DEVELOPMENT & CONSTRUCTION

Dubai 2018 | REAL ESTATE & CONSTRUCTION | B2B

Real estate development companies discuss the different opportunities and regulatory environments in Dubai and Abu Dhabi.

Sameh Muhtadi
SAMEH MUHTADI
CEO
Bloom Holding
Sami Asad
SAMI ASAD
CEO
Pivot

How do you see your project portfolio evolving in the near future, and how does this evolution fit into your expansion plans?

SAMEH MUHTADI In terms of diversification in the real estate sector, Bloom has embarked on a sustained path of growth, vertically and horizontally, offering both luxury and middle-income properties. Our diversification is visible across the region, as we continue our development activities in Abu Dhabi while being active in Dubai too. We have close to 2,000 units in the pipeline and three projects under development. We are also looking at diversifying internationally, with a number of countries on our radar. We have appointed consultants and are doing our due diligence in Europe, particularly Portugal, which has become an attractive destination for Europeans. Furthermore, we have identified three possibilities that we are currently studying carefully. We also have a large plot of land in Bucharest in southern Romania. In the US, we have two projects in the pipeline in Rochester, Minnesota. Apart from the hotel we are building, the second project is currently under development and has become an attractive proposition due to its exclusivity and our collaboration with the Mayo Clinic, along with a number of components that make it a sought-after property. We will have the final green light to commence the construction works on the senior living part in 2018, and we hope to break ground in 4Q2018.

SAMI ASAD We are an established company, having been here since the late 1970s. Currently, 100% of Pivot is owned by UAE nationals, with 65% owned by Aldar. We typically work within the Emirates market, with most of our projects between Abu Dhabi and Dubai, although we have considered exploring opportunities abroad. We currently have projects worth over AED2.5 billion (USD680.66 million) in our backlog. We are selective of our clients, and do not deal with anyone unless we do our own analysis to make sure there is the financial capability to fulfill the project requirements. In the past, the majority of our operations were in Abu Dhabi. However, with the current market situation we are shifting more toward Dubai. In Dubai, our projects deal with Emaar, Dubai Properties, as well as private individuals, where we have projects such as a mall and hotel in Motor City. We did villa projects earlier with DAMAC in Dubai. Now, we are bidding for more projects with Nishmi, Deyyar, and Dubai South. We see many projects coming to Dubai. There is more business here from the aspect of villas and high-rise buildings.

What is your perspective on the efforts of local authorities in terms of urban planning?

SM There are effective regulators in Abu Dhabi and Dubai. In Abu Dhabi, the Urban Planning Council (UPC) plays a fundamental role, and it checks on everything that is taking place in the Emirate. It is concerned about congestion, traffic, and volumes, which helps keep developments reasonable. In Dubai, there are 167,000 units in the pipeline to be delivered in the coming five years, which is a big challenge for urban planners and the market, especially in terms of generating demand. This will certainly affect the rental yields moving forward. In Abu Dhabi, things are more balanced. We work closely with UPC, and it is supportive of our idea to enter into community retail. We are not building mega malls, but talking about communities that need a small supermarket, hair salon, pharmacy, and so on within a 1-km radius.

SA There are certainly challenges whenever one enters a new territory as they have to learn about the requirements of the authorities. The requirements differ between Abu Dhabi and Dubai, and we are also looking into projects in Fujairah; hence, we need to know about the requirements there as well. In our business, authority requirements are vital because all buildings are approved by the civil defense firstly, then the municipality, and so on. Challenges today in the market come from it being a client market. We are working at extremely low margins and there is severe competition. There is great demand for projects in Dubai; the city is a construction site. The issue there is high competition and low margins. The market in Abu Dhabi for residential and commercial is saturated, though we expect this to change soon. We do not have new major projects today; however, in 2018 there will be many more opportunities and more projects will come to Abu Dhabi in the next two to three years. The Abu Dhabi plan for urban development is integrated into Vision 2030, and one of the main opportunities currently is the entertainment sector.