To say 2016 has been a busy year for Damac Properties would be an understatement.
In September, the Dubai-based real estate developer said it had launched more than 10 projects with a total value exceeding Dhs13bn ($3.53bn) so far this year, including the Dhs7.4bn Aykon City near the Dubai Canal.
It has also awarded more than 285 construction and consultancy contacts across the Gulf Cooperation Council and the United Kingdom worth Dhs5.25bn ($1.43bn) since January and expects to handover 1,350 villas and apartments at its flagship Akoya master development this month.
All at a time when the local market is facing downward pressure, with real estate consultancy Cluttons predicting apartment and villa prices in Dubai will end the year down 5 and 7 per cent respectively.
You could be forgiven for thinking the firm is simply making up for lost time after the emirate’s 2008 property market crash forced it to scale back projects and delay any significant launches until late 2012. But when asked in a plush side room of Damac’s packed stand at this year’s Cityscape event in Dubai, softly spoken managing director Ziad El Chaar says the reason for the flurry of launches is quite simple: buyer interest.
“For a developer of our size you can say it would be a mistake launching the first project but we would not launch the second, third, fourth, fifth, sixth, seventh, eighth, ninth and tenth unless you see success at the launches you have,” he says.
That Damac appears, at least externally, to be powering through the storm of low oil prices, reduced economic sentiment and sliding property values may seem like poetic justice to the MD, who has spoken out against predictions of the market’s downfall by consultancy firms.
At the end of January, he was even quoted by UK publication The Sunday Times as saying he would “go on TV naked and resign” if the Dubai real estate market crashed as some predicted.
When asked about the article El Chaar insists it was “a very big misrepresentation”.
“Actually what I said was if all these reports ended up being true this is what I would do. Technically, since 2014 we’ve started seeing reports on the market crash,” he says.
However, it is also clear there is no love lost between El Chaar and those forecasting declining market performance.
“If you want to do a really big article, take all these reports over the last 12 months and check which ones were actually correct eventually. Then come lets talk, and then ask me the question,” he says when asked if he agrees with recent assessments of the market.
This confidence is backed by what he describes as “very strong” demand fundamentals including inventory growth, population growth, increasing visitor numbers, spending on infrastructure and government desire to attract more and more companies to the UAE.
It also comes despite demand for the Dubai/London-listed company’s shares having dampened quite significantly since last year, down roughly 27 per cent over the last 12 months, but up 2.15 per cent in year-to-date terms.
But unlike other developers that are eyeing the World Expo 2020 in Dubai as a catalyst for surging market performance, he suggests the mega event is “just the cherry on the cake” given all the other factors at play.
Among the recent changes that have caught El Chaar’s attention is the approval of a new bankruptcy law – likely to take effect in early 2017 – which will boost business confidence by allowing companies in financial distress to restructure. He is also encouraged by the recent revelation on Twitter by UAE Vice President and Prime Minister and Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum that the country intends to grant Chinese visitors visas on arrival, but suggests there is still one missing piece of the puzzle.
Wealthy foreign buyers are attracted by Dubai’s high yields of 7-10+ per cent per annum, he argues, but stricter financing requirements mean many are forced to turn to other global cities.
“We need to reach the same situation of Sydney, Melbourne, Singapore and Los Angeles where you have a programme where you put 35 per cent down and you get the other 65 per cent no questions asked. It’s a one-hour mortgage and this will encourage a lot of people to buy property, residents and non-residents.
Damac’s enthusiasm for attracting foreign investors is not surprising considering much of its recent success has come through gauging what kind of product a non-resident would want to buy.
As a result, close to 80 per cent of the company’s portfolio is now golf communities, which “have higher demand and produce higher rates of return for investors” he says.
And even controversy surrounding Damac’s relationship with Donald Trump, whose firm will manage the two golf courses at the developer’s Akoya and Akoya Oxygen master developments, does not appear to have suppressed the firm’s appetite.
When asked, El Chaar indicates Damac will continue to work with Trump Golf for the courses and a branded villa development despite the ban on Muslims entering the United States the US presidential candidate proposed when running for the Republican Party nomination in 2015.
“We’re not into politics, we just focus on who can do the best job in operating those golf courses and today Trump Golf is the best franchise in golf in the world.”
Another area where the firm is constructing a sizeable portfolio is managed real estate. Of the 44,000-rooms it has in various stages of development, some 13,000 units are hotel rooms, serviced apartments and hotel villas to be managed by its hospitality arm Damac Hotels and Resorts. El Chaar says this hands-off ownership style has particularly appealed to non-residents who are not familiar with Dubai but are attracted by the emirate as an “investment platform”.
El Chaar appears to share this attrraction and says there are no plans for large-scale international expansion outside of the emirate, despite a number of developments in other locations including Saudi Arabia, Qatar, Jordan, Lebanon and London.
“We started here [Dubai], we succeeded here, we have a very big customer base here and we have a very good land bank here. Returns are good our shareholders are happy so there is no reason to dilute this,” he says.
And regardless of the firm’s recent financial performance, with a 37.4 per cent dip in its second quarter net profit compared to the previous year to Dhs886.8m ($241.4m), there is a sense that El Chaar would be happy if current market conditions persisted.
“In 2016 and 2017 supply and demand are very close to each other, and I think they should stay like this as much as possible because this will give us a continuous market,” he says.
“As long as we are able to market developments aggressively with good pricing and good payment then we’ll continue launching projects.”
Clearly there are no signs of Damac slowing down quite yet.