Dubai Investments eyes replicating its successful business model

In 1995, a young UAE was preparing to leapfrog into the future on the back of petrodollars. The government was giving due consideration to privatisation and diversification. Comprehensive five-year plans were being drawn up to promote growth and build a sophisticated economy. However, for the successful Dubai merchants looking to capitalise on the new opportunities, there was hardly any avenue. It was against this backdrop that Dubai Investments was born.

“We were mandated to create business and investment opportunities for UAE nationals,” says Khalid Bin Kalban, Vice Chairman and CEO of Dubai Investments, looking back at the inception of the organisation he has been a part of from day one. Backed by an initial capital of Dh650 million and a proper set-up and management, Dubai Investments began developing investment opportunities across diverse sectors such as manufacturing, real estate, finance, healthcare and education.

Today, 30 years on, Dubai Investments stands tall as an approximately Dh23-billion, pan-UAE company, with assets worth Dh15 billion in real estate, Dh5.5 billion in financial investments, and nearly Dh3 billion in manufacturing.

Carving its own path

To attain such success, Dubai Investments has had to carve its own path, being the first of its kind in the country. With no commercial activities off limits, the company was expected to keep an open mind and look at every business opportunity that made economic sense. It started small, first by acquiring Marmum Dairy Farm, which was tucked away in the desert, in 1996, then establishing Emirates Building Systems in 1997, and setting up Emirates Glass and Global Pharma in 1998.

These operations gave rise to a new requirement, a place of its own, explains Kalban. “So, we negotiated with the government for what you now see as Dubai Investments Park to host the manufacturing plants that we have as well as the future ones.”

Not surprisingly, Dubai Investments’ concept of a property of its own went beyond the usual government-sponsored industrial areas. Kalban toured the world, from the US to France and Switzerland in Europe, checking out various facilities. Earlier, during his posting in Singapore, he had seen at close quarters what Singaporeans had built in their own country, Malaysia as well as China. Taking inspiration from what the world was doing and combining different elements together, Dubai Investments created a new concept – Dubai Investments Park, a city within a city.

The crown jewel

The novel plan met with a lot of scepticism, with naysayers likening it to pouring money into the desert. “I showed them the master plan,” remembers Kalban. “I told them it will be an investment park, where we will host everything, offer land for manufacturing, logistics, residential buildings, offices, schools and hospitals. They said it was not going to work.”

However, Dubai Investments hunkered down and worked towards realising its goals. In 2002, it entered into a joint venture with Union Properties to build the Green Community in Dubai Investments Park. A gated community of this magnitude – with 800 villas and apartments – was never attempted before in a special zone.

Today it’s the crown jewel of Dubai Investments Park, the flourishing, self-contained mixed-use industrial, commercial and residential hub spread across 2,300 hectares.

“The story of Dubai Investments Park is unique because it did not cost the company much,” explains Kalban. “We borrowed Dh100 million from Dubai Investments and created Dubai Investments Park, and we gave Dh85 million back in two years’ time with the remaining Dh15 million serving as paid-up capital. Today Dubai Investments Park is 100 per cent leased out.”

Dubai Investment Park’s success encouraged Dubai Investments to create its property arm, Dubai Investment Real Estate (DIR) in 2006. As the UAE property sector grew and the rules of engagement changed, DIR ventured further out of Dubai Investments Park and started building mixed-use developments in Mirdif Hills in Dubai and Danah Bay in Ras Al Khaimah, its most ambitious project to date.

Although real estate makes up the lion’s share of Dubai Investments’ portfolio, the company is free to tap into the potential that exists in any field without any restraints thanks to its mandate. “It just depends on how creative and innovative we can be,” says Kalban. “We can be a real estate company; we can be in healthcare, education or financial investments. We can be whatever we want to be.

“What we bring to the market is new ideas, know-how, technology and expertise. Most of what we have done has never existed in the country and hardly existed in the region.”

Healthy growth and returns

This creativity and innovation, combined with a diversified portfolio built through a scientific approach to investment, have ensured that Dubai Investments remains profitable.

“Since Dubai Investments was established, we went through three or four crises. But we sailed very smoothly compared to others,” says Kalban. “We never failed in our duty; the company never made a loss, and we kept paying dividend, even during the financial crisis of 2008-09 and beyond.”

With a successful strategy driving growth and returns for investors, Kalban sees no need for change. “There are challenges, but the company was able to absorb the challenges and move forward,” he says.

If anything, he’s eager to replicate the successes he’s overseen at Dubai Investments.

“Government heads and companies come and see what we have done and they want to replicate not only Dubai Investments Park but also something similar to Dubai Investments in their home ground, countries, or different emirates because they think it will create opportunities,” he explains. “This is something that we have been engaged with in the past six months.”

As Kalban casts his eye over Dubai Investments’ 30-year journey, he’s confident that the company will rack up the achievements of the past three decades within the next 10 years. “We have learnt from the past. If we have made a mistake along the way, that's now knowledge. With that knowledge, we will transform the company, by creating new companies, expanding the existing companies and concepts, or going to the financial market to list some of the companies.”

In fact, consultants have already evaluated Dubai Investments’ 36 companies and pegged their worth at Dh20 billion. “This Dh20 billion will become Dh35 billion in five years’ time because I can see the pipeline, and I see where we have been successful,” says Kalban.

With five companies ready to go public, Kalban is bidding his time, as the value of the companies keeps climbing up.

Meanwhile, Dubai Investments shareholders remain happy and content. From 22,000 in 1995, the number has come down to 16,000 today, with people consolidating their shares over the years. “Most of them, if not all, have stayed with us because they like what we do,” says Kalban. “They say: ‘We gave you around Dh2 billion. You gave us back Dh11 billion over the past 15 years; that’s more than 10 per cent return year-on-year. And we still have the value of the shares with us. So why would we sell?’

“When somebody comes and tells you that, you feel proud of what you have done, and you are proud of your people who have helped you create that. Thirty years ago, this company wasn’t there; today it’s a successful company, with strong financial results, moving forward and growing.”