TBY talks to two executives in the construction sector on the history of the industry and prospects for the future as activity picks up.
What have been the factors that have led to the success of your company over its history?
MOHAMMED K. AL HABTOOR I think the success of the group is a product of the leadership of the Chairman, my father. When he established the company in 1970, he had no capital—my father borrowed funds to start construction and worked 24 hours a day to arrive at this level. Today, our group is considered one of the largest in the region. The group has survived the initial construction projects and branched out into different business sectors, such as automotive, real estate, hospitality, insurance, and education. Although my father has been operating the company for over 40 years, he still spends all day at the office. He does not believe in relaxation, even now that the company has reached a very comfortable level. Therefore, I believe his time and effort have created the successful company you see today. We are mainly focused on the hospitality, real estate, and automobile segments, which are generally car agencies. The company is also expanding car sales in the UAE; we are seeking new opportunities and agencies throughout the region. Although this activity is in the initial stages, we are working hard. Al Habtoor Group has the right management and marketing team, and it is considered one of the best in the world in terms of selling Mitsubishi products. The hotel and hospitality segment is also performing very well, despite numerous crises over the last 20 years, from the first and second Gulf Wars to the conflict in Afghanistan. Despite the economic crisis, our hotels were operating at very good occupancy levels and a reasonable average rate. Our hotels are better than those in Paris or London; they offer better services and amenities. We still aim to attract the maximum number of tourists, and prices have dropped. This phenomenon is not optimal for us, but it does attract more people. In the next few years we expect to bring these rates back to pre-crisis figures.
SANJAY MANCHANDA We were given a defined business plan and were tasked with the objective to implement it. I’m proud to say that two years down the line that we are very much staying on-plan and continue to focus on delivering it. At the same time, as a developer, we have not lost sight of our activity. We have started to look at projects that will enhance our existing communities and other projects that are demand driven. For example, we are significantly expanding our hugely successful Dragon Mart Mall and are very enthusiastic about the fact that a lot of people have shown a keen interest: 80% of the expansion is already leased. Similarly, a number of projects have been launched on Palm Jumeirah, including Palm Views, Palm Residences, and The Pointe, with a healthy response from investors. From our perspective, for the people and the investors to place their trust in us is another sign of significant confidence in our company. We may have had some hiccups, but we have overcome them. We are launching what we believe to be products that people want. We want to fulfill our communities’ needs by enhancing and developing them into mature communities—places to live and belong.
In Dubai, what were the lessons learned from the economic crisis?
MH We are 80% recovered from the crisis. The remaining 20% will bring us back to a level comparable to 2007 and 2008. Considering all of our businesses, trading is excellent, and the margins are even better than before. The number of car units we sell and luxury brands we offer such as McLaren, Bugatti, and Bentley positions us at number one or two in the market. People continue to purchase from us, and we sold 30% to 40% more Bentleys and Bugattis this year; we are selling every car we receive. In Mitsubishi sales, we are performing better than before. In our schools, we have longer waiting lists. The hotels are full, and construction is busy.
What kind of trends have you seen in terms of the demographics of investors?
SM Our buyers have has always been a mixed set of investors. Nakheel is currently developing and delivering what we have been contracted to do. If we have different people from different nationalities and different places having had contracted with us, we are now fulfilling our obligation to give them their houses and apartments. In our newer developments, we see a lot of interest from Malaysian investors and from Southeast Asian economies, because of the proximity to Dubai and because the Emirate has shown its resilience in difficult times. The Arab Spring has helped us because people are looking for a safe haven, and Dubai continues to live up to its reputation of being just that.
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