Dubai, the frontier of recovery

Here is an interview of Gulf news wit Omniyats executive chairman.

Dubai: The results are in for Dubai's listed real estate developers and they were a mixed lot although there is a lot to be optimistic about in Dubai's real estate market. Here, Mahdi Amjad, executive chairman of private developer, Omniyat Properties and president and chief executive of Omniyat Holdings, explains why quarterly results should be taken with a pinch of salt, the key to a better fourth quarter and why Dubai is the frontier of recovery.

Amjad took a deep interest in the trading activities of his family's business at a young age before going on to establish his first company Almasa Computers in Dubai. Over time, Amjad grew this small business into a regional IT conglomerate achieving a $450 million (Dh1.6 billion) annual turnover in 2006.

Al Masa was renamed Omniyat Properties in 2004 to focus more on Amjad's love for real estate.

Omniyat's project portfolio is over $3 billion.The company, whose name means wishes in Arabic, has eight projects underway in Dubai.

Gulf News: Tell me how business is doing right now and how plans are going forward.

Mahdi Amjad: 2009 is a key year for us as we are going to be delivering three of our projects, with a value of over Dh1.9 billion. They include residential, commercial as well as retail - One Business Bay, Bayswater and The Square which was handed over last week and it is a phenomenal project because we managed to deliver it in a way that has exceeded expectations.

And honestly it will be run like a resort - amenities, mixed-use office tower to be launched later and then by mid-April, the Movenpick serviced apartments.

In this difficult economic time, how is Omniyat keeping its customers happy?

The fact that Omniyat intends to deliver on its promises and not only that, to keep (close to) its values in the good times and to over-achieve them.

We try very hard to solve any problems coming up in this environment, quality and our relationships with our investors are key. We understand the challenges around the world, not only Dubai, but we have obligations, it's a balancing act and so we are constantly coming up with solutions.

Some developers and contractors are now looking to other markets - Saudi Arabia and North Africa in particular - do you have any plans to expand into these markets or others?

We have created an independent unit, the Business Development Unit, which is looking at projects in Saudi and even in Europe and are deploying our development skills and leveraging our experience there. We need to be careful internationally as it's a new landscape but work is in progress but it depends on the opportunity. Saudi is an option and there is a focus on Europe in general. We're gearing up and we are ready.

Do you have a time frame in mind, when you'd like to enter these markets?

We hope to be set up in the next three to six months.

Another development company in Dubai is focusing a lot on the rental side of their business, so that if the market experiences a future downturn where sales will be dented, business won't be affected as badly. Is this something Omniyat might consider as a business strategy?

Overall, for development companies it is important to maintain a constant income stream to support them in challenging times. In a company there is an upbeat and a downbeat but always consistency of income streams, whether it's new revenue streams or rental models, but for Omniyat we have our asset management arm. So we depend on that as an income generator for the future - a consistent income stream for the years to come.

There have been a lot of reports and analysis focusing on the bottom of the market and they all have different outlooks. So, in your view, has the property market here hit bottom?

We have definitely seen a flattening out and we've had more enquiries which gives us a feel that we're close to the bottom. Prices have adjusted and momentum is much, much better in the second quarter than in the first quarter. And sentiment is also better.

Omniyat is a private real estate investment and development company, but you've seen the Q2 results for the listed real estate developers. Do you think the results are a fair indication of where the market is?

No. These results of listed companies are a reflection of the situation some time back. We cannot link that with the market now. Dubai has had a very high growth in 2007 and 2008 and so had a higher adjustment in 2009. Abu Dhabi had relatively low growth and so low adjustment this year. The fourth quarter will be much better.

Is it easier or harder for private developers in the current climate?

In the short term, the repercussion of the financial crunch on the business overall was not easy. However, real estate is a long-term investment measured over prolonged periods of time. In the current economic environment, companies should shift their focus from growth to consolidation and prepare themselves for opportunities that will arise as soon as markets start to pick up again.

What issues still need to be addressed? For example, how much is financing still an issue?

Financing is a key issue that fuels everything else. The Support Fund will be a major contribution to the infrastructure and a (help) to developers so the effect on all consumers will be positive.

But also the banks and their involvement is getting better but we still haven't got back to where we were. Clarity from the Tamweel-Amlak merger will definitely help.

What Rera is doing in the current environment is definitely giving more transparency to the market and they have reacted so quickly. I think there must be more and more transparency, focus on quality and to consistently deliver.

Dubai is a phenomenal brand. It is a success story and is built on years and years of hard work and vision of its leaders. I am a big believer in the Dubai phenomenon because of the fundamentals here - it is well-infrastructured, it's a well-advanced city and has maintained its competitive advantage. Dubai will be the frontier of recovery.

What does Dubai now need to do to become, as you said, the frontier of recovery?

Quality and commitment and to be as transparent as promised. This all adds to the credibility of Dubai and reinforces our recovery. Fourth quarter outlook depends on the global environment but will definitely be better than the second quarter so we are looking for the momentum to be confirmed in the fourth quarter.

From my perspective, we need a continuation in delivery with superior quality. That is our key focus. We'll be announcing major milestones in the next three months for our next three projects.

Source: Gulf News