By Jason Benham
Abu Dhabi developer to cut prices and ease payment plans on Alghadeer project.
Abu Dhabi developer Sorouh Real Estate said on Sunday it was cutting prices and easing payment plans on an 8 billion dirhams ($2.18 billion) project to help customers weather the global financial crisis."Sentiment is positive in the market but price is playing a determining role," Sorouh Chief Executive Mounir Haidar said on the sidelines of Cityscape being held in Abu Dhabi on Sunday.
Sorouh said in a statement it would cut selling prices, rephase and consolidate, and reschedule payment plans for Alghadeer, a mixed-use project located between Abu Dhabi and Dubai.
The global financial crisis has battered the real estate sector in the UAE. But UAE capital Abu Dhabi, home to most of the country's oil, has fared better than most. Many developers across the country have moved to ease payment plans as customers suffer, however.
Haidar declined to put a number on the price reduction but told reporters "it will be substantial".
Haidar said Sorouh has not cancelled any of its projects.
The company's managing director Abubaker Seddiq al-Khouri said Sorouh was "lucky" to have sold more than 60 percent in each of its projects, enabling them to go ahead.
Sorouh currently has more than 70 billion dirhams worth of projects under development in the UAE and internationally.
Haidar said funding was not a problem as state aid had helped restore liquidity to the financial sector.
"We have banks granting mortgages so money is flowing. The government has also injected money in some financial institutions but banks are assessing the creditworthiness of customers," he said. (Reuters)
Hydra Properties should take note from the industry leaders like Sorouh. Hydra is actually raising prices in this environment not passing on cost savings to customers. It makes many wonder if Hydra Properties intends to be around for the long term or is simply a company with little background or experience whose only intention was to take money in a booming market. It also makes us wonder if the truth is that Hydra have already spent all the payments by their customers to date on TV shows and promotion and are now they are cash strapped. To date not much is built for a construction company that is 3 years old, with little to show for it and a lot of angry customers. It seems whenever Hydra Properties makes the news they are simply defending themselves against many unpleasant allegations.
This is a very positive annoucement that will be welcomed by customers. Alghadeer is a good project that, according to Morgan Stanley's January 2009 report, had stood up best in pricing relative to other schemes in the current market. Sorouh should be congradulated that it is supporting their customers. More transparency is needed and i for one welcome the news that companies like Sorouh have recognised they don't have a business without satisfied customers. Let's see the detail, but this bodes well for having some confidence for Alghadeer.
Hydra Properties should learn lessons from other developers like Sorouh.