The Business Year

Mohamed A.R. Fakhro

QATAR - Real Estate & Construction

Studied Opportunity

CEO, Tanween

Bio

Prior to becoming CEO of Tanween, Mohamed A.R. Fakhro was Executive Director at The First Investor, where he was responsible for all business development activities across a multitude of investment and asset classes. He has also held the position of Associate Regional Director for Investment Development and Distribution for Bank Al Khair. Previously, he spent four years as a Consultant for Corporate Finance at KPMG, where he was an active member of a team that concluded major IPO transactions, valuations, and M&As. Fakhro holds a BSc in Finance from UCB, an affiliate of the American University of Beirut, and currently serves as an active Chairman at Kayan Real Estate United Company in Kuwait. He is also Board Member at Bahrain National Life Assurance in Bahrain and Chairman at Investate Arabia.

"A large amount of GCC money is coming into Doha, which is a sign of confidence."

What role does Tanween play in meeting increased demand for real estate in Qatar?

We are a development management company that acts as a third party or owner-representative of projects. If an investor or a landowner has a project but does not know how to go forward or needs financing, we will provide a full turnkey solution. Through these services we achieve a key indicator, which is the reduction of time to market from inception until completion of the development. We start off with investment reports, business plans, feasibility studies, and market research in terms of absorption rates for supply and demand. The Tanween model shifted in 2008 after the crisis. We sat down and compared our work with that of neighboring countries and we knew we had to move away from speculative building and more toward a concrete business based on supply and demand. Now, there is a full due diligence process that needs to be complied with, which includes proper financial studies and business plans. As a very multinational company, we are able to attract the best talent from around the region and beyond. Tanween does business with about 40 different nationalities and plays the role of development consultant for Barwa. We have managed most of Barwa’s projects during construction since late-2008. When we built enough internal capabilities and expertise, we then started to move toward being developers on our own. We did this by approaching people and clients who would be interested in leasing or selling their property or partnering with us to jointly develop land under joint ventures or build-operate-transfer (BOT) schemes. For example, we recently signed a major milestone for Tanween with an international player in the healthcare sector. We are building a hospital for a foreign operator that will enter the market as part of a 30-year program. We have also recently announced the creation of a real estate fund with our partners and shareholders, which we are calling, “The First Investor Tanween Fund.” It will target investment and development in educational property. The company is putting together a plan to roll out new buildings and campuses for the education sector. We have worked for almost two years with Lusail and Qatari Diar in terms of advising in Lusail City, among other projects. We have also started bridging the gap between local small landlords and developers to help create more SMEs and developments through creating partnerships between opportunities and capital.

What are some of the new projects that Tanween is going to be focusing on in the near future?

In addition to our operations in Qatar, we have a project in Saudi Arabia. We are now focusing on Oman as a market, as it is starting to mature. We were looking at Egypt, but until things settle down in the rest of the Arab world, we are pretty much confined to Qatar specifically, and then Saudi Arabia and Oman in terms of our expansion plans. We have already moved into Saudi Arabia, and we have an office operating there in the eastern province. Our focus in Saudi Arabia is the development of housing projects. In Oman, we are looking mainly at development and project management opportunities. In Qatar, we are working on a hospital, which is a large investment, and three other transactions. One of them is a mixed-use development in the north with private owners. Another project we are working on is in the heart of Doha. We are developing different ideas for that location, centered on creating a cinema complex with a hotel and serviced apartments with retail space.

“A large amount of GCC money is coming into Doha, which is a sign of confidence.”

How important are Tanween’s employees?

In a business like ours, our people make our business. The simple reason is that the service we provide is a people’s business. Our people are the biggest assets we have, and I am honestly proud of the team. The team makes Tanween what it is, and the day when our employees leave is the day that Tanween ceases to exist. It is as simple as that; I do not have a stock to sell. What we sell is expertise built over years and the combination of 50-80 years of experience, which comes from different backgrounds and expertise. We sell the intellectual property of our people.

How would you describe the investment climate in the local construction sector?

Qatar is where foreign investors are looking. The yields are still very attractive, although they have been tightened. Around 2011, we used to have yields that were 10% or 11%. This is not the case today, as we are seeing closer to 7.5%-8%. In another two or three years, we will see rates in Doha drop to around 5%-5.5%. The reason is that the demand is much greater than the supply, especially in the residential sector. A large amount of GCC money is coming into Doha, which is a sign of confidence. Many GCC companies are opening up branches and this has created a stimulus in the economy.

What are your medium-term plans for Tanween?

Our main focus is in education and health care, and this is where we are heading. We are looking at investing and participating in the development of healthcare and education facilities alongside our partners, and creating a pool of investors who are interested in Qatar as a whole. Saudi Arabia and Oman are our next focus outside of Doha. We believe that Doha is not oversaturated, but it is very important to study opportunities well before taking investment decisions.

© The Business Year – May 2013

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