Big businessby Stuart Matthews on Jan 27, 2013
Aldar and Sorouh look set to become one company. Both have proven to be excellent sources of site visits for this magazine in the recent past, thanks to their collection of landmark projects in Abu Dhabi.
Sorouh’s Gate Towers provided some of the most spectacular photo opportunities of 2012; Aldar’s Yas Mall, which we visited just last week, is both massive and impressive. It’s HQ is a global architectural landmark. Neither company, it seems, has been afraid to take on the big jobs.
Sorouh notably snapped up the Developer of the Year prize at the recent Construction Week awards. While this accolade may not have made any difference to the deal, or the share price, the fact our panel of judges picked the company out of the pack, is a good indicator of its strength.
That two of the power houses of Abu Dhabi development should join forces makes sense to a lot of people in the current market. Contractors and consultants currently involved with one or either of the companies, may reasonably expect to continue a relationship now full of expanded opportunities. They might also expect a little competition among preferred suppliers.
Between them, the organisations have cash, land and deliveries behind them. It seems likely that after the merger they will have those things in front of them too. If it meets with shareholder approval - the Abu Dhabi government will be a 37% shareholder in the combined entity - the merger will create one of the biggest listed developers in the MENA region.
With 77 million m2 at its disposal the new company will have no shortage of land to work with. The proposed chairman, Abubaker Seddiq Al Khouri, has said that the company will look to ‘monetise’ this land bank. This could mean development opportunities for smaller companies, a land sell-off, or just a stack of tenders to compete for.
Other numbers stack up too. As a single entity, the company will lay claim to 1.4 million m2 of leasable space, about half of which is residential, and 2500 rooms spread across nine hotels.
Those rooms can look forward to good occupation levels as Abu Dhabi continues to push for a slice of the tourist dollar. Its ambitious development programme has included the recent award of the long-awaited contract to construct the Louvre.
Abu Dhabi has also just added the latest regional water park to its list of attractions, a development one of my more downbeat colleagues described, with genuine enthusiasm, as the best water park he’d ever been to.
If and when the merger gets shareholder approval, it will mark another milestone in the development of Abu Dhabi and the UAE. It should also stimulate business for the construction industry from the top down. That can only be a good thing.