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Interview: The man behind Damac

Interview: The man behind Damac

Following a two-year period that has seen his fortunes increase dramatically, Hussain Sajwani details the path ahead for Damac as it looks to projects in Dubai and abroad


While much of the focus in the Dubai real estate market over the last 18 months has been on stagnant or slumping residential property prices and rents, one man that has been left with something to smile about is the founder and chairman of Damac Properties, Hussain Sajwani.

On the back of the historic election win of US President Donald Trump and a surge in the company’s share price, Sajwani was ranked the richest new billionaire in the UAE last year.

And his – and Damac’s – fortunes have only risen steadily since then after the opening of the company’s first golf club in partnership with the Trump Organisation in February at its Damac Hills mega project, and its addition to index compiler MSCI’s UAE index in June.

The company’s share price on the Dubai Financial Market has increased from Dhs2.69 at the start of January to around Dhs3.4 in November. Sajwani’s net worth has in turn increased significantly over the last six months from $3.7bn to $4.3bn, according to Forbes.

Speaking from the company’s Barsha Heights headquarters, he describes 2017 as a “good stable year” for Damac amid expectations it will exceed it targets for sales and handover by December 31.

“We had forecast Dhs7bn ($1.9bn) of sales, and I think we’re going to exceed that. We are on target with our profitability, we are very much on target on our handover,” he says.

Sajwani’s optimism is indicative of Damac’s dramatic turnaround. The company itself was founded in 2002 after the businessman, who was previously in the catering business through his venture Draieh Management Services Company, saw an opportunity in the opening up of the Dubai real estate market to foreign investors. It was then almost laid low like hundreds of other developers by the bursting of the city’s real estate bubble in 2008, which saw prices decline up to 60 per cent.

Since then the company has – in his own words – focused “heavily on delivery”, handing over 50 per cent more units than its peers during the 2010–2011 recovery period before launching its first new project for years in December 2012. This momentum continued in 2013 with the launch of the 42–million–square–foot Akoya, later renamed Damac Hills – a mega development featuring apartments, villas and branded mansions surrounding a golf course built in partnership with the Trump Organisation. Even larger, the 55million–square–foot Akoya Oxygen was launched the following year.

“One of the key things that makes me and makes the company very different and has contributed heavily towards our success is our ability to see the changes and react to the changes very quickly and accept any realities of markets and life and deal with it,” he says.

“After the 2008 crisis, out of the dormant companies we were the only survivor because we saw the crisis at the early stage and immediately took severe actions to fix things.

“We also saw in 2012, in the early months of the first quarter, that the market was moving and especially after 2011 and the Arab Spring we saw an influx of people coming. So we took the brave decision to launch Damac Hills and Akoya Oxygen. That was seeing the future and taking certain decisions which helped us to move to the next level.”

It is this post crisis period from 2012 onwards that has accounted for the majority (14,530) of the 19,855 units the company has delivered to date, including 1,923 in the first nine months of this year, and it is showing no signs of slowing down.

Sajwani is expecting the company to exceed the 2,800 units it is forecasting for delivery this year as handovers at projects including Damac Hills and potentially the $1bn Damac Towers by Paramount four–tower luxury hotel and serviced residences development are completed.

However, this momentum has not necessarily been reflected in the company’s profitability after it posted its third consecutive profit decline in the third quarter, with a 20 per cent reduction in the July–September period to Dhs719.34m ($195.86m).

Sajwani suggests this dip is indicative of lower profit margins on some international projects handed over in the last year in Saudi Arabia, Qatar and Lebanon but it is not a trend that he sees continuing. Particularly as the company’s sales continue to increase – up 13 per cent in the first nine months of 2017 to Dhs6bn ($1.63bn) compared to the same period last year.

“Here you have to book profit on progress and hence there are years where your delivery is less or more so that is nothing to do with your sales but to do with your delivery and on your progress of projects.”

As Damac’s sales momentum continues the chairman is also optimistic about the Dubai property market as it continues work on its mega projects and a growing portfolio of hotels and serviced apartments, which now make up around 30 per cent of sales.

Figures from Dubai Land Department show transactions for the first half were up 16.8 per cent to Dhs132bn ($35.9bn) compared to Dhs113bn ($30.7bn) in the first half of 2016. This was despite residential values dipping 1.5 per cent between the first and second quarters and 5.8 per cent year–on–year in Q2, according to figures from consultancy Cluttons.

In the first nine months of the year the total value of transactions reached Dhs204bn ($55.5bn), suggesting the emirate is on track to beat the Dhs259bn ($70.9bn) of deals seen last year.

“We have done more sales, Emaar has done more sales. So it’s been a good year,” Sajwani says.

But while the businessman believes much of the current stability enjoyed in recent years has been down to government regulatory efforts, one area he believes has been ignored in the current climate is the growing prevalence of payment plans to sell off–plan property.

Current mortgage rules requiring buyers to put down 25 per cent of the value of a property have led many developers to offer their own schemes to encourage sales. Buyers are in some cases paying only 30 per cent of the value of a property in initial instalments then up to 70 per cent on handover or the years after completion.

“If the market goes soft this encourages a lot of speculation, it is a pure speculative product. And if the market goes soft a lot of small developers will suffer and not be able to deliver and hence we’ll have the whole overall market issue.

“So I do request the regulators to look at the payment plan issues and see how they can make it more reasonable.”

While the Damac chairman is more than happy to speak about Dubai and the UAE there is a sense his gaze is increasingly looking outside of the company’s home market, having built up a substantial pipeline of more than 40,000 units to be handed over in the UAE in the 2017–2021 period.

So far this year, the company has handed over its first projects in Riyadh and Amman – DAMAC Esclusiva and The Heights – and hired a new senior vice president of business development in London, Richard Choi, as work on its 50–storey tower in the city, Aykon London One, continues.

In June it was also selected to develop the $1bn Mina Sultan Qaboos Waterfront, a mixed–use tourism and residential development in the Omani capital Muscat, and Sajwani has made no secret of trips to Croatia, Malta, Montenegro and other markets this year – hosted by government officials.

“We have felt during the last 18 months that we need to now expand outside Dubai and use the base we’ve created – the brand, the cash flow, the management team, the system – to grow overseas,” he says.

In the process, the chairman says the company is “looking quite aggressively in different parts of Europe and studying different projects” with an eye on doing something in 2018. He also reveals he was among the guests at Saudi Arabia’s Future Investment Initiative conference in October where the kingdom announced $500bn mega city NEOM.

“Saudi is a big market and we would love to take part in that,” he says.

This suggests the company’s portfolio of international developments, totalling 1,000 units and 2 per cent of its overall business at the end of September, will only increase in the future.

At the same time, Damac does not appear to be losing its taste for its home market, particularly as it prepares to finish a second Trump–branded golf course before the end of next year.

Trump’s election as president has prevented the Trump Organisation from doing any further business abroad, with the president himself highlighting in January how he had turned down a $2bn deal with Sajwani who he described as a “very, very, very amazing man, a great, great developer” and a “friend”.

But Sajwani still speaks of the relationship with optimism describing the “fantastic job” the Trump organisation – now under the management eldest sons Donald Trump Junior and Eric Trump – did on the first course.

“They are helping us on the design and construction of a second golf course and the team has been excellent. So from that point of view they add a lot of value to us,” he says

Sajwani discloses few details but he suggests the mega developments housing the two courses are unlikely to be the company’s last in Dubai as it looks at new projects and land acquisitions.

“We hope we can do something in the near future,” he says.

In the meantime, the chairman is focusing his efforts on other areas including the Hussain Sajwani–Damac Foundation – a philanthropic joint venture that announced its sponsorship of the One Million Arab Coders initiative in October.

The project, launched by UAE Vice President and Prime Minister and Ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum, is intended to provide free programming training and has already seen significant interest.

“We feel and we think all the sizeable companies in the UAE and in the Middle East should have a role in the social contribution to their society and their neighbouring companies,” he says.

As Damac moves into 2018 the word sizeable appears ever more appropriate, with handovers between the second half of 2017 and first half of 2018 expected to total 5,500 units.

And with “very little if any” risk of a similar crash to that seen in 2008, according to Sajwani, he appears confident that Damac and the Dubai market will continue to appeal to property investors in the years to come.


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