The second-largest property developer in Abu Dhabi, will begin offering average price cuts of 20 per cent and easier payment plans.
Sorouh to offer 20% price cuts
ABU DHABI // Sorouh Real Estate, the second-largest property developer in Abu Dhabi, will begin offering average price cuts of 20 per cent and easier payment plans to buyers of units in the Gate Towers, a top company executive said. "We're working very hard with our customers and financial institutions to keep our default rates low," said Abubaker al Khouri, the managing director of Sorouh.
The move comes several months after Sorouh offered buyers at the Alghadeer project, which is on the border of Abu Dhabi and Dubai, average price cuts of 35 per cent and payment plans that become due after homes are completed. Developers across the country are trying to reduce the number of buyers defaulting because of the global financial crisis. Mr al Khouri said property developers would face challenges in raising funds in the months ahead, but would benefit from a market that recovered by March next year.
"I do believe prices are bottoming out," he said. "Within the next nine months, there will be a recovery in Abu Dhabi." Finishing projects, including Sorouh's Sun and Sky towers and Tamouh Investment's Marina Square on Reem Island, would prompt the market's turnaround. "End users want to see tangible things before they make a purchase," Mr al Khouri said, adding that imminent laws regulating the Abu Dhabi property sector would also bolster confidence.
The inherent demand in Abu Dhabi was high because many long-term residents have been waiting for the chance to buy a home rather than rent one, Mr al Khouri said. Many residents also were looking for a higher quality home, where parking was not an issue and premium amenities were available. But the market's quick turnaround has left many customers searching for funds to keep up with their obligations.
Mr al Khouri said one of Sorouh's main strategies for keeping buyers paying for their purchases was to pair them up with mortgage providers. In the last three months, about 180 customers had received mortgages, he said. Sorouh has joined 20 banks to obtain preferential rates for mortgages at its projects. Sorouh was also assessing the financial health of its sub-developers. The Shams Abu Dhabi project alone has more than 100 sub-developers, some of which are having trouble raising the necessary cash to continue construction.
"We try to help them to meet the banks to get financing," Mr al Khouri said. He said Sorouh had enough cash reserves to proceed with its projects after issuing an Islamic bond last year and raising funds from banks, but it was still talking to banks and looking at other options. The Gate Towers are in the early stages of construction. The buildings are at the entrance to Sorouh's Shams Abu Dhabi master development on Reem Island, which will have numerous high-rise towers, a central park and as many as 100,000 residents if all goes to plan.
Reem Island will be the first area in Abu Dhabi with buildings where foreigners can acquire leasehold ownership of properties, rather than just renting them. @Email:firstname.lastname@example.org