Sorouh expects the Sun and Sky tower developments to be ready for handover by Q1 2010In an interview with AME Info Sorouh Real Estate’s Chief Operating Officer, Samer Abu-Hijleh, said that the Abu Dhabi-based property group would make sure that they were doing everything they could to help their sub-developers complete their projects on time.
Sorouh expects the Sun and Sky tower developments to be ready for handover by Q1 2010

The statement comes as continuing financial constraints in the building sector have meant that many smaller developers across the region face tightened access to project finance.

‘We are working with all our sub-developers to understand what challenges they may be having,’ Abu-Hijleh said.

‘Where we can help, we are doing everything we can, whether it’s in securing design approvals or government permits, or whether it’s looking at how we can help them with financial challenges.

We will continue doing that because it’s in our, and Abu Dhabi’s, best interests for the developments to go forward and be completed within the time frames set.’

Abu-Hijleh was speaking to AME Info during a site tour of the Shams project currently going up on Reem Island.

Sorouh has a total of eight towers currently under construction on the island, with the group’s two flagship developments, the Sun and Sky towers, built up to the 60th and 55th floors respectively with construction finished early in 2009 and handover to owners expected in the first quarter of 2010.

No change to projects underway

The company does not expect to come up against any difficulties in raising financing, nor does it expect to have to make any changes to projects already underway – although no mention has been made to developments that are still on the drawing board.

‘People talk a lot about financing, but all of our developments are proceeding as planned. All of the projects in advanced stages of planning are also proceeding as planned, so nothing in our current backlog has been altered.

‘This is largely because most of the projects underway had already been financed, and for the projects in the advanced stages of planning we either have the finance or we are confident that we can get it. So, although there are problems in the market we haven’t yet felt the impact on anything that we are trying to develop.’

Many of the projects that form part of Shams Abu Dhabi have been contracted to smaller sub-developers, and most have secured the necessary permits and begun excavation work, but there are some that have been affected by the restricted access to liquidity.

Challenges for small developers

‘I’m sure, as you are aware some smaller developers are having challenges starting their work because of the financial situation and because of the challenges that they are having in securing finance, or selling some of their developments,’ Abu-Hijleh said.

‘But for the most part we are optimistic, and we are working very closely with our sub-developers to make sure that the plan for Shams is delivered.’

The slow down in the building industry has thrown up some positive side effects for developers in the region however. Construction costs, which had been hyper-inflated by the soaring demand, are now cooling as projects are slowed or put on hold. In addition, developers now have more access to, and choice of, contractors.

‘We are able to receive offers from contractors that we wouldn’t have been able to a short while ago,’ Abu-Hijleh explained.

‘Whether the market is changing, however, is something that we will have to wait a while to see. Intuitively, this is what everybody expects, and you can see some commodity pricing supporting that, but whether it is translated into significant construction cost savings in what is delivered by contractors is still to be seen – but everybody expects that to happen.’