With strong projects in Abu Dhabi, good relationships with government related firms, such as Mubadala Development Company, and an active management that promoted a flexible response to the real-estate downturn in 2008-09, Sorouh has several strengths that will help offset the sluggish domestic property sector, where overcapacity has crimped margins.
The firm reported a 33 per cent rise in net profit to AED83.6m in the third quarter of 2011, from AED62.9m in the same period in 2010. This performance was underpinned by the handover of Sun and Sky Towers units, construction revenue from the luxury Watani national housing project and rental income from Sorouh’s property portfolio. Net profit for the nine-month period was AED285m, compared to AED215m for the same period in 2010.
Sorouh’s management team, comprising both Emiratis and expatriates, is highly experienced and is focused on delivering projects on time.
The central location of much of its land bank is another major positive, given the mostly poor quality property available there. The company’s balance sheet is robust, with leverage contained and a generally strong cash flow. It has AED500m available in bank credit if needed.
When the property market recovers, Sorouh should be well-positioned to benefit, although some outstanding issues regarding the government’s influence on the sector via its holdings in the local Aldar Properties, remain to be resolved.