TBY talks to Mohamed Alabbar, Chairman of Emaar Properties, on developing the Dubai real estate sector, international operations, and working with the Dubai Real Estate Regulatory Authority.

Real estate development has played a pivotal role in shaping today's Dubai. What role has Emaar Properties played in this?

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 Centre of Now." The $20 billion Downtown Dubai development features several architectural and engineering landmarks such as Burj Khalifa, which features the world's first Armani Hotel Dubai and the world's highest restaurant, At.mosphere; The Dubai Mall—the world's largest shopping and entertainment destination; and The Dubai Fountain, the world's tallest performing fountain set in a 30 acre lake, in addition to residential, commercial, and leisure components.

How important a role does Dubai continue to play as a hub for Emaar in terms of its regional operations?

Dubai is our home market and we have a robust portfolio of projects in the pipeline in the city. In Dubai, we also see continued growth in our retail and hospitality and leisure businesses, which further assists in the increased ability of Emaar to create superior assets and landmark developments across its international projects. Dubai will continue to be a central hub for our operations even as we expand to other global markets. Already, we have a strong footprint across several markets spanning the Middle East, North Africa, pan-Asia, Europe, and North America. The company has established operations in the UAE, Saudi Arabia, Syria, Jordan, Lebanon, Egypt, Morocco, India, Pakistan, Turkey, China, the US, and Canada. We have also highlighted our commitment to project delivery by handing over homes in our master-planned communities in Turkey, Egypt, Saudi Arabia, India, and Pakistan, as well as commercial offices in Syria. The strong fundamentals that we have built up over the years have enabled us to finance projects in our international markets, as well as utilize the expertise available in Dubai for our regional projects. This, in turn, has provided us a competitive edge over local developers, by continuously developing superior developments.

“Dubai is our home market and we have a robust portfolio of projects in the pipeline in the city."

Emaar works closely with the Dubai 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.

There remains a need for greater liquidity in the sector to drive market growth. Do you foresee banks in the region lowering the cost of property financing?

With the real estate sector gaining positive trends in 2012, there is stronger interest from the banks and financial institutions to offer value home finance packages. The banks have started offering home financing at 4.5% to 5.5% interest per annum. This is significantly lower than interest rates in 2010 and in earlier years.

© The Business Year - June 2012