Abdullatif AlMulla: Dubailand, JBR & Business Bay developer planning "massive investments" on the back of rising revenues

Can you name Dubai’s three biggest property companies? 

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Most people will instantly name Emaar and Nakheel. Emaar gave the emirate the world’s biggest mall and the world’s tallest tower — Burj Khalifa — and the $11.5bn company is a bellwether of the Dubai stock market. Equally headline-grabbing, Nakheel redefined the emirate’s coastline with a series of palm-shaped islands and sent shockwaves around the world when it restructured billions of dollars in debt during the global financial crisis.

But who is the third? You could be forgiven for taking a while to name Dubai Properties Group to complete the emirate’s trilogy of master developers. Arriving seven years after Emaar and four years after Nakheel, it has operated far more under the radar than its rivals, preferring to focus on delivering projects without the fanfare of its competitors.

Why is this? The developer’s newly appointed group CEO Abdullatif AlMulla explains all to Arabian Business in one of his first interviews since his appointment in August.

“We are all established to serve Dubai at the end of the day,” says AlMulla, an industry veteran with more than two decades of experience in strategic leadership, having previously held a number of senior roles, including group CEO at TECOM Investments, a sister company to DPG and part of Dubai Holding, the investment firm owned by Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum.

“Our mandate is to make sure Dubai has enough housing available for the residents and [to support] its growth. We don’t do it in a vacuum. Certain companies have their own mandates,” he adds.

When pushed to explain why DPG typically focuses on functional rather than trophy assets listed in the Guinness Book of World Records, AlMulla fires back by mentioning three simple letters: J-B-R.

“We do [build mega projects], but in a different way. JBR was a massive project but if you are looking for a unique building in itself that is not our mandate.”

Some may forget that JBR, or Jumeirah Beach Residences to give its full title, was marketed as the world’s largest single-phased residential development when it was launched in August 2002. The $1.6bn development is now home to about 15,000 people in 6,917 apartments and 40 sandy-coloured towers, along a 1.7km strip of beach.

“We know for sure, JBR is one of the most successful destinations we have done and it has attracted over 12 million visitors so far and has huge demand from GCC visitors, especially from Saudi Arabia,” AlMulla says. “Recently we invested heavily in renovating the place and making it much easier to walk and cleaner — more as a destination for families and children.”

With ‘The Walk’ retail and hospitality section and the new beachfront mall, The Beach, proving popular with residents and visitors alike, the area has become a victim of its own success. Huge crowds attracted to the area at weekends mean traffic congestion along the one-way loop road has become infamous for all the wrong reasons.

AlMulla concedes that the traffic is an issue and one that he is determined to address. “We did [do research]. We appointed some company and we also are working hand-in-hand with the Roads and Transport Authority on how to make the flow in and out of JBR much more seamless.”

But has the brainstorming led to any solutions? “Partially,” he says, insisting it is still early days. “Traffic is getting bigger and bigger… The more we try to [improve] the flow, the more the traffic increases… But still it is a success,” he says, proudly.

Resolving the JBR traffic issues has been given added impetus with the start of construction on the $1.6bn Bluewaters Island tourism mega project, located at the south end of the strip. Announced in 2013, it has been described as one of the largest tourism hotspots in the world by developer Meraas Holding, another development firm backed by the Dubai ruler. It will feature the world’s tallest Ferris wheel and an entertainment piazza as well as retail, residential, hospitality and entertainment zones. It is due for completion in 2016.

DPG certainly is investing in the master development of JBR and at the Cityscape Global real estate exhibition in Dubai in September it unveiled a new luxury residential development, 1/JBR. Located at the northern end, the tower will include five-bed penthouses, panoramic sea views and a unique glass façade.

Due to be completed in early 2019, AlMulla boasts that it will become “the crème de la crème of high-end residences” and predicts it will be “one of the most sought-after destinations in the country”.

Another highly ambitious project under AlMulla’s DPG wing is the massive Dubailand development. Launched in 2003, it was a headline-grabbing project of epic proportions. Various valuations put the initial plans at anywhere around $65bn and it was marketed as being twice the size of Walt Disney World Resort in Florida, with the largest collection of theme parks in the world.

Several partnerships were announced, including Six Flags Dubailand, DreamWorks Studio Theme Park, Universal Studios Dubailand and F1-X Theme Park Dubai. However, many of these were put on hold in the wake of the global financial crisis in 2008/2009 or were moved to other projects within the emirate.

A Universal Studios gate that still stands — alone — in the desert on the outskirts of Dubai came to symbolise the enormous crash in the emirate’s property market following the global financial crisis.

“This [the theme park] is still in discussions,” AlMulla says teasingly, without giving any details of what the future plans may entail.

Some aspects have pushed ahead, such as IMG Worlds of Adventure, which will contain themed rides based on the Cartoon Network, Marvel and the Lost Valley Dinosaur Adventure when it opens next year. AlMulla is keen to state that the theme park masterplan is still very much active.

“We are still focused on building the theme parks and it is still in the plans. We have a specific team working on that,” he says.

Initially, though, he is more concerned about delivering residential units for the emirate’s growing population in the surrounding area. “Dubailand is becoming the new Dubai. What we try to do is segment the land for different purposes; [for example], on one side we are looking to build affordable housing for professionals,” he says.

AlMulla reiterates DPG’s fundamental mandate: to make sure everyone in Dubai can afford somewhere to live. It is obvious affordability is a passionate topic for him.

“We are allocating a big piece of land for staff accommodation and making sure people with specific needs are also catered for… Each group is allocated. Demand has always been there [for affordable housing]… I think this segment was ignored for some time but, we believe, so many people they work in Dubai, they live in Dubai and then they go outside Dubai for their homes. That segment needs to be catered to.”

Affordable housing is currently a hot topic across the Middle East. A report in September by real estate consultancy firm JLL found the region is suffering from a shortage of middle-income housing and major efforts are required to address the current imbalance.

JLL says this shortage is an important and consistent issue across three of the major MENA markets of Saudi Arabia, the UAE and Egypt. While there is a general recognition of the problem among governments and a growing number of policy initiatives and projects targeting the middle-income sector, more needs to be done if the current shortage is not to widen further before it is reduced, the report says. JLL defines affordable housing as costing no more than 30 percent of gross household income for households earning between AED10,000-30,000 a month.

“The importance of the middle-income sector of the market should not be under estimated, as it accounts for over 60 percent of all households in both Saudi Arabia and Egypt. That equates to 3.3 million households in Saudi Arabia and 12 million in Egypt,” JLL says. “The relative numbers in the UAE are smaller, but there are still over 820,000 middle-income households, representing almost 40 percent of all households in the UAE.”

AlMulla’s belief that affordable housing is a viable business model was proven in August when the first phase of a $190.5m project targeting middle-income residents at Dubai World Central, launched by MAG 5 Property Development, saw 80 percent of its properties snapped up.

At DPG’s other major development, Business Bay, AlMulla is also pushing for more residential units and to diversify from office and commercial space. “Our focus on the office market will be less… there will be more residential,” AlMulla says. “It will be an area for everybody — professionals, families and knowledge workers.”

In 2011, consultancy firm CBRE claimed Business Bay was struggling to attract tenants as an upsurge in construction across Dubai squeezed rental rates and occupancy levels.

“Despite a prominent location adjacent to the existing central business district (CBD), Business Bay faces a battle to reverse huge vacancy rates,” the firm observed in April 2011. “Tenants have proved unwilling to contend with ongoing infrastructure issues and facility shortages.”

When H&H Investment and Development launched its $80m 014 property in Business Bay weeks before the CBRE report, CEO Shahab Lutfi told Arabian Business the area would not be completed for another three years, with low occupancy rates deterring new tenants.

AlMulla says Lutfi’s forecast was on the mark and vacancy problems no longer existed. “In our properties it [occupancy] is almost 100 percent.”

DPG last year also announced a new $217m project near Dubai Creek. Dubai Wharf will be located in the heart of DPG’s existing project and is set to feature four towers with 582 residences, approximately 150 retail, dining and entertainment units on the ground and first floors and over 2,000 resident and visitor car parking spaces at basement level.

The launch of the project proved so successful that DPG released additional units this summer, following what was described as “tremendous investor interest”. As a result of the positive sales and high occupancy levels, prospects are looking up at DPG and AlMulla reveals that revenue is likely to be up this year compared to 2014.

DPG’s results are included within those of Dubai Holding Commercial Operations Group (DHCOG). Last month, DHCOG reported a net profit of $707.91m in the first six months of 2015, up 24 percent on the same period in 2014.

In a statement, the company said it expected full-year net profit to exceed $1.5bn. It reported a profit of $1.27bn in 2014. DHCOG did not provide any insight or explain the profit growth, but said it “continued to see good operational progress with all businesses performing well and contributing to the Group’s profitability”.

AlMulla told Reuters DPG’s revenues were split about even between property sales and income from leasing residential, commercial and retail units to tenants, predicting this balance would remain stable.

As a result, AlMulla says DPG’s balance sheet is in a healthy position: “Financing? It is still very good, we still are in good shape,” he says, before adding that it will not need to go to the markets any time soon to fund its ongoing projects. “No, I don’t think so; we don’t require that.”

Various real estate reports regularly churn out data on the state of the Dubai market. The most recent one, Emirates NBD’s latest Dubai Real Estate Tracker survey, found the pace of price declines in the emirate slowed during the three months to October. It said the new international buyer enquiries index, particularly for apartments, suggested there was demand at the right price.


“The Dubai real estate market is still very competitive,” AlMulla says. “It still has high potential growth and it still draws the attention of many investors across the region and across the world. Despite some slowdown over a certain period of time, it is still one of the most favourite destinations.”

Looking to the future, DPG has even more big plans ahead: “We are considered one of the largest land bank holders in the city and we still have our strategies and way to go to make sure the land is consumed as per our plans,” AlMulla says.

“Today, we have three destinations that we are focusing on: Business Bay, JBR and Cultural Village… You are going to see massive investments here,” he adds, cryptically. While DPG may have previously been considered the silent giant of the Dubai market, under AlMulla it may soon fully emerge into the spotlight to rival its higher-profile competitors.

 

credit to Arabian Business