TBY talks to Mohamed Alabbar, Chairman of Emaar Properties, on developing the Dubai real estate sector, international operations, and improving community management structures.
TBY Real estate development has played a pivotal role in shaping today’s Dubai. What role has Emaar Properties played in this?
MOHAMED ALABBAR The most significant contribution of Emaar to Dubai is in supporting the city’s social and economic growth through the creation of prime real estate assets that add to the civic pride of the city. We provide the residents of our integrated communities with a sense of belonging, creating thousands of new jobs across the property, hospitality, and leisure segments, as well as in shopping malls through retail development, thus driving the growth of ancillary industries. Since its inception in 1997, Emaar has been a true partner in Dubai’s growth, led by the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice-President and Prime Minister, and Ruler of Dubai. With the government of Dubai owning over 30% of the equity of the company, it makes sense for us to grow in our home market. Our development approach complements the growth outlook of Dubai, and through our projects we have contributed to further strengthening the traditional growth sectors of the Emirate—especially in retail, hospitality, and tourism. This is underlined by strong visitor numbers to The Dubai Mall, which welcomed more than 54 million visitors in 2011, contributing significantly to Dubai’s retail sector. Visitor numbers to the mall were over 16 million in 1Q2012, an increase of 22% compared with the same period in 2011, highlighting the strong growth in retail and leisure that contributes to Dubai’s economy. Our hospitality business, through our Address Hotels and other leisure assets, also complement the city’s tourism sector, having recorded robust occupancy levels through 2011. It achieved a 92% occupancy rate in 1Q2012. In the property sector, Emaar brought a new dynamic to the city by pioneering the concept of integrated lifestyle communities. Since 2001, we have handed over more than 33,500 residential units that are today part of established and sought-after integrated lifestyle communities. A highlight of Emaar’s approach to developing integrated lifestyle destinations is Downtown Dubai, a 500-acre mega-project described as “The Center of Now.”
Emaar works closely with the Real Estate Regulatory Authority (RERA) to improve corporate governance in the sector. What recent developments have been made in this regard?
Emaar works closely with all governmental authorities including RERA, the Dubai Municipality, and other related departments. We pioneered interim owner associations in our communities, with the residents themselves taking an active role in enhancing the long-term welfare of their neighborhoods in association with Emaar’s Community Management Department. Emaar has been one of the first companies to comply with all RERA regulations for the launch of our recent project—Panorama at The Views. The development has been registered with the Dubai Land Department, and all units are listed on the Land Department’s registry. Emaar also set up a dedicated escrow account for Panorama at The Views, with 20% of the construction value deposited as a bank guarantee. All sales proceeds will be deposited in this escrow account, which will be used only for construction purposes. Customers will pay based on the percentage completion of construction, providing significant protection to investors and financial flexibility. Emaar also works with RERA and is handling various customer concerns and developing superior policies and regulations to safeguard investor interests.
What is your outlook for Emaar in 2012, and the sector as a whole?
This year, we will also roll out our new value creation strategy for our stakeholders, taking into account current market realities, the evolution of new markets, and potential growth opportunities to drive tangible value-creation propositions. Our outlook for the year and for the property sector is robust, as highlighted by our new project launches and our focus on further strengthening our retail and hospitality and leisure businesses. Developing recurring revenue streams that add to the long-term value of our stakeholders has been a key pillar of our development strategy. This is reflected in our group revenue model; in 2008, 90% of our revenues were accounted for by Dubai-based property developments, and the rest came from leasing and hospitality. In 2011, 41% of our revenues were from the recurring streams of shopping malls and retail and hospitality, 22% from our international operations, and the rest from Dubai real estate operations. Today, we have recurring rental revenue generating assets of over 6 million square feet, and 12 hotels and resorts offering over 1,870 rooms. We will continue to strengthen our hospitality and retail business subsidiaries.
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