Leading Abu Dhabi-based real estate developer Aldar Properties, and Sorouh, another public traded developer in the emirate, are considering a merger, it has been revealed.
The two major developers of the emirate have the ability to form one of the largest real estate companies in the region, with assets worth more than Dh.54bn, Reuters said.
Aldar had been promised nearly $10bn in government funds earlier. This new decision, which also has the consent of the government, comes, following a wide-ranging review of its government-linked companies and departments, aimed at improving efficiency of state spending.
The real estate market in Abu Dhabi had suffered setback during the financial crisis, with housing prices having halved, and the government had to step in expressing its interest, by purchasing assets such as the Ferrari World Theme Park. Thereafter, analysts have long-recommended consolidation of the sector.
The Senior Executive Officer at Exotix, Ahmad Alanani, speaking about the merger, agreed that it could be a sensible move. This is undoubtedly a part of the wider restructuring of the emirate's government-related companies.
A group has already been established to study the proposal for three months, following which, a recommendation will be made whether to integrate the two developers, the companies said.
It is also said that a potential merger of these real estate giants may also include other privately held Abu Dhabi-based developers such as Al Qudra real estate.
It is yet to be clear as to what a merger of Sorough and Aldar, would mean for shareholders of the companies.
On the whole, the announcement signals that the emirate is acting upon its spending review which concluded in January, wherein it recommitted itself to several flagship projects, including Louvre and Guggenheim.