Saturday, Oct 01, 2011

(This story was originally published Thursday.)

DUBAI(Zawya Dow Jones)--Sorouh Real Estate Co. expects Abu Dhabi rental and sales prices to fall further this year and the next thanks to increasing supply, Sorouh Chief Operating Officer Gurjit Singh told Zawya Dow Jones Thursday.

"For this year and next, Abu Dhabi is seeing a new phase of [increased] delivery and supply so the real estate market is going through a lot of adjustments in terms of rent and prices," Singh said in an interview on the sidelines of a real estate event.

"As supply comes in, prices will become realistic and that will be good for the end-user/occupier market," he added.

Singh said Abu Dhabi-based Sorouh will complete its scheduled developments during this time as there are end users to be considered and his company has so far this year delivered three developments, including Sun & Sky Towers, Abu Dhabi Aviation Complex and Sorouh's Tower.

"We will complete our developments and put them in the hands of the people who purchased them and want to rent them," Singh said.

Rental prices have continue to decline in Abu Dhabi, the largest of the emirates in the United Arab Emirates and home to most of the country's crude oil, after a global financial crisis dried up bank lending and hit developers across the U.A.E. two years ago. Sharper price declines in neighbouring Dubai has also had a negative impact on demand in the emirate's market.

Singh said going forward Sorouh, the emirate's second-largest developer by market value, will consider developing more affordable housing projects in Abu Dhabi.

"We are looking at affordable housing as a segment we can go into but haven't decided yet, we are still studying it," Singh said.

Sorouh's managing director Abubaker Seddiq Al Khouri had said in July the company would look to do more work on government national housing projects as a way of diversifying income streams.

The developer made a second quarter net profit of 125 million U.A.E. dirhams ($34 million), a four-fold rise over the year earlier period.

Sorouh shares closed trading down 1% at AED1.09 in a slightly negative overall market.

-By Tahani Karrar-Lewsley, Dow Jones Newswires; +9714 446-1692; Tahani.Karrar@dowjones.com

Copyright (c) 2011 Dow Jones & Co.

(END) Dow Jones Newswires

01-10-11 0703GMT