x Abu Dhabi, UAEMonday 24 July 2017

Abu Dhabi's new property giant could breathe life into stalled projects

The US$13 billion merger of Abu Dhabi's largest developers could free up stalled projects in the city as the new merged entity rethinks its strategy.

The US$13 billion (Dh47.74bn) merger of Abu Dhabi's largest developers could free up stalled projects in the city as the new merged entity rethinks its strategy.

Yesterday, Aldar Properties and Sorouh Real Estate agreed to form one company. It will be known as Aldar Sorouh, the third-biggest property company in the Middle East.

The companies also said that the Abu Dhabi Government had agreed to pay Sorouh Dh3.2bn for 700 to 800 flats at its The Gate scheme on Reem Island.

The Government also plans to refund the company for the money it had spent building roads and other infrastructure at the Shams area.

"Aldar and Sorouh will complete their current projects over the next 12 to 18 months such as Yas Mall shopping centre and The Gate housing complex," said Abubaker Seddiq Al Khouri, the proposed chairman of Aldar Sorouh.

"We will soon see more developments coming from our land holdings, especially in the free zones. As we see improvements in the economy, at the same time we will soon see new projects coming out and we look forward to working with the Abu Dhabi Government on more projects."

The two developers own some of the biggest developments in the city. Aldar is behind Yas Island and is managing the Central Market development. Sorouh is a master developer on Reem Island and is working up plans for Lulu Island.

Property analysts welcomed the news.

"Clearly, while the plans have been ongoing for the merger, there has been a little bit of holding back on stalled projects and the merger will result in more traction in the market," said one analyst closely involved with the deal.

William Neill, the head of Cluttons in Abu Dhabi, said the merger had "to be seen as a positive step".

"By putting the businesses of these companies together with a single strategy between them, the city can move forward with future development plans," he said. Some land can be sold and other pieces rolled out over the long term."

But property experts cautioned against expecting any major new development decisions soon.

"We will probably start to see the results of the merger taking more effect in 2014," added Mr Neill. "When big property firms are put together it is not an overnight process."

 

lbarnard@thenational.ae