Abu Dhabi’s Sorouh inks 30-year leasing deal

State-backed developer says rental income will 'significantly strengthen' its portfolio
Abu Dhabi’s Sorouh inks 30-year leasing deal
Sorouh has won state housing projects worth $1.5bn since 2009
By Claire Ferris-Lay
Wed 26 Oct 2011 03:38 PM

Sorouh
Real Estate, Abu Dhabi's second largest developer by market value, has signed a
30-year lease agreement for 287 units in its Alrayyana development, the firm
said.

The
developer said it the rental value would “significantly strengthen” its
reoccurring portfolio, in a statement to the Abu Dhabi bourse. The deal was
made at “prevailing market rates,” it added.

The Abu
Dhabi-listed firm said this month it expects government projects to become a
core part of its developments in the short term. The firm has secured housing
projects worth AED5.4bn ($1.5bn) from the government since 2009, and said it is
hopes to win further projects.

Abu
Dhabi in August announced plans to distribute AED2.3bn (about $626m) to more
than 1,400 citizens in the form of housing loans, to build homes or renovate
their properties.

The UAE
capital said in June it had ringfenced AED7bn from its 2011 budget funds for
housing projects and home loans for citizens, and infrastructure spending.

Real
estate prices in Abu Dhabi have declined around 50 percent from their 2008
peaks forcing developers to shift their focus to delivering existing projects
and government projects.

Aldar
Properties, the emirate’s biggest property developer, in January sold assets
including a Ferrari theme park and convertible bonds to the government for
AED19.2bn ($5.23bn) to pay off its debt.

The developer in August posted four-fold surge in
second-quarter net profit to AED125m ($34m) as it handed over more units and
saw a sharp drop in bad debt provisions.

Profits for the first half were AED202m, up 33 percent from
the year-earlier period.

Jones Lang LaSalle warned this month that Abu Dhabi’s real estate
market may see fresh pressure in the fourth quarter as an additional 11,000
homes are released to the market.

Average
real estate prices in the capital declined seven percent to AED 11,000 per sq,
representing a 49 percent decline from their peak in 2008, the consultancy said.

The rate
for apartments is slightly higher at AED 11,900 per sq m, compared to villas at
AED10,100 per sq m.

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