A stable new property giant will help to ensure Abu Dhabi's prosperity continues.
Property merger lays foundation for entire sector
The merger of Aldar Properties and Sorouh Real Estate is a momentous event, and one that offers the prospect of stable growth for the company - and for Abu Dhabi and the whole country.
The much-discussed merger was approved unanimously by the boards of directors of the two property companies on Sunday. So now the birth of Aldar Sorouh Properties, as the new entity will be known, needs only the approval of 75 per cent of shareholders, a step in which no difficulty is expected.
Aldar and Sorouh, between them, have built and are building many of the capital's modern landmarks, such as the Sun and Sky Towers on Reem Island, Central Market, the new Cleveland Clinic on Al Mariah Island and the F1 Yas Marina Circuit; the new company will be among the Middle East's biggest listed property development firms.
Both Aldar and Sorouh have grown up in intimate cooperation with the Abu Dhabi Government, which will own about 37 per cent of the shares in the new enterprise, as well as regulating it. So it is natural that the Government shepherded the two companies into this deal.
Everyone understands that the UAE's property markets have endured challenging times lately; both companies have worked closely with the authorities through the lean years - and both companies have relied on government support to weather the storm since the 2008 crisis. But the merger comes at a time when there is plenty of evidence that the dry spell in property markets is over, and a renewed era of bustling building sites is beginning.
Note the nature of the big investments recently confirmed for Abu Dhabi - the Louvre and the Guggenheim, major new residential developments and billions of dirhams in additional infrastructure work: all are government-driven, as befits a nationwide state-led development plan.
Under those conditions, the government-endorsed merger creates one major developer; this will help to dispel any uncertainty in the property market. The reorganisation will better coordinate the operations of the two property arms, and should also brace and stimulate the overall property market.
For more than half a century, construction has been a staple of Abu Dhabi's growth. A stable new property giant, well-run and well-monitored, will help to ensure that prosperity continues and expands.