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The property puzzle: what next for UAE’s fallen sector?
The property sector keeps us on our toes with some eyebrow-raising news and a property bailout, tycoon and new project kickstart looks like it's just the beginning.
March 12, 2012 4:18 by Eva Fernandes
Big news today for the Abu Dhabi real estate market: Aldar and Sorouh have announced plans of a state-backed merger. The proposition is currently being studied and a decision is said to be made within the next three months. The news doesn’t come as a surprise. After all, Aldar has been repeatedly reporting losses in 2010 and finally moved to profits only last year. Government bailouts have helped Aldar, Abu Dhabi’s #1 real estate firm tremendously, enjoying a sum of more than $10 billion in government funds since announcing loss post crisis.
Currently the company has assets worth over Dh40 billion which probably explains this statement from Haissam Arabi, Dubai asset manager Gulfmena Investments: “A merger makes perfect sense. There is no need for two developers with very similar offerings.”
No need for two developers with similar offerings, you say? Or similar debt issues? It is hard to ignore the fact that the Aldar and Surouh Merger will make it easier to refocus debt and create a stronger single entity reducing the burden on the government of rescuing two large companies.
Meanwhile in Dubai, real estate is looking less gloomy: according to global residential and commercial property consultants Knight Frank house prices in Dubai rose 2.3 percent during the last quarter of 2011. Knight Franks ranks Dubai at #12 in terms of house price appreciation.
Also, we mustn’t exclude the potential promise of Al Fattan Properties which has put up a billboard of Crystal Towers at Dubai Marina. Al Fattan Properties has been responsible for the development of the Lake Villas, Oasis Beach Hotel and Al Fattan Marine Towers in Dubai Marina. And though construction on the project on the site is yet to start, Emirates 24/7 prefers to sell you the rather shiny “New project to ‘crystalise’ Dubai Marina horizon” version of the story. Right, because intensive ‘artist impression’ motivated sales worked so well for the Dubai real estate market the last time.
But hey, we are not going to launch into a Dubai-bashing rant (at least not in this article). After all, if it wasn’t for Dubai’s over ambitious larger than life ways how would we ever enjoy the envy of Donald Trump? Yes, you read right- Donald Trump, speaking at a taped message at the Middle East Facility Management Association conference said that he “”jealous” that the UAE is home to the world’s tallest tower, the Burj Khalifa.” Well then, guess it was all worth it.
At the very same conference, RERA chief Marwan bin Ghalaita said “From outside they look fantastic – amazing – but whenever you go inside, you don’t know. It’s a different story. This is what the engineers are telling me, what the investors tell me.” Encouraging words from the chief of the RERA, no less. Even if the RERA figured out to do with the less-than-‘amazing’ interiors of buildings, the authorities dealing with the Nakheel Shoreline Apartments makes us think they’d do little to enforce it.