswire Reuters. "Sorouh also has lots of projects under development."

Prime Group brokerage had, in a Reuters survey last month, expected Sorouh to make a first-quarter profit of 378 million dirhams.

Abu Dhabi rival Aldar Properties, in a statement late on Wednesday, posted an almost tripling in first-quarter profit on land and property sales.

Net income at the second-largest UAE property developer by market value surged to 1.37 billion dirhams, or 0.59 dirhams per share, from 450.67 million dirhams, or 0.26 dirhams per share, in the year-earlier period, state-controlled Aldar said. "It is the sales of land and property that drove net profit," Shafqat Malik, chief financial officer told Reuters.

Deutsche Bank and Dubai-based investment bank Shuaa Capital had forecast in the Reuters survey last month that Aldar would make a first-quarter profit of 1.1 billion dirhams and 650 million dirhams respectively.

Shares of Sorouh are up 13.2% this year, compared with a 5.4% decline in Aldar. Abu Dhabi's main stock index is up 10.2%. (Reuters)

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