Work on Dh20bn Al Ghadeer starts

Abu Dhabi-based real estate developer Sorouh Real Estate has started infrastructure works of the Dh20 billion-Al Ghadeer development, said a senior official. The project is located on the Dubai-Abu Dhabi border.

“The company does not have any problem with regard to liquidity at present. It collected Dh4bn loans from international and local finance institutions through sukuk. The company has money to complete its projects,” Gurjit Singh, Sorouh’s Chief Property Development Officer, said.

He said the ongoing construction of Al Reem Island project has exceeded expectations and the firm is trying to finish the project before the scheduled date to take advantage of the drop in prices of building materials, especially iron.

He called banks to continue financing real estate developments in the UAE, in general, and Abu Dhabi, in particular. On the delay of Al Lulu Island project launch, he said: “Months before the start of the crisis, Sorouh announced the project’s design will be complete by this year-end. It is about to complete the final engineering and architectural design, which is due to be unveiled in the beginning of 2009.”

Zawya

Developers see challenges ahead

Despite tight credit weighing down on prices of property purchased in the secondary market, developers say a combination of continued strong demand and limited supply will sustain prices in the long term.

Prices have dipped in the past few days after dramatic growth in the first half of the year as property speculators found the supply of ready buyers drying up, while terms for financing home ownership have become more stringent.

“The severity of the global situation will bring challenges. Our real estate sector may see some short-term margin compression, mostly affecting the smaller developers, but overall the fundamentals have not changed and it [the sector] will prosper over the coming years,”

said Abubaker al Khouri, the managing director of Sorouh, in a speech today in London.

“At the heart of that future growth lie the fundamentals of strong demand and as yet limited supply,” he said, adding that he saw Abu Dhabi as the best property market worldwide. Earlier this month, the Chamber of Commerce forecast a shortage of at least 28,000 units this year.

Developers have not reduced their prices for new properties, but they are shifting their focus from speculative buyers to end-users.

“What we have seen in the last six months is more-informed buyers, because now the market is approaching what we call the end-user market,”

said Zaid Ghoul, the chief financial officer of the Dubai-based developer Union Properties.

“So they will be more interested in hooking themselves up with a developer that has reputation and that is large enough to deliver. We are raising prices as we go along because we are releasing a product that is almost complete. We are targeting the end-user market.”

Prices of phase five in the developer’s Uptown project in Motor City are ranging between Dh1,450 (US$395) and Dh1,550 per square foot, compared with Dh700 and Dh800 last year for similar types of units in previous phases. Given the current shortage of supply, developers whose projects are near completion focus on their near-term availability. Profile group is advertising Marina Heights, two towers in Abu Dhabi, as “the first project to be completed on Al Reem Island”. Units are on offer at no less than Dh2,950 per sq ft. Hydra Properties’s average residential price on Al Reem Island is about Dh3,000 per sq ft, with office space going for Dh3,700.

The only middle-income freehold area in Abu Dhabi remains Al Reef, from Manazel Real Estate, where units are changing hands at Dh1,100 per sq ft. “Although prices have recently dropped from what some may say were unrealistic prices, it is important to note that they have risen fast over the last months and people are still making profits,” said Michael Wilde, the general manager of Manazel. “Our Al Reef units are still, even in these difficult times, selling at 70 per cent to 80 per cent above their original values, and are expected to increase in value once the market realises there is still a fundamental demand for quality completed product as they come on stream.”

In Dubai, prices for off-plan homes have also fallen by about 10 per cent on the resale market but some segments are still in strong demand, according to developers. Mr Ghoul noted that “the villa type hasn’t yet been fully saturated” nor has office space, or middle- to low-income housing in low-rise buildings comprising apartments of three bedrooms or less.

Developers see the recent price drop and slowdown in sales as linked to negative sentiment about the global economy, rather than as tied to fundamentals of supply and demand.

“People are panicking. They need more information. Abu Dhabi is one of the healthiest markets in the world,”

said Sulaiman al Fahim, the chief executive of Hydra Properties. “There is no oversupply”.

In any case, the current crisis will not leave developers unaffected, according to analysts. “Some smaller developers that don’t have much cash will have problems, as some banks have already stopped backing them,” the head of sales at one property broker said. “I have quite a few plots of land to sell and can’t do so because those who will have to develop them are thinking twice before buying.”

Mr Khouri from Sorouh predicted a “rush to quality” by consumers and banks, both of which would look for solid real estate developers and developments to invest in. The larger and well capitalised companies such as Sorouh, which has projects worth more than Dh70 billion under development, would benefit from this, he suggested.

As sales slow, some developers are finding ways to make their projects more attractive to investors and buyers. The developers behind Eco Towers, a pair of environmentally sustainable buildings within the Danet Abu Dhabi project, are requiring buyers to only pay a 2.5 per cent booking fee and are offering a more relaxed payment plan, executives said at a launch event today.

Luis Loureiro, the national head of sales and leasing services for Colliers International, said that most developers were waiting until early next year to make decisions about easing payment plans, but since Eco Towers was already 30 per cent financed by developers, they were able to act earlier.

Others focus on “education”. “Starting in mid-November,” Mr Fahim said, “I will stop travelling to do a full campaign… I will myself be talking to the investors, telling them how to re-sell and how not to be greedy, and how they should wait to the long term. It is more about education.”

The National

The Gate Towers 6 Billion AED development contract awarded to Arabian Construction Company

Sorouh Real Estate PJSC and Tameer Holding Investment LLC today announced the award of a AED 6.2 Billion contract to Arabian Construction Company (ACC) to build The Gate Towers, a joint venture project, situated at the entrance of Sorouh’s flagship project, SHAMS Abu Dhabi, on Al Reem Island.

This new contract will see ACC construct six of the eight towers that make up The Gate District, covering a construction area of 1.1 million square metres. Piling work is scheduled to start immediately and construction of the towers will begin January 2009, to be delivered in phases over the next four years. The Gate Towers will be a mix of residential, commercial, retail, serviced apartments and a hotel.

Mounir Haidar, Chief Executive Officer, Sorouh, stated:

“Sorouh is pleased to announce its continued partnership with ACC. As a leading real estate developer in the United Arab Emirates, Sorouh partners with companies that reflect our own professionalism and commitment to creating innovative real estate projects. We are looking forward to working with ACC on this phase of our exciting development.”

Dr. Abdallah Shaaban, Managing Director, Tameer Abu Dhabi, added:

“Tameer has an excellent relationship with ACC. This partnership adds value to our project with Sorouh, creating a spirit of excellence and efficiency where all three parties work together to produce an innovative and exciting development for Abu Dhabi.”

The contract is seen as a strategic partnership between Sorouh, Tameer and ACC, and will see all parties sharing roles and responsibilities such as procurement and engineering.

ACC’s Managing Director Hamed Mikati said the award of this contract shows that ACC has once again gained the trust of Sorouh.

“We are looking forward to completing this unique project which is set to change Reem Island’s ever growing skyline,” he said. “We have been active in the UAE for over 40 years and are very proud to have contributed in the growth of the country.

“We are very proud to extend our relationship with Sorouh and Tameer and we thank them for their confidence in ACC.”

SHAMS Abu Dhabi will be a completely new self-sustaining city designed around canals and parks which integrates world-class master planning practices and extends the lush green of Abu Dhabi’s landscape. In addition to the Gate District, Shams Abu Dhabi will feature several other unique projects including Central Park, Sky Tower, Sun Tower and Marina, and the Gate District.

ACC is currently building the Sky and Sun Towers in Abu-Dhabi for Sorouh, as well as Princess, the world’s tallest residential tower (414m high), and Elite Towers in Dubai for Tameer.

Zawya

90% of IREIS 2009 space reserved by real estate companies

Real estate giants from the UAE and other countries will gather in Abu Dhabi in January for a major property show and organizers said nearly 90 per cent of the exhibition’s area has already been booked.

Dome Exhibitions will organize the January 27-29 Abu Dhabi Real Estate and Investment Show - IREIS 2009, to be held under the patronage of H.H Dr. Sheikh Sultan bin Khalifa bin Zayed Al Nahyan.

“Property companies from the UAE and other countries of the region are now vying to grab the remaining area of the exhibition,” Dome Exhibitions said.

“The fifth IREIS edition, which coincides with a construction upsurge in the UAE in general and Abu Dhabi in particular, will be a chance for major real estate developers from the region and the whole world to view the latest investment opportunities in this sector.” The Show will attract such major property companies as Tameer; the platinum sponsor of this event, Sorouh, Aldar, Al Qudra and Hydra.

According to real estate sources, property projects worth nearly Dh1.2 trillion are being carried out in the UAE, including Dh300 billion in Abu Dhabi alone.

They noted that the real estate sector has become a major contributor to the country’s gross domestic product given its rapid growth over the past years.

The sources expected sustained growth in demand for housing units in Abu Dhabi and other UAE emirates in the light of the economic and social boom through which the country is passing.

“The 2009 edition of the exhibition will be an opportunity to view the major projects being carried out or planned in the UAE and the region given the wide participation by major property companies as well as finance firms, banks and real estate brokers. This means this show will be a significant platform to finalize large deals in this sector,” Dome Exhibitions said.

It said many real estate companies from the UAE and other Gulf countries have confirmed their participation and booked large spaces in the exhibition, adding that this demonstrates their strong interest in the event.

Besides showcasing their products, the participating companies will present their current projects and future investments.

“This means the event will present an important opportunity to national and expatriate investors to see those projects and future plans in this sector,” Dome Exhibitions said.

“There is a strong interest from many investors and companies to take part in this event as is evident from their planned participation in national pavilions that will constitute an umbrella for companies from the same country, including those from Egypt, Morocco and India.” “We are confident that this event will be a good chance for all exhibitors and investors to present their projects and this in turn will contribute to further expansion in this sector and achieve the interests of all concerned parties.”

WAM/MMYS