No longer is Sorouh, a publicly listed Abu Dhabi-based real estate developer, going to restrict itself within the borders of the capital. It is looking at expansion and planning to capitalise on the investment opportunities in neighbouring countries.
Within Abu Dhabi, however, there is expected to be increased protection for real estate investors as the freehold concept takes hold in specific investment zones. The emirate is also likely to introduce the escrow account law that Dubai put in place this year.
“We are looking at different opportunities in the Gulf Co-operation Council countries, particularly Saudi Arabia and Qatar. The Middle East too is on our expansion list,” says Masood Al Awar, the special advisor to Sorouh Chairman Saeed Eid Al Ghafli.
Sorouh is not ruling out the possibility of acquiring an overseas firm on the lines of Dubai-based Emaar Properties’ acquisition of the American John Laing Homes, “if it proves to be a good investment,” says Al Awar. “We are a fast-growing and robust company and we look at opportunities. We will acquire a company if it proves to be good investment and adds value to shareholders.”
Moreover, he emphasises the need for Abu Dhabi real estate developers to co-operate and co-ordinate their projects, but through the assistance of the Executive Affairs Authority. “If we do it under that umbrella it ensures that our creativity will play a part in terms of generating more profitable businesses,” he adds.
As a master developer, several big companies have approached Sorouh to take up opportunities in their countries.
“We are master developers and so we will move to countries that offer us such opportunities. In the coming years, we will launch huge projects [master developments] in Abu Dhabi market.”
Al Awar, who is also the company’s Executive Director for sales and marketing, rubbishes claims by analysts that real estate prices in the capital are lower than in Dubai.
“Abu Dhabi’s real estate prices are not on the lower side. We are very competitively priced, considering the fact that projects have been launched to cater to the different segments of the market.
“The Abu Dhabi market is opening up and there is a huge demand from within the emirate. And that is happening without any sales effort on our part.”
The UAE and GCC nationals are purchasing larger plots, with individual investors, mostly Arab expatriates and Westerners, buying apartments. “We also have clients from the Indian Subcontinent,” he says.
Sorouh was established on June 26, 2005, and is currently one of the largest real estate developers listed on the Abu Dhabi Securities Market, with close to 55,000 shareholders. Its project portfolio has crossed Dh50 billion with the launch of the Al Ghadeer development. So far the company has launched Shams Abu Dhabi – its flagship project – Golf Gardens, an exclusively designed project for nationals as well as The Gate District.
Al Awar believes Abu Dhabi is taking steps to ensure protection of investors. But when asked if the capital was working to extend its freehold law or introduce the escrow account law, he says: “Creating an investment zone in Abu Dhabi is allowing freehold to happen. I think Abu Dhabi will introduce rules such as escrow accounts and we are pushing for all those financial tools that protect customers’ investment and bring in transparency.”
In July, Dubai approved a law related to trust accounts, which comprises several articles that set regulations for real estate market and guarantees purchasers’ rights.
He rules out a direct competition with Dubai, but anticipates competition when it comes to customer offerings.
“Dubai and Abu Dhabi have their own separate identities since creation of the UAE. Both with their own identities are complementing each other,” he says.
However, the competition will be on the offering side. “Competition is healthy if it brings anything for the benefit of the UAE population by way of different offerings and new lifestyles,” he adds.
Al Awar claims to be the first person to sell an apartment in the UAE. This happened in Dubai Marina in 2000, when the project was launched, he says. “I have operated in this field before the boom, during, and thereafter,” he says emphatically.
Asked how Sorouh plans to raise finance for its future projects, he says: “We will not reinvent the wheel. We have to use the same financial tools available in the market, which can support our businesses to generate enough profit for our shareholders. But we will borrow from local and international markets.”
Al Awar also dismisses speculation the property bubble is ready to burst, pointing to the economic growth that is taking place in the country. The International Monetary Fund estimates gross domestic product of the UAE to grow by 7.7 per cent in 2007.
“For the past five years, people have been talking about a bubble. The burst is not coming as long as the engines of economy – oil and gas, healthcare and hospitality sectors – generate enough returns. They are fuelling real estate growth,” he says.
Shams Abu Dhabi, Sorouh’s flagship project (pictured above), is a Dh25 billion landmark development on Reem Island. A complete new city of 55,000 residents, it will be a self-sustaining city of canals and parks that integrates world-class master planning practices and extends the lush green of Abu Dhabi’s landscape.
The Gate District on Shams Abu Dhabi is a cluster of eight towers located at the entrance to Shams Abu Dhabi. Now architecturally renowned worldwide, the Dh11 billion residential, office and retail development is designed as a gateway to the peninsula from Reem Island. The Gate District also includes the 74-storey Sky Tower.
Al Ghadeer is a Dh20 billion mixed-used development to be built at Saih As Sidirah on the Abu Dhabi border. It will cover three million square metres and will have more than 6,000 residential units providing “affordable luxury housing.” Infrastructure work will start in the first quarter of 2008 and the project is expected to be complete in 2010.
A Sorouh timeline
May 2005: Sorouh is set up with an initial public offering of shares worth Dh2.5 billion.
September 13, 2005: Official launch of Sorouh Real Estate and Shams Abu Dhabi.
December 13, 2005: Shares start trading on the Abu Dhabi Securities Market.
March 2006: Sorouh wins the project to develop Lulu Island.
May 2006: Sorouh launches Sky Tower at Shams Abu Dhabi.
May 2006: Sorouh launches The Golf Gardens – Abu Dhabi’s first premium golf estate – which is a Dh1 billion project overlooking the Abu Dhabi Golf Club.
July 2006: Al Khalidiya Village rental villas are completed.
September 2006: Sorouh and Tameer Holding sign a strategic partnership deal to develop six towers of the The Gate District at Shams Abu Dhabi.
November 2006: Tala Tower project is launched.
December 2006: Saraya development is launched.
December 2006: Central Park at Shams Abu Dhabi is launched.
May 2007: Phase 1 of Sas Al Nakhl residential development completed.