Abu Dhabi bank putting 1b dirhams in property unit

Source : Business Times - 11 Sep 2008

Its Burooj Properties plans aggressive expansion in Africa, Europe and Asia

Abu Dhabi Islamic Bank plans an aggressive real estate expansion outside its home base into Africa, Europe and Asia by putting one billion dirhams (S$390 million) into its Burooj Properties unit. The bank also aims to float a majority of Burooj shares in 2010 as cash profit at the division, which excludes revaluation of assets, should at least triple in 2008 from 2007, Burooj managing director Adel Al Zarouni said.

‘All these markets look attractive and stable for investments to be done where the fundamentals are good with strong demand,’ Mr Al Zarouni said.

He also said that ADIB would add 500 million dirhams to the unit’s capital base, after injecting 500 million dirhams last month, to capture big growth opportunities in the Middle East. Burooj is also on track to float the company by staging an initial public offering (IPO) in 2010. ‘This is our plan and we could probably float 50 to 60 per cent of the company through the IPO to raise capital,’ Mr Al Zarouni said.

He projects cash profits to grow at least three-fold by the end of this year.

‘Our cash profits (excluding revaluation of assets), which was 110 million dirhams at end-2007, will grow to between 300 million and 400 million dirhams by end-2008. These expectations are based on sales and the company’s performance up to now,’ he said.

Burooj is setting up branches in Egypt, Algeria and Syria, and will examine commercial and residential property development.

‘We are closing a number of deals to develop property in Cairo valued at between three billion and four billion dirhams,’ he said. ‘In Algeria, there is a shortage in all segments - luxury, middle-class and low-income housing. So the potential is huge.’

Burooj started up in early 2006 with a capital of 500 million dirhams and has focused on property development in the United Arab Emirates.

It is developing projects worth 25 billion dirhams.

‘We are operating in dynamic markets and our portfolio will keep increasing steadily at least until 2015 as we take on new projects in the country, the region and outside,’ Mr Al Zarouni said.

Burooj is in talks with potential partners in Romania and India to speed its drive abroad.

As part of a new strategy, Burooj plans to set up two wholly owned companies before the end of this year to complement its property business.

‘We are setting up two subsidiaries, one a facility and property management company and the other a Sharia-compliant hospitality management company. These will complement our offering to the public,’ Mr Al Zarouni said. — Reuters