Corporate leases look to be a fruitful revenue area

Sorouh, one of Abu Dhabi's biggest property developers, is looking to corporate leasing to boost its revenues.

Sorouh Real Estate, Abu Dhabi's second-biggest property developer, is looking to corporate leasing to boost its revenue as it capitalises on companies seeking accommodation in the capital.

It is expecting to complete its Al Rayyana apartment development, located next to Abu Dhabi Golf Club, this summer. The development, which has 1,537 apartments and is designed for upper middle-income residents, is targeted at companies looking for accommodation for large numbers of employees.

"Our strategy is to pre-bulk-lease this to large corporates," said Paul Middleton, the executive director of sales and marketing at Sorouh. "And that strategy is bearing fruit. We have almost 30 very high-calibre leads from both international and local corporates."

The development will add to a growing supply of apartments for rent in the capital.

Sorouh in October signed a 30-year residential lease agreement with Défense Conseil International Group, a French government-related company, for 287 units in Al Rayyana, almost 20 per cent of the total development,

"In terms of our broader strategy it's to make sure we have a strong, growing recurring income base," said Mr Middleton.

In 2010, the company announced a target to triple its recurring income over a three-year period to more than Dh500 million (Dh136.1m) per year.

This has become all the more important after declines in the sales market in the UAE.

"The market was very different three years ago, where it was all about a sales market," said David Dudley, the head of Jones Lang LaSalle's Abu Dhabi office.

"It's very important that developers find ways to get stable revenue. It makes a lot of sense to have corporate leasing because they can get long-term revenue streams and, off the back of that long-term revenue stream, they can raise finance against it. It also reduces the risk profile of the project, so arguably they can accept a lower return."

Aldar Properties, also based in the capital, considers the corporate leasing market an important aspect of its business, too.

"There are many companies that hold leases on residential properties with Aldar," said Rami Nasser, the director of sales and leasing at the company.

"We work with corporates across all of our developments."

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