Managing Director of Al Ruwad Real Estate, Ismail Al Hammadi, talks perception, progress and preparing for the Emirate’s next chapter. Melanie Mingas writes.
While nowhere near the events of 2008, it’s been a somewhat turbulent start to the year for Dubai’s real estate market.
2016 began with news of new projects ranging from villas to affordable housing projects and analyses of the market that indicated the supply-demand equilibrium would begin to balance out by the end of the year.
On the back of the activity came news that AED68bn had been spent on Dubai real estate in the first 53 days of the year and predictions surfaced that transactions would reach values of AED300bn by 2016 end.
Allsopp and Allsopp announced that transactions in the first two months of the year were up 18% on the same period last year, and month-on-month growth over the last 12 months had increased by 12%.
Then in early March, the emirate was ranked 96 out of 100 global markets due to its property price decline of 5.5% in Knight Frank’s Prime International Residential Index and statistics released by Dubai Land Department indicated a decline in the number of residential units sold between January 2014 and November 2015.
As managing director of Al Ruwad Real Estate – and entrepreneurial force behind a number of other business endeavours – Ismail Al Hammadi heads a business that specialises in property management, consultancy, buying and selling, brokerage and leasing.
If ever one is unsure about the state of the market, he is a trustworthy source of information.
“The market today is bigger than people are thinking. There is a perception that prices are always going up and down, but the size of the market and the projects we have today is different from what we had in 2013, 2008 and 2005,” he explains.
“When it comes to a comparison I cannot compare Dubai’s market today to Dubai’s market yesterday. Reason being, every day you have new products coming up, new islands, new villa projects, new buildings, we are talking about almost 700 different projects which are being announced,” he continues.
Al Hammadi, who previously served as executive director of TECOM and Dubai Industrial City, isn’t just a Dubai advocate, but one of the many business people who understands its economic nuances to enough of an extent as to capitalize upon them. He is also a keen writer.
In his op-ed “Dubai Real Estate and Public Relations…The Wasted Opportunities” he talks not about the speculators who moved in in the early 2000s, but the lack of PR support for Dubai and how, with the right positioning in the press, much of the negativity in Dubai’s real estate market wouldn’t even exist.
In light of how the first quarter of 2016 has played out, one would be hard pressed to argue otherwise; for almost a decade the media, no more so than internationally, has relished the anti-Dubai narrative.
Sensationalist headlines – mostly driven by an online journalism industry that is fed by how many times a page is visited, rather than how much value an article can bring to the reader – only perpetuate the situation.
“How many developers did we have in 2005, then 2010, now 2015? I can see the market is growing so why talk negatively about it? Unless we have a hidden agenda to say the market is down, in order to sell our product, you can come and buy.
“In 2015 alone there were more than 60 projects launched with a value of more than AED130bn It’s not a small amount and this is only one city in the country.”
Talking with passion on his mastermind subject, any frustration that could be considered normal in the face of such a constant, is jokingly brushed off as he adds: “People come over to me and say ‘hi how are you? How’s the market?'”
Following the leader
When Al Ruwad entered the real estate industry in 2013, Hammadi had a simple mission: to create one of the top 10 real estate companies in Dubai, based on the firm’s core values of professionalism, innovation, responsible business and integrity.
Today the business spans multiple operations and within three years Hammadi is certain that list will have expanded to include the words “holding company”.
As he says: “We will expand into all the supporting activities to increase the Foreign Direct Investments in the UAE by offering complete business solutions under one roof.”
Partnering with the emirate’s big name developers has been the driving force behind a large part of that success and these include Emaar, Damac, Meraas, Dubai Properties and Al Wasl properties, among others. Hammadi is the first to admit – albeit with humility – that he is incredibly well connected.
But as with any industry in a business environment that is built on global transactions, the local value is not the end of the story.
Dubai is highly dependent upon foreign direct investment (FDI) when it comes to making projects financially viable, in addition to banking facilities and infrastructure development – as somebody whose profession depends on relaying the state of those three key elements to investors in the city’s property stock, Hammadi’s authority is second to none.
Dubai aggressively targets FDI from a number of key markets, without depending on too small a pool of interest in its projects – residential, retail and commercial.
“In my business I like to be honest and transparent with my investors to show them all the positive and negative because their opportunity is my opportunity. In real estate the stakes are very high. One mistake and nobody forgets, so you need to cover all the gaps. Reputation is of a high importance for me.
“In only 40 years, Dubai became one of the most attractive cities in the Middle East because regulation outside of Dubai is much more difficult to operate under.”
Over that time, the market has not only continued to recover from its 2008 lows, but has entered a phase of hyper-growth, which while far from the heady days of the mid 2000s, is shaping the emirate of Dubai for a future based on diverse economic pillars.
“Dubai is about chapters. A new chapter is now open in Mohammed Bin Rashid City, a new chapter is open in Jumeirah Village Circle and Jumeirah Village Triangle, Sports City is also upcoming and Dubai South is taking part because it is linked with Expo.”
And it is with the words Dubai Expo 2020 that Hammadi’s tone changes – far from being the person who looks to the six month event in four years‘ time as a way to pave the streets with gold, he is one of the few people who refuses to join the bandwagon.
“Expo is one event and I am proud it is here in Dubai but I should not link it with my business – my services will be provided before and after Expo and Dubai’s strategy and the government vision is for 2021 not 2020.”
“For example, today we could have a launch for Emaar and the development will be completed in 2021. That shows that even the developers are not looking only to 2020,” he continues.
The where and when
When it comes to business, Hammadi’s local knowledge means one thing: he knows where to develop, and he knows what to develop on each plot.
According to his observations, there are areas of Dubai which are “ignored” by investors. Without surprise these are the submarkets, generally on the outskirts of the city, that are not served by a metro line and don’t boast water-side views.
In a horizontally-planned city that has been known to create additional coastline on a whim in order to boost real estate development and values, where the proximity to a metro line can add between 20 and 30% to the value of the plot, these are important points.
But there are other things which add value.
“You can compare Jaddaf to Barsha, it’s the heart of Dubai, it is linked with Sharjah and New Dubai, it is four minutes to the airport, seven minutes to Burj Khalifa, you have access to everywhere, infrastructure is 100% ready and even the metro stations are there. But it is not being utilised because the area is not on the agenda for development.”
Why? “I don’t see any reason. The main reason for Dubai is that the investors who are GCC nationals or foreigners, are following a scenario, but you need to have someone who is proactive to take risk and build, and then you will find people who follow these investments.
“We need to educate people more on these areas and become less reactive. At the end of the day I have a regulation for each zone. You can go right now and see that there is a huge investment in Jaddaf and I can see the role that area can play in the greater Dubai story and once that is clear people will be moving fast into that location,” he continues.
Al Ruwad has few hotel plots inventory some of which sold over recent months, although plans remain to develop a 3-star hotel that will be independently branded by Al Ruwad itself.
Jaddaf joins the likes of International City Phase 3, Al Ain Road – where Al Ruwad has “huge plots” listed in it’s inventory– and the area surrounding Global Village.
But it isn’t just infrastructure and a thirst for risk. Referencing the “Downtown effect” new areas need demand drivers, especially if they are out of sight.
Close to Global Village for example, is Al Barari; a luxury villa development described by its founder as an “exceptional botanic haven, unrivalled in its ecological sensitivity”.
It’s an enormous, sprawling oasis, with very little else around but the only part of the development non-residents know is its flagship restaurant, The Farm.
“That is the only anchor in that area and it is one restaurant in a huge development. We are not looking at the value of the project but because we know that one landmark that is what it is known for.”
Another key development on this trend is the evolution of the product offering. Not only is interest moving away from the “prime” areas, but it is also diversifying. Today affordable housing components are required alongside the luxury developments, because no one single property type sells to every member of Dubai’s ever expanding society. It is a sign not only of market maturity, but also the changing face of the Dubai resident and buyer.
“The good time to invest is now. Where, the location I don’t want to mention the place because it will be a promotion for the developers, but we have a good place in Dubai and this is the right time to invest, regardless of Expo,” Hammadi asserts.
The road ahead
In light of how 2016 had begun, what could happen over the next 12 months is anybody’s guess. In February 2016, Asteco, real estate consultancy, said residential rents would fall in 2016 and 2017 if “all housing units are delivered on time.”
It’s a big if, but a statement continued to predict that: “rental performance in 2016 will be highly dependent on the timely delivery of supply. Assuming the anticipated supply is handed over on time, rental rates are likely to come under pressure over the course of not only 2016, but also 2017 onwards.”
In Hammadi’s eyes the road to 2018 could see “any service providers do well”.
He predicts hospitality will emerge “as a main player”, both hotels and restaurants, and the demand for services such as FM, building materials and maintenance will reach such a level that the market will need to double to keep up.
“Then the price will be in competition and companies from other emirates will not be able to come to Dubai.” He concludes: “My target is not 2020 because if a major event is going to start then I need to be in the market by 2019, 2018 is even better, so we have a good number of investments.”