Sorouh to hand over 1,350 units in H2
Abu Dhabi's Sorouh Real Estate will hand over some 1,350 apartment units in the second half of 2010 in a move that will fortify the company's revenue, its chief financial officer said on Sunday.
"We expect to hand over a good portion of 950 units in Q3 and Q4," Richard Amos told Reuters in an interview at property conference Cityscape Abu Dhabi. Amos was referring to the company's Sun and Sky Towers project in Abu Dhabi.
He also said that Abu Dhabi's second-largest developer by market value will hand over another 400 apartments from its Tala Tower project starting in July.
Amos said liquidity and high mortgage rates were still hampering a recovery in the Abu Dhabi property market.
"It's a question of liquidity coming back into the marketplace. Mortgage rates are relatively high although we are seeing signs of mortgage companies trying to address that recently," Amos said.
Average mortgage rates are currently around 8-8.5 per cent, he said, adding the firm offers a rate of 4.99 percent for customers for its Sun Tower project.
Amos said Sorouh would need additional financing in 2010, but declined to give further details.
Conditions in Abu Dhabi's property market were still "fairly challenging" he said, adding he expected the slump to be "quicker and shallower than Dubai."
The firm expects to double its income from rentals from 12 per cent currently over the next two years.
Developers across the United Arab Emirates have suffered the impact of the global financial crisis which put an end to a six-year construction boom. While Dubai has suffered the most, Abu Dhabi, home to most of the country's oil, has fared better.
In January, Amos told Reuters he was "cautiously optimistic" that 2010 will be better than 2009 on land sales, and does not expect to take more provisions this year.
Sorouh's shares took little heart from Amos' outlook and fell 2.89 percent in a broadly weaker market.
Sorouh made a profit of Dh28.1 million in the fourth quarter.
House prices in Abu Dhabi are expected to fall 10 per cent in 2010 while rents are seen declining by 15 per cent, according to a Reuters poll earlier in April.
Average house prices in Abu Dhabi have fallen some 50 per cent since their peaks in 2008, according to UBS.
In March, HC Research downgraded Sorouh to "hold" from "buy".
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