Sorouh earmarked as solid investment

In terms of investment, the lower exposure in Abu Dhabi - where Morgan Stanley believe growth will be above 50% - is cited as a disadvantage.

Added to this, 68% of the company's land bank is on the Abu Dhabi-Dubai border, in a region that the analysts estimate will see lower price appreciation than Abu Dhabi.

The main risks that the company faces are in terms of execution. Many of the developments are still in the pre-construction stage and with so many planned there is concern that delivery delays will be inevitable.

Yet chief executive officer, Mounir Haidar, told AME Info last month that: 'The first half of 2008 is one which can be characterised by the development of strong ties with leading international world-class organisations. These relationships will deliver financial and operational benefits far into the future.'

Abubaker Seddiq Al Khouri, Managing Director for Sorouh also said that he saw this success continuing in the future: 'This is another positive financial performance for Sorouh, marking continued progress in our development as one of the leading real estate developers in the region. Our key financial performance indicators have improved over the period. We are optimistic about the performance for the rest of the year.'
Morgan Stanley also remains moderately bullish about Sorouh's growth prospects. It has a good level of exposure to the booming Abu Dhabi real estate market and has been one of the first to move into the potentially lucrative (and untapped) middle-income sector.

Although margins here are smaller, demand is higher. The report estimates that approximately 60% of investment over the coming five years will be channelled into this sector.

Geographical diversification of projects is hailed by the report as a shrewd move, limiting the company's vulnerability to possible future slumps. The authors caution that timing could be against Sorouh though, as several other real estate heavyweights have already moved into the same target markets, which could skew the benefits.

However, a limitation of the report is the exclusion of planned projects in Egypt and Morocco which, if successfully launched, could boost the share value. The long-term business goal is to generate 50% of business from international operations.

It also retains what the analysts estimate is the third-largest sales portfolio in MENA stocks over the next five years which the aggressive unit sales strategy should be able to cash in on.