Dubai
The overseas arm of Lebanon’s real estate giant Solidere will start scouting for new project developments in the region from the second quarter of 2017, with Dubai and Abu Dhabi rated among the possibilities.
In keeping with its existing strategy, any new signings must be joint ventures, a top official at Solidere International confirmed.
“Until today we have a little bit over $1 billion (Dh3.67 billion) invested in our existing projects and that’s close to maturing, especially the ones in Saudi Arabia,” said Oussama Kabbani, Chief Operating Officer of Solidere International.
“Our exit from many of the Saudi projects will start in the second quarter. Once projects mature and start giving positive earnings, we have to look at other sources and reinvest.” (The Saudi developments are in Jeddah and Riyadh, where it has built a residential community.)
Solidere International — in which the parent company has a 40 per cent share — has been profitable for the last three years, turning out $11.5 million in 2013, and shooting up to $67 million and $61.8 million in the following two years.
Solidere in Lebanon has been operational for 23 years now, while the international entity came into being in 2007 and capitalised at $700 million. Solidere International has a 50 per cent stake in Al Zorah Development Co., with the rest held by the Ajman Government. Al Zorah Development Co. is overseeing a multibillion dollar mixed-use development in Ajman, which includes a golf course, residences and hotels along a 1.6-kilometre stretch of beach.
Al Zorah was launched in 2008, but then came the global financial crisis and the developer took the decision to bide its time until the market picked up again.
The new round of investments will feature some changes to the way Solidere International has done business. The focus will no longer exclusively be on the high-end, but to create “places for life” that will offer both short- and long-term income and value generation.
In fact, just before the second downturn hit the UAE real estate market in 2014-15, there was constant speculation that Solidere International would enter its second project in the UAE, with Abu Dhabi rated as the strongest possibility. It was felt that the developer’s reputation for masterplanned high-end communities would be the ideal fit for the kind of projects Abu Dhabi’s real estate market was focusing on at the time.
Kabbani would not be drawn into where specifically his company might plant a flag next. “We have looked into more than one country in the Middle East. Once the dust starts settling down, there is a need for a lot of investments.
“This trend might start increasing from 2017 onwards, even though the markets are not as rosy. Because of the way we invest, we would like to make steady profits rather than outsize returns.
“At one point (before the 2008 crisis) the world was too small for all the developers in this part of the world. Everywhere there were possibilities, be it Monaco or Morocco.
“Then came the reality check. Everyone needs to know that real estate is not a commodity that will generate immediate returns … It need time to mature. We are not selling water bottles.
“You are building concrete and that always takes time. We have been approached by people in Dubai and Abu Dhabi, but we do not want to chew on too many projects at the same time. Sometimes, people want to take us faster than we can … or want to.
“In any new foreign investment we would like to have an alliance, simply because it makes your learning curve faster.
“As a developer we have been around for more than 20 years and plan to be very much there for another 50 years. We don’t want to do anything that gets us frantic over economic cycles.”
BOX
Solidere makes headway in creating an Ajman masterpiece
With the Nicklaus designed golf course open for some time now, the Al Zorah master-development is all set to welcome its next attraction — an upscale hotel managed by Oberoi Group — in the first quarter of next year.
A second hotel project is to start construction and another four or five could eventually take place along the 1.6-kilometre stretch. (That is half of Ajman’s overall waterline of 3.2 kilometres.)
“We have invested more than Dh2 billion until now and Al Zorah overall should take 15 years to develop,” said Oussama Kabbani at Solidere International. “The features we are building into Al Zorah is raising value and puts us in a strong position to raise debt if we want to.”
The second release of golf-course side residences — around 117 units — is also imminent. “We are more than 60 per cent sold on the first set of releases,” said Dana. “We are not increasing the prices beyond the Dh900-Dh950 a square foot.
“When those were released, they were 40 per cent cheaper than comparable units in Dubai. But after the market correction in Dubai, the gap has come down appreciably.
“But we are sure of our product — and this one golf course community where the number of residences will be in the hundreds and not in the thousands.”
