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BUILT TO BUILD

Sharjah 2016 | ENERGY, INDUSTRY & ENVIRONMENT | INTERVIEW

TBY talks to Mohammed N. Al Hazzaa, Director General of Emirates Company for Industrial Cities (ECIC), on the company's performance, government support of the private sector, and forecasting occupancy trends.

Mohammed N. Al Hazzaa
BIOGRAPHY
Mohammed N. Al-Hazzaa attended Central Michigan University for both a bachelor’s and master’s degree in industrial management. After university, he became an Assistant Plant Manager at Petromin Lubricating Oil Company, before moving to Saudi Basic Industries Company (SABIC) in 1991. In 1993, he became the General Manager of Manufacturing and Projects at Adwan Chemical Industries, then General Manager of Saudi Development Company, before taking up his current position in 2005 as Director General of Emirates Company for Industrial Cities.

How would you assess the performance of the Emirates Industrial City (EIC) over the past year?

We have around 800 companies, all ranging in size. At the beginning of 2015 there was an improvement in our real estate department. Sales increased and the range of warehousing capacity was strong. Unfortunately, that was only the case for a short period, after which the market started losing momentum. The problem here in the Emirates is that we always take the market to the extreme—nothing is gradual. This is why most of 2015 was tough for us and we are still struggling, particularly with the current oil prices. In terms of financing, since 2008 the banks have been very conservative, which is due to the lead of the central bank. The banks' exposure to real estate is high and unfortunately our project is perceived as a real estate project because it is industrial real estate. We do not have financing and the EIC is self-financed. The EIC has advantages when compared to industrial zones in other Emirates, especially infrastructure, as the site is already available for use. The entire infrastructure is completely developed, including the electricity supply. The site is accessible and not hidden away, and we are near to the coast. Whatever we sell we reinvest alongside shareholders' money. Current conditions are likely to continue through 2016 and into the beginning of 2017, even though oil prices are improving.

What can the government can do to boost the private sector?

The government is supportive, especially in Sharjah. The government should always be reviewing the rules and regulations to attract investors, particularly industry. The problem is that sometimes people mix up the commercial and the industrial sites. The EIC is not real estate, but sometimes the rules that apply to real estate are applied to us. This should not be the case because, for example, there is a high turnover on apartments. By comparison, changing or selecting a new site for your factory is a major undertaking. You have more flexibility and choice when it comes to homes and offices, compared to industrial investments. Increasing fees are becoming a major issue as well. Sometimes the cost of electricity can also discourage investors and businesses from coming to Sharjah.

What are your expectations for occupancy?

Some of our properties are for lease so clients come and go; therefore, it will be a continuous process. Right now we have eight sectors and we have taken care of five of them. Some are 8.5 million sqft and we have 20 million sqft remaining. We expect this remaining space to be occupied within the next five years. However, for our warehousing and logistics zone we know you cannot always find the right customers at the right price. Therefore, instead of just holding onto that land and waiting, we believe you have to add value to it by building something on it and then sub-leasing to generate revenue. The return on this can be very good, at around 10-20%.

Do you think that companies coming to the region for the World Expo 2020 will have an impact on your business?

Unfortunately, I do not think we should expect too much from the Expo. Dubai will benefit through the development of new sites. Dubai's government and business sector are always ahead of the times with their planning and organization. They have a stronger PPP relationship and the public and private sector work well together because most of the companies in Dubai are semi-government. One impact might be the rising cost of doing business and land in Dubai, which is increasing. Dubai is a commercial and service-based center rather than an industrial center. Activities that need a large area of land will find themselves coming here, not because of the Expo, but because of the lower cost of doing business and the chance for expansion here.


 

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