Abu Dhabi-based Sorouh Real Estate has bought a 60 per cent stake in the local Pivot Engineering & General Contracting Company as it seeks ways of delivering the AED45bn ($12.3bn) worth of projects it has under development.
By taking a stake in a contractor, Sorouh hopes to protect itself from the tightening of the contractor market. By locking in resources in advance, it should find it easier to develop its large portfolio of real estate projects, such as the multi-billion-dollar development of Lulu island.
“Given the scale of our many developments coming to market in the coming months and years, our construction force needs to be extensive and to operate at world-class levels of build and safety,” says Mounir Haidar, chief executive officer of Sourah. “With this acquisition and our shareholding in LLJ Property, we have made strategic investments up and down the delivery chain.”
Over the past 12 months, property developers have tried to overcome rising construction costs and a lack of competition in the contractor marker by forming partnerships with contractors.
Notable partnerships include Abu Dhabi’s Tourism Investment & Development Company (TDIC) with the local Gulf Leighton, and Aldar Properties with both the UK's Laing O’Rourke and Belgium's Besix.
Sorouh's portfolio of schemes includes the Shams Abu Dhabi, Golf Gardens and Saraya real estate developments.