Aldar, Sorouh Surge on $90 Billion Spending Plan: U.A.E. MoverZahra Hankir
Aldar Properties PJSC and Sorouh Real Estate Co. surged to a two-year high on bets Abu Dhabi’s biggest property developers are poised to benefit from about $90 billion in infrastructure spending over the next five years.
Aldar, which is discussing a potential merger with Sorouh, soared 4.5 percent to 1.62 dirhams, the highest level since April 2011 at the close in Abu Dhabi. Sorouh jumped 3.2 percent to 1.6 dirhams, the highest since January 2011. The stocks were the second and third most traded by value on the benchmark ADX General Index. They helped the gauge rise 0.9 percent to 2,766.29, surpassing the threshold some investors consider as the beginning of a bull market after it advanced 20 percent since last year’s low.
The United Arab Emirates’ capital, which is transforming itself into a business and cultural hub, plans to spend about 330 billion dirhams on projects including housing and roads through 2017, the Abu Dhabi Executive Council said yesterday. The announcement comes about a year after the oil-rich emirate said it will resume suspended real estate projects including branches of the Louvre and Guggenheim museums after the credit crisis slowed lending and caused property prices to crash.
The move is “expected to stimulate economic growth and will benefit developer companies in the emirate among other sectors,” Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities, said by e-mail.
The Abu Dhabi government forecasts economic growth to accelerate to 5.7 percent a year through 2016 from an estimated 3.9 percent in 2012 as it invests in metals, chemicals and the arts. Abu Dhabi sits on the majority of proven oil reserves in the U.A.E.
Aldar and Sorouh surged 15 percent last week as the companies said discussions about a potential merger are in advanced stages. Shares of Sorouh rallied 47 percent in 2012 and Aldar’s surged 38 percent, outpacing the Abu Dhabi gauge’s 9.5 percent gain, as investors anticipated news on the merger.
Aldar’s 2012 profit probably doubled to 1.31 billion dirhams ($357 million), according to the average estimate of six analysts compiled by Bloomberg. Sorouh may post a 70 percent advance in net income for the year, the median estimate of four analysts shows.