Sorouh Real Estate PJSC Records 16% Increase In Second Quarter Net Profit

Sorouh Real Estate on Wednesday reported a 16 per cent increase in second quarter net profit to Dh151 million on revenue of Dh978 million. The company's results marked the second straight quarter of profit growth after it suffered a 94 per cent fall in the fourth quarter of 2008 with the onset of the credit crisis. Sorouh's first half profits, however, declined 71 per cent to Dh281 million compared to Dh977 million in 2008, falling short of analysts' expectations, which predicted a 40 per cent drop. "Going forward you will see higher numbers from Sorouh as they begin to deliver units in their Golf Gardens projects," Bobby Sarkar, Vice-President of Al Mal Capital, said. Golf Gardens is a 392-villa residential community overlooking the Abu Dhabi Golf Course. Sorouh said it began delivering units in the first phase of the project earlier this month. In the past year, Sorouh adopted a strategy of price-cutting and matching prospective homeowners with mortgage finance companies in order to lower its risk of customer defaults.

The company lowered its price per square foot from Dh1,600 to Dh995 in its Al Ghadeer development and from Dh2,500 to Dh1,600 in The Gates District. Both projects are scheduled for completion on time in 2012, according to Sorouh's website. "Sorouh has been in the forefront of lowering prices," Sarkar said. "They're coming to terms with what the world market will bear." In a statement, Sorouh CEO's Mounir Haidar said his company plans to continue price reductions, payment rescheduling and, consolidation and customized mortgage financing. "Despite the tough econ-omic environment, long term demand remains promising and we are actively managing the company's cash position," Haidar said. Excluding last year's Dh4 billion asset-backed sukuk issue, the company reported a debt to equity ratio of 2.53 per cent, retaining Dh4.9 billion in cash on its balance sheet.