Credit crunch will not delay projects - Sorouh

Abu Dhabi developer expects Q3 profit to top previous quarter due to increased sales.
Credit crunch will not delay projects - Sorouh
BUMPER QUARTER: Sorouh said profit growth would be better than the second quarter. (ITP Images)
By Jason Benham
Mon 06 Oct 2008 10:55 AM

Abu Dhabi's Sorouh Real Estate said on Monday that the global credit crunch would not delay its projects and saw no problems finding financing despite tightening liquidity.

"We are going ahead with our projects as planned... It will not impact serious developers like Sorouh," Chief Executive Mounir Haidar told newswire Reuters.

"Banks will lend to serious developers," he said, adding that the firm had no plans to borrow in the near future.

Sorouh, Abu Dhabi's second-largest developer by market value, said last month it was looking at projects in Morocco, Egypt and other countries and would launch the final phase of its 11 billion dirham ($3 billion) Gate Towers on Reem Island at Cityscape.

Sorouh also said in a statement on Monday it had begun construction of the Al Ghadeer project between the emirates of Abu Dhabi and Dubai.

But concerns are mounting that the fallout from the global credit crunch will bring the United Arab Emirates' real estate boom to a halt as liquidity tightens.

Real estate stocks have been tumbling for weeks amid fears that the market is overheating and as a government crackdown on corruption led to the arrest of officials at major property and mortgage firms in the Gulf Arab commercial hub of Dubai.

Haidar said the UAE was not insulated from the global financial crisis but rising demand would shelter it from the worst effects.

"The UAE is an not isolated link from the chain, from the global financial system," he said.

"However, the UAE does enjoy slightly different dynamics. The UAE is an emerging economy and demand is strong. Economic policy is encouraging for people to invest in the region. Therefore, we are optimistic about the future."

Sorouh expects third-quarter profit top the second quarter due to increased sales and the UAE state news agency said on Sunday that a shortage of at least 28,000 housing units in Abu Dhabi this year was still pushing up rents and prices.

The Gulf's oil-fuelled boom has so far protected the region from the major upheavals that have shaken the financial and property sectors in the United States and Europe.

But the global credit crunch does mean tighter liquidity in the Gulf, and that could already be speeding up mergers.

Dubai-based mortgage lenders Amlak Finance and Tamweel said on Saturday they were in talks to agree a $2.4 billion merger, but the news failed to lift their shares.

Sorouh was not planning any mergers itself, Haidar said.

"It is not on our agenda now. We believe we are a self-sustained company. However we do look for right investment opportunities whether through mergers or acquisitions," he said.

"But at times like these you would expect more consolidation."

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