Aldar, Sorouh Rise on Property Market Outlook: Abu Dhabi Mover

Aldar Properties PJSC (ALDAR) and Sorouh Real Estate Co. (SOROUH), Abu Dhabi’s largest real estate companies which are in talks to merge, rose to the highest levels since March on an improved outlook for the United Arab Emirates property market.

Aldar gained 0.8 percent to 1.32 dirhams, the highest close since March 27, extending yesterday’s rally of 4.8 percent. Sorouh also climbed 0.8 percent to 1.25 dirhams, the highest level since March 25. The ADX Real Estate Index rose 0.7 percent, helping lift the ADX General Index (ADSMI) up 0.5 percent. In Dubai, Emaar Properties PJSC (EMAAR), the developer of the world’s tallest tower, slipped 0.8 percent after advancing 3.5 percent yesterday.

“Market sentiment is definitely improving and both Dubai and Abu Dhabi remain major drivers in the regional real estate market,” Alan Robertson, chief executive officer of Jones Lang LaSalle, Middle East and North Africa, said in an e-mailed report dated yesterday.

Property companies’ profits are picking up after house prices in Abu Dhabi slumped 50 percent in the aftermath of the 2008 global credit crisis. Aldar, bailed out by the Abu Dhabi government last year, posted a second-quarter profit that more than tripled. Sorouh may post a 31 percent advance in net income for the three months ended Sept. 30 to 88 million dirhams ($24 million), according to the median estimate of three analysts on Bloomberg.

‘More Realistic’

The neighboring emirate of Dubai, which teetered on the brink of a default in 2009 after property prices plunged, is seeing a recovery in the real-estate market, Mohammed Al Shaibani, director general of the Dubai ruler’s court, said today. “The developers are being more realistic. The banks are more mature,” he said. Sub-market home rental rates are on an “upward curve,” in Dubai, CBRE Group Inc (CBG) said in a report today.

Shares of Emaar, the stock with the heaviest weighting on Dubai’s benchmark stock index, surged 24 percent in the third quarter, making it the best performer on the gauge in the period. The company may post an 18 percent advance in third- quarter net income to 479 million dirhams, according to the mean estimate of five analysts on Bloomberg.

Aldar and Sorouh have rallied 43 percent and 47 percent respectively this year after Abu Dhabi, holder of most of the U.A.E.’s oil reserves, said it plans to resume stalled projects including branches of the Louvre and Guggenheim museums.

The companies said in a joint statement today that a decision to recommend a merger will follow the completion of talks, which are at an “advanced stage.”

Seven analysts recommend investors buy Aldar shares, two say hold and three have a sell rating, according to data compiled by Bloomberg. Six analysts recommend buying Sorouh’s shares, five holding them and two selling them. Meanwhile, 12 analysts recommend investors buy Emaar shares while three have a hold rating on the stock.

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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