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Sun 30 Nov 2008 04:59 PM

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Gov't backing to help Aldar, Sorouh weather storm

Citigroup says Abu Dhabi able to finance, and ultimately buy, all projects in progress.

Abu Dhabi real estate developers Aldar Properties and Sorouh Real Estate could fare better than expected amid the global financial crisis as they continue to benefit from invaluable government backing, Citigroup said on Sunday.

Current account surpluses and sovereign wealth amassed in recent years means that Abu Dhabi is able to finance - and ultimately purchase - all of their projects now in progress, the bank highlighted in a report.

"Aldar and Sorouh are enjoying government backing: near zero cost land grants, development approvals and explicit/implicit financial backing," said Citigroup’s Hasnain Malik.

Investors may have become increasingly wary as they expect foreign demand and financing to weaken in the current global economic environment, but Manlik noted that while this would inevitably impact potential price growth, these sources of capital were not "essential to the viability of existing projects".

On top of this, he said there remained enough "unsatisfied pent-up demand" to ensure that demand for residential property in Abu Dhabi continued to outstrip supply over the next few years.

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