|Left: Downtown Dubai is a 500-acre integrated development with internationally known landmarks Burj Khalifa and The Dubai Mall
Right: An avid horseman, Alabbar is an active member of the UAE’s endurance horse racing community
THE car takes us down a busy six-lane highway flanked by 1 and 2-storey shops and showrooms and a smattering of houses. Tall sleek buildings replace these as we draw closer to the Dubai city centre.
Towering over all is the 828m Burj Khalifa, the world’s tallest building. The structure stands majestically against the sky with its glass-clad façade gleaming in the light of the setting sun. Down below, locals and tourists take advantage of the cool winter weather to eat and drink or enjoy shisha in the al fresco cafés and restaurants that line the 3.5km-long Mohammed Bin Rashid Boulevard.
Many flock to the massive Dubai Mall, which has a total internal floor area of 5.9 million sq ft to shop while others linger around the outdoor musical water fountain — The Dubai Fountain — next to the mall.
“This is Downtown Dubai,” our driver tells us as we pull up at The Palace Downtown Dubai where we will be residing during our media trip to the city.
The 500-acre Downtown Dubai is the US$20 billion flagship development by Dubai-based Emaar Properties Public Joint Stock Company. It comprises commercial, residential, hotel, shopping, entertainment and leisure components with open green spaces and lakes.
Emaar was established in 1997 by its chairman Mohamed Ali Rashed Alabbar and has since become a major real estate, retail and hospitality player in the UAE and the world.
To date, it has handed over about 36,600 units, including 20,900 apartments and around 15,700 villas. Emaar has also completed more than 4.3 million sq ft of commercial space, of which 690,000 sq ft are in international markets. Emaar has a presence in the Middle East, North Africa, Pan-Asia, Europe and North America.
Its first project was Emirate Hills, an integrated lifestyle development in Dubai with the Montgomerie 18-hole championship golf course, in 1999. Sales were slow in the beginning as the developer was then an unknown player in the market but they soon picked up and the development went on to become a prime real estate location. It was reported that a villa in Emirate Hills was sold for AED67 million in 2Q2013.
Much credit has been given to Alabbar for the success of Emaar and many have considered him the driving force behind Dubai’s transformation into a cosmopolitan city.
A self-professed daydreamer, Alabbar is of humble origins. He grew up poor with 13 siblings in the old city of Dubai. Earning a government scholarship, he studied in the US and graduated with a degree in Finance and Business Administration from Seattle University.
Alabbar then worked for the Central Bank of the United Arab Emirates. This was followed by positions in the US Federal Reserve and the Dutch Central Bank. In 1987, he joined Al Khaleej Investments in Singapore. He returned to Dubai in 1992 and was the director general of the Department of Economic Development until Emaar was set up.
To build big and bigger
Alabbar is all smiles when we meet him in his office. Dressed in a thawb (a robe commonly worn by men in Arab countries), he strolls casually into the room and greets us with a firm handshake. “Thank you for taking the time to come to Dubai,” he says.
Alabbar recalls what it was like to build Downtown Dubai with its internationally known landmarks, Burj Khalifa and The Dubai Mall.
|An artist’s impression of Downtown Erbil|
“I was sitting with Robert Booth [CEO of Emaar Dubai Real Estate] in a crummy coffee shop overlooking the Sheikh Zayed highway, looking at this site that was then the military barracks. I thought, ‘This is such a good location’, and I said, ‘Let’s build a place which the whole world will want to come and see’.”
His dream was also driven by the need to do something for his country, says Alabbar.
“When I go to great cities, I’m so happy and excited but I’m also so upset. I walk around places like Mayfair in London and Champs-Élysée in Paris and it’s so beautiful. I go to Las Vegas and see what man has created, then I see the musical fountains there, it trips my heart.
“I asked myself, ‘What am I? Am I low class? Do I have low IQ? Why can’t my country have something like this?’ I burnt inside. So many people have seen all these places but none of them want to build this in our country,” says Alabbar.
He first went to see the ruler of Dubai, HH Sheikh Mohammed Rashid Al Maktoum, to pitch his plan to build “a very tall building”. Sheikh Mohammed thought it was a good idea. However, when the time came to present the design of building, the meeting didn’t go very well.
“I gave him a design for a 90-storey building. He saw and asked, ‘Only 90 storeys? How tall is the tallest building in the world?’ I said 101 storeys and then he left. I hated that question!” laughs Alabbar.
Not one to give up, he did five more designs and three months later, asked to see Sheikh Mohammed again.
“He asked me, ‘Are you sure you’re not going to waste my time?’ I promised him I won’t and asked him to just give me a chance. It was maybe a two-minute meeting. He came and asked, ‘How tall?’ I told him it was almost 50% taller than anything ever built by man. Then he simply asked, ‘When do we start?’ I told him, ‘Now’.”
In 2004, construction started on Burj Khalifa and the development of Downtown Dubai was announced. At the peak of Burj Khalifa’s construction, there were 12,000 workers on site daily. It took 22 million man-hours to build Burj Khalifa. It was topped out in January 2009 and officially opened a year later.
Burj Khalifa has a total built-up area of 5.67 million sq ft. It features 1.85 million sq ft of residential space, over 300,000 sq ft of prime office space as well as the Armani Hotel Dubai and the Armani Residences. It has 160 habitable levels — the most in any building in the world.
Downtown Dubai’s residential offerings include The Residences, South Ridge, The Old Town, The Old Town Island, Burj Views, The Lofts and 8 Boulevard. Its offices include Emaar Square, Boulevard Plaza, The Corporate Suites in Burj Khalifa, The Offices and Al Saha Offices in The Old Town Island.
Several residential projects are in the midst of construction, including The Address Residence The BLVD and The Address Residence Sky View and Burj Vista. Downtown Dubai also has a range of hospitality and leisure components, such as The Address Downtown Dubai; The Address Dubai Mall; The Palace Downtown Dubai; and Vida Downtown Dubai, the first property in Emaar’s newly launched Vida Hotels and Resorts portfolio, and Al Manzil hotels in The Old Town.
Alabbar took note of the flaws in many cities in Asia to design the masterplan for Downtown Dubai.
“Some Asian cities are not well planned. They don’t have a complete environment where you can get out of the hotels and stroll anywhere nicely. What you get is pavements that go up and down, digging here and there … But when you go to Australia or Europe, everything is in the right place. That happens when you design on a large scale, but do it with passion.
|Downtown Dubai when it was under construction|
“You need parking, landscape, parks, buildings, shopping, offices, apartments, cafés and so on. The question is, how do you put all these together?
You have to be passionate about every detail,” observes Alabbar.
He and his team talked to the people, going as far as France to determine what is needed to create an environment people would want to live in.
“The Mohammed Bin Rashid Boulevard was purposely made longer than Champs-Élysées. We actually asked the French what was lacking in Champs-Élysées. They said no parking space. So we put 5,000 parking bays underneath. Then they said, not enough toilets, so we built 50 toilets underground. Over here, people pray five times a day. So we built a mosque underground.
“You must have all the amenities and keep them clean and safe. It is not so much about having all the amenities, but how you respect human life. Of course, you have to be careful so that the whole thing makes financial sense. We realised that by doing it right, it made a lot of financial sense, and we succeeded like nowhere else,” remarks Alabbar.
Emaar’s buyers are a mixed bag with about 40% to 50% coming from the region, a large percentage of locals and the rest international investors. Alabbar says the market is so strong that Emaar only really started marketing overseas about six months ago.
“You have to make sure the product is marketable and you have to be in the right place first of all. It has to do with the brand, the product and the right strategy for international marketing. Our regional market is huge but we still do sales in places like Kuala Lumpur, Hong Kong and Singapore. The results [of international marketing] have been good. We should do more,” says Alabbar.
Ups and downs
While Emaar is doing well now, it was not plain sailing for the company. The crash of US Lehman Brothers sent property prices in Dubai spiralling down 60% and a four-year recession followed. Emaar’s sales stopped and at one point, Alabbar and his senior executives took a 50% pay cut while most of the others took 30%.
“You can always say I wish I could have done things differently. The whole world has gone through so much. I think the lesson learnt is that we should have noticed that as prices went out of control, something was about to go wrong. Prices were moving so fast and we got scared. We dropped our forecast by 50% but we should have dropped it by 80%,” remarks Alabbar.
“Another important lesson is that during a boom, humans become very relaxed and productivity is low because everyone thinks they are intelligent. The boom was killing all of us. I would say that going through a crisis, I think people learnt to tighten their belts, to be more careful and realistic. And I hope we don’t forget the lessons. We are forgetful. But I have definitely learnt a lesson and I won’t forget it.”
One area where Alabbar believed the company did well was not to borrow and take on more debt. “Somehow we are allergic to it. Bankers used to come and tell us our balance sheet was not efficient. I just don’t enjoy people looking at us and saying, “The banks have given us US$1 billion.’ It worked for us.”
As at September 2013, Emaar had total assets of over AED61.2 billion, a landbank of more than 234 million sq m globally and over 11.19 million sq m in current gross construction area in the UAE.
It posted a net profit of AED2.119 billion on revenue of AED8.240 billion in 2012. Its shopping malls and retail and hospitality and leisure businesses contributed AED4.096 billion or 50% to total revenue. Its international operations contributed AED1.264 billion or 15% of total revenue.
Emaar recorded a net profit of AED1.812 billion in the first nine months of 2013, which was 13% higher than the net profit of AED1.607 billion recorded in the same period last year. Revenue was AED7.566 billion, 36% higher than in the previous corresponding period.
The Dubai Mall welcomes more than 65 million visitors in 2012 and over 20 million in the first three months of 2013.
Dubai’s property market is growing and prices are soaring once again. The market is expected to see more growth in 2014 due to Dubai’s successful Expo 2020 bid. However, some property experts have expressed concerns over a property bubble.
According to Knight Frank’s Global House Price Index, prices in Dubai increased 28.5% year on year in 3Q2013, the highest recorded globally. The index tracks mainstream residential prices in 53 countries.
But Alabbar is not worried. “Prices in the city have not moved for almost four years. It’s typical for prices to shoot up after four years of belt-tightening as people get excited. I expected after this, the increase will be more gradual. The reason is that supply is coming onstream as well. Even the government is watching; it has learnt from the past.”
As speculators were blamed for the city’s last property bubble, Emaar has taken steps to flush them out, although Alabbar admits it can never eliminate all of them.
“Speculators are human; everyone wants to make money. Humans are born that way. Government rules and company rules like ours will eliminate a lot of them but they will always be there. You can’t avoid them. But I think you should be smart enough to watch and change the rules to make sure the market and people are safe. Rules will change because human behaviour will change. You have to continuously keep an eye on things,” says Alabbar.
Emaar has banned real estate brokers from reselling its homes before completion, while non-property brokers can only resell its homes off-plan after they pay 40% of the value of the property.
“For us, it’s very strict. We know they are part of our customers and we know they want to flip. We want to do real business. The end customers want to buy from me but the flippers got there first. So the end customers end up buying from the flippers at a higher price. Fine, it’s business but I feel bad for my end customers.
“Our technology backbone is pretty advanced. Even if you pay the 40%, we will never sell to you again because we are driven by good behaviour. When we imposed this rule, a lot of people were eliminated. If it doesn’t work, we will come up with a new rule,” stresses Alabbar.
|An artist’s impression of The Opera District … its centrepiece will be a 2,000-seat multipurpose performing arts centre that is inspired by the city’s maritime history|
Downtown Dubai is about 70% completed and Emaar has embarked on the next phase of the development — The Opera District (TOD), which is billed as the UAE’s cultural hub.
The integrated lifestyle TOD will feature luxury hotels, residences and serviced apartments, a retail plaza, restaurants, waterfront promenades, recreational spaces and parks. Its centrepiece will be a 2,000-seat multipurpose performing arts centre that is inspired by the city’s maritime history.
In October 2013, Emaar unveiled Downtown Erbil, which is touted as the first-of-its-kind integrated lifestyle development in the region. The development is located in Erbil in Kurdistan of Iraq.
Modelled after Downtown Dubai, Downtown Erbil covers over 133 acres. It will comprise the city’s largest shopping mall and entertainment destination, twin towers, several world-class hotels, homes, offices, green parks, plazas and public spaces.
Alabbar is excited about Asia, noting that this is the region where the world is going. “Asia is important and interesting. Countries like Malaysia, Thailand, Indonesia and Vietnam have reasonable unemployment and it’s part of the region where people are hardworking. That’s a good sign. Of course, there are issues in every country but people survive and move on. We tend to look at only the crisis but we should look beyond that. I hope there will be something for us there and I’d like it to be a combination of real estate, retail and hospitality.”
Alabbar has set his sights on Malaysia, but he is no stranger to the country. In 2003, he was made chairman of United Malayan Land Bhd after acquiring a 24.7% stake from Pernas International Holdings Bhd. He relinquished the position in 2005.
Alabbar is also partnering his close friend and Malaysian tycoon Tan Sri Syed Mokhtar Albukhary to build an aluminium smelter in Sarawak. Alabbar recently set up Tradewinds International Sdn Bhd, which, according to its website, is a wholly-owned subsidiary of Tradewinds Corp Bhd (TCB). TCB was delisted on Sept 26, 2013.
“Syed Mokhtar and I have been together for years; we have a very special relationship. Yes, we are very seriously looking at some opportunities in Malaysia. Asia is right, Malaysia is right and Malaysia is a very exciting market.”
While Alabbar declines to reveal the exact plans, he says, “We will soon be making certain decisions. We should look at real estate, hospitality and retail. We are looking at a few things, Iskandar in Johor as well.”
|The Dubai Mall Grand Drive|
A driven man
To Alabbar, success is not just about drive. “You know, for someone to let me do what I have done … I can’t believe it. I’m so lucky to have got a chance like this. I could have been born somewhere else where I could be selling food on the side of the street. But I was born at the right place and at the right time, God bless my mother. Sheikh Mohammed gave me a chance and trusted me. To see people come and use our facilities, smile and celebrate, I can’t believe it myself. I think what we need to do is appreciate it and continue doing good things,” says Alabbar.
He gives credit too to the people he worked with and those who worked to transform the city. “Look at Europe, it is 400 years old and my country is only 42. We are supposed to catch up with the New Yorks and Londons of the world. We need to move so fast. People criticise you, they say you move fast, you make mistake. Nonsense! If you know what you’re doing and you are passionate about it, you will go at the speed of light. If you’re not up to it, I can give you two lifetimes and you still can’t do it right.
“I thank my God every time I pray. I thank the people who work with me. They are from all over the world. They are Muslims, Christians, Buddhist and they make so much contribution and make me look so good. I really can’t thank them enough. I celebrate when I ride my horse for God’s goodness.”
Alabbar is an avid horseman and an active member of the UAE’s endurance horse racing community. He has taken part in several endurance races in the Gulf region and internationally. He owns his own horses and Radban Stables and races all year round.
“What makes me run is in my DNA and I think it’s because I lived as a poor child and I’m scared of poverty. I’m scared of losing my success, so that makes me run faster. I’m hungry for knowledge because I think I’m ignorant. Every single day I’m ignorant, so I read about what’s going on around the world. I love life,” concludes Alabbar.
This article first appeared in The Edge Malaysia Weekly, on December 30, 2013.