Rolling out a new project every week is the theme of the city of Dubai. It may sound fun and exciting. But according to one giant developer of the city itself, it’s always a question of finding the right project at the right place and one with the right financing and environment.
According to Mohamed Ali Alabbar, the founding member and chairman of Emaar Properties who is also a member of the Dubai Executive Council, such big project is Emaar.
Emaar Properties in Dubai is now growing phenomenally world over, with its high-profile global expansion in 36 countries. It is the Dubai-based Public Joint Stock Company and one of the world’s largest real estate companies, is listed on the Dubai Financial Market and is part of the Dow Jones Arabia Titans Index. Emaar has assets in excess of $65 billion in investments, net profit of $1.8 billion and land bank of half a billion square-meter worldwide.
The Dubai Executive Council is the supreme body of the government of Dubai with the mandate to synergy for all growth initiatives in Dubai.
With Alabbar’s six-year exposure to Singapore, he said with the power of India and China, his love for the region increased. But he says China is a very difficult environment to operate in, so much so that one has to know his way in and out of the market. “You have to know whom to talk to, and I include my contacts who are Singapore-Chinese who have had tough times. One should study the market well and learn from his mistakes. The point is, one should not ignore China. It may take 3-4 years to finish a project, but it is critical for the project because China is the world,” he said.
Indonesia, too, has recently come on the radar screen of Emaar. Alabbar said it may take longer than 10 or 20 years to execute his projects there due to the size of the country; but since it is just few hours from India and China and has a huge market (over 200 million people on 1000 islands) with unlimited natural resources, and with the government evolving in the last two years, Indonesia to Emaar is a gold mine. “We’ve already opened an office there before we even closed a deal there,” said the Dubai executive, who was recently presented the AHIC 2008 Leadership Award by HH Sheikh Ahmed bin Saeed Al Maktoum, president of Dubai’s Department of Civil Aviation and chairman and CEO, Emirates Group.
Despite the credit crunch in the United States, with the ripple effect being felt in certain parts of Europe, the rest of Asia and Arabia forges ahead and scoops the ventures Alabbar has a handful of. “Because banks have forgotten what banking is truly about (like opening up the accounts to all, welcoming everybody to come to the vault and take all they want), the real drivers have not been managed wisely. Learning from all these, I want to say we manage the assets of Emaar like a little Chinese shop – where we don’t like counting points. We don’t like to pay a lot of dividends because we’re not new. We’re 11 years old! This is the base, the foundation of this company which has worked for us all these years. Going into markets with 7-8% cap (who I think are just bluffing us) is not our cup of tea. So were’ slowly going to other parts of the world carefully,” said Alabbar.
Where does Dubai currently stand in the cycle of the dollar crunch? He thinks in the age of the credit crisis, banks will come back but very slowly. “Gone are the days when they would come out and get very generous with the market. I would say the days are over for investors coming in with $100M borrowing 21 times. This is a thing of yesterday. They will be strict next time around,” said the Emarati, who is frequently acknowledged by the real estate and hospitality industries for his role in steering growth not only in Dubai, but also in the region.
Dubai cannot ignore the US, regardless of the recession. Alabar said they cannot underestimate the strength of the US economy. He said: “It’s huge and so far whatever is happening there is critical for our future and for our growth. We look at the States as a platform for growth. But the expertise and human resources we now get come from India, Dubai and Hong Kong is unmatched. The US offers a platform for us, looking into the future.” Emaar also has strategic views on the UK market despite the slowdown. Alabbar pointed out to North Africa as a target market in the coming months.
With good leadership, nothing is impossible in Dubai. “With good people backing us up, we can never go wrong. India is only 1.5 hours from Dubai, Asia is only 6 hours from us. With our economy growing 7-8 percent, I don’t see any reason why we cannot excel and double our size,” closed Alabbar, adding, “ With Sheikh Mohamed al Maktoum’s leadership in Dubai, our city will only boom further. We’re very lucky to do what we do and be born at the right place at the right time.”