Dubai: The global financial meltdown triggered by the collapse of the Lehman Brothers in September 2008 had forced most small time real estate developers in the UAE out of business while it left the larger players struggling to come to terms with the new reality.
However, one developer stood out from the rest by consistently delivering projects on a regular interval - Damac Properties.
To date Damac has delivered 28 buildings with 6,045 units spanning 10,619,469 square feet of developed space. Before the end of this year it will complete a further eight buildings comprising 1,329 units spanning 2,513,015 square feet.
It also has a further 50 buildings at various stages of planning and progress across the Middle East, North Africa region. These consist of 9,849 units, spanning 16,886,151 square feet.
Damac, a Dubai-based developer, is also perhaps the only Dubai developer that has announced new projects — in Beirut and Saudi Arabia, after the crisis.
The million-dollar question remains: what makes it tick?
"We have very little reliance on banks or external finance. That helped us positively," Ziad Al Chaar, managing director of Damac Properties, said. "When the financial crisis hit the market, we were at a very advanced stage of development of a number of projects. We took a full review of our projects and finance position.
"We decided to postpone construction of those projects that had not hit the ground by then and continue with those that were under various stages of construction. This helped us to continue to deliver projects."
He said his colleagues had engaged with customers and explained the company's determination to complete projects that were going through.
"We offered alternatives to the clients and asked them to shift to the projects that were under construction. Most customers appreciated this move and stuck with us. This helped us to fast track a number of projects," he said.
"In the end, the strategy has helped both the customers and us."
In an interview, Al Chaar elaborated his views on the market.
Gulf News: How do you see the market changing and when do you see it picking up?
Ziad Al Chaar: The market has hit the bottom at the beginning of this year. Things can only get better from there. It's picking up. From our own experience, we see that the rates are picking up and the sales are also increasing — slowly but surely.
We are a firm believer in this market and that's why we have continued with our commitments to serve this market.
Could you explain further the reasons behind this strong conviction?
The fundamentals of Dubai's real estate market remains strong. It never changed — even after the financial crisis. However perception deferred from one person to the other.
Nowhere in the region you will find such an advanced infrastructure — good connectivity through a world-class airport and a global airline. The roads and highways connect to all the neighbourhoods with the Metro adding convenience to this.
Dubai provides a good quality of life. With decent income, families can live well and enjoy life here. No matter what happens — these will remain and nothing can change that.
On top of that, the property regulations that are in place now, make it one of the best places to buy and sell real estate. In my view, the property legislation and the regulations are the best in the entire Middle East.
They are transparent and serve their purpose. The laws protect investors' interest. Property registration has been fully automated. You can register your property upon purchase whether it is completed or purchased off plan and upon handover you can get the title deeds.
So, these are going to stay here and will surely bring back investor confidence in this market. But as a developer, we have seen the market evolve and we know enough about the market and the leadership of this country to have a firm conviction. That's why we are here for the long run.
What about the global economic crisis that affected the real estate market here badly? What is your view on this?
Ups and downs are part of the same economic cycle. If you are in business, you will have to face both. You can't expect continuous booms for long. And you can't expect continuous recession for long. These are cycles. One has to live with these. You've got to make your business sustainable to be able to operate in both boom and bust.
How did you manage the business since the tsunami hit the real estate market in October 2008? How tough was it?
As I have said earlier, we reviewed the situation as soon as the market was hit and made some readjustments. We postponed works on those off-plan projects that did not hit the ground — and was still on the drawing board.
However, we continued with those projects that were under construction and asked investors and property buyers to shift to these properties. It was the natural thing to do and it allowed us to continue with projects. It also helped the investors and end-users as it guaranteed the delivery of their projects.
We were lucky to have a large investor base who had placed their trust in us. Also, we had very little exposure to the banks. We were more reliant on our own resources. That helped a lot.
Additionally, of course, we have gone through cost-cutting measures to reduce expenditure. We have delivered almost 5,000 units since then. And we are the only developer to announce projects in recent times.
You have already announced two new projects in Lebanon and Saudi Arabia. Do you have any plans to announce new projects in Dubai? When?
We are currently focusing on the existing projects at hand. We have a large number of units to deliver. This year we are delivering eight buildings comprising 1,329 units.
However, we expect to announce new projects in the UAE as and when the market picks up.
You seem very optimistic. Why?
One of the key reasons, in addition to the Dubai advantage, is the low price of properties, due to the effects of the financial crisis.
Property prices in Dubai are cheaper compared to some parts of India.
At an average price per square foot of $264 (Dh969) in Dubai according to Colliers International, property is now 60 per cent less expensive than in central Mumbai, where the price per square foot is $664 according to Jones Lang LaSalle.
So, I'm sure any right thinking investor would invest in Dubai's properties. It's just a matter of time.
In addition to the price disparity, Dubai's property market is becoming increasingly attractive to foreign investors due to the implementation of a raft of new regulations, such as the new Strata law, which favours homeowners.
As these new tougher and more stringent regulations take hold, Indian investors are looking to take advantage of the plethora of investment opportunities that exist within the emirate's real estate market.
What is your view on the latest amendments to the property visa law?
This will boost the real estate market. However, the market is waiting for more clarity on the details of the law so that they could make informed decisions.
I am sure investors are eagerly waiting for further clarity on the law. We have been receiving lots of inquiries on this from potential property buyers as this is an important issue for many.
Damac has announced $300 million investment in Russia to develop resorts in the Black Sea city of Sochi for Winter Olympics in 2014. Is there any progress?
Yes, this is still on. We are still talking with our partners, Prominvest, on the properties that we agreed to partner with.
What about investments in other countries? Any plans to expand into new territories?
We are looking at a number of territories. We will make a decision when the time is right.
What about your projects in Egypt? You have recently been fined on a project. Could you update us on this?
We have contested the ruling. We have sought an international arbitration. I can't elaborate further as this is still under litigation period.
Ziad Al Chaar, managing director, DAMAC Properties, graduated from the American University of Beirut with a degree in Masters of Business Administration.
His career started with the largest private company in Lebanon, Fattal Holding, where he held several positions in Lebanon, Syria and Iraq all under business development.
He joined Damac Properties in 2005 with a remit of international expansion of sales and developments. With Damac he developed the sales model in the GCC, CIS and Africa and launched developments in Egypt, Lebanon, Saudi Arabia and Jordan.