Sorouh Q1 profits fall 64%
Abu Dhabi's second largest property developer Sorouh Real Estate has released its figures for Q1 2009 showing an increase over figures for Q4 2008, but a loss of 64% on its profit figures for the same period in 2008.
United Arab Emirates: 2009-04-30 17:12:50
Sorouh's net profit for the first three months of 2009 stood at Dhs130.4m according to figures released by the group.
This represents an increase over the group's results from Q4 2008, when the financial crisis hit the country's property markets and liquidity disappeared, which stood at Dhs45.9m.
Though the group has posted a profit, it is still 64% down on the same period in 2008, close to the peak of the UAE capital's property boom, when the company's reported profits were Dhs361.5m.
Sorouh's revenues stood at Dhs335.6m, compared to Dhs532.6m in Q4 2008 and Dhs623.7m in Q1 2008.
The group said in a statement that: 'The results reflect the company's strategy to develop its earnings profile by increasing recurring income....[Sorouh will retain] more property for development and subsequent sale and lease, despite the short term impact on the income statement.'
The strategy reflects an earlier statement made by Sorouh's Chief Development Officer Gurjit Singh, in an interview with AME Info at the end of 2008: 'Whereas in the past we have allocated a fair amount of our developments to the residential sector, we have also now focused a fair amount of our portfolio on recurrent income property. If you were to put the credit crisis on the table for consideration, I think developers will have to be smarter in coming to the market.' To this end Sorouh, reports that it has seen growth of 63% in its investment properties to Dhs1.4bn.
The group also states that the figures are partly a result of its decision to sell less of its land bank, as it believes that it is 'currently not reflective of its intrinsic value.' Gradula improvement is expected over successive quarters as the Golf Gardens development is handed over and recurring income increases.
'In the context of difficult market conditions we are pleased to report earnings progression quarter on quarter. This reflects our decision to retain land to develop more property ourselves for future sale and lease...and not to revalue land,' said Abubaker Siddiq Al Khouri, Sorouh's Managing Director.
