Nov. 2, 2018

PNC Menon

UAE, Dubai

PNC Menon

Founder & Chairman , Sobha Group

TBY talks to PNC Menon, Founder & Chairman of Sobha Group, on Dubai's status as a commercial hub, the Firdaus Sobha project, and two-plus-two market cycles.


PNC Menon is the Group Chairman of Sobha Group, a well-established and diversified real estate development company with a presence in the UAE and India. He began his entrepreneurial career in 1976, launching his interior decoration firm, Services & Trade, in Oman. He went on to found Sobha in 1995.

Where does your long-term assurance come from when talking about Dubai's property market?

Dubai is the commercial capital for roughly 40% of the global population living across the Indian subcontinent, Africa, and the Middle East. None of the geographies mentioned have been able to create a city like this, which is vibrant, well-connected, safe, and beautiful. Dubai is the most sustainable real estate city in the Middle East. It delivers high quality living and is not expensive compared to its European and western counterparts. With Dubai running a series of mega projects, the Emirate's property sector is projected to see a ramp-up in 2018, thanks to a growing demand for new apartments ahead of Expo 2020. The three-year supply pipeline in Dubai's property sector is growing at a compound annual growth rate (CAGR) of 5% compared to demand CAGR of 5.6%. As a result, we can see a different investment cycle in the Dubai real estate market. With megaprojects planned, the supply will continue to grow; however, there are new trends that have led to changes in the potential buyers' category. There are first-time buyers flooding the market, and there is a greater supply of units targeted at middle-income buyers. There is a change taking place in the market, and the next two years will identify it until 2020. Importantly, the World Expo 2020 may be two years away, but will surely have an impact on Dubai real estate by creating a higher demand for residential housing in the city. We think this can be attributed to several key factors such as Dubai's status as a top commercial and tourism hub, a rising local population, the maturing nature of the market, strong appeal among international investors, and government funding of major infrastructure projects in time for Expo 2020. For residents and end users with stable income and plans of staying long-term in the Emirate, it is an ideal time to buy, as in some areas, rents can often be higher than mortgage payments.

Many say that demand is low. How is that affecting Sobha's business model?

The real estate business is cyclical, and no one is able to say how long a cycle is going to last and whether it is a positive or negative one. We expect that if not by 2H2018, the market will be back to normal by 1H2019. According to my analysis, the market is experiencing two-plus-two cycles, meaning two years of positive developments followed by two years of negative ones. Yet even during the two-year negative cycle, there are positive factors and opportunities in the market.

The Firdaus Sobha project has been signed off, a huge project in one of the smaller Emirates. How will this project add to Umm Al Quwain?

Firdaus Sobha is a joint venture between the government of Umm Al Quwain and Sobha Group on a 5sqkm plot. One of the most beautiful parts of the project is that it is a natural island. Moving forward, it is going to be developed as a city where people can live and experience high-quality entertainment. The project is designed to appeal to all ages in the region. Since the majority of people in this part of the region enjoy being close to the water, the company's aim is for the Firdaus Sobha project to be a dream destination. We broke ground in September 2017, and the project will take a total of 10 years to be completed.

Do you see other areas of the northern Emirates that have potential for city-within-a-city style development?
For the time being, the company is not looking for more projects because we are busy with projects like Meydan Sobha, Sobha Hartland, and Umm Al Quwain. These projects alone create plenty of opportunities in this part of the world. However, we never turn down a good opportunity.