Abu Dhabi’s Sorouh banks on state housing projects

Developer has netted government housing projects worth $1.5bn since 2009
Abu Dhabi’s Sorouh banks on state housing projects
Sorouh has won state housing projects worth $1.5bn since 2009
By Reuters
Mon 17 Oct 2011 02:41 PM

Sorouh Real Estate, Abu Dhabi's second largest developer by market value, expects projects awarded by the government to be a core part of its developments in the short term, its managing director said on Monday.

The Abu Dhabi-listed developer has secured housing projects worth about AED5.4bn ($1.5bn) over the last two years from the Abu Dhabi government, Abubaker Seddiqi al-Khouri told reporters.

"More will come from the government in the coming years. We always considered ourselves part of the government and its 2030 plan," he said.

Sorouh is working with the government to win other projects, he added, declining to give details. It is also in talks with school developers to build a school in the Shams area.

Real estate prices in the capital of the United Arab Emirates have slumped about 50 percent from their peaks in 2008 and investor interest is declining. Developers are relying largely on government projects for their growth.

With hundreds of new residential units ready for delivery before the end of this year, the threat of increasing supply could push rents and prices further down.

Abu Dhabi's real estate market may see an additional 11,000 homes in the fourth quarter, a report by property consultants Jones Lang LaSalle said.

Sorouh has handed over keys to nearly half the owners at its flagship Shams Gate project's Sun and Sky towers. The remaining units will be handed over in the next two quarters, said Gurjit Singh, chief operating officer.

Lower mortgage rates could also "stimulate the market" he added. Mortgage rates are currently around 6 percent, he said.

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