Dr. M Taheri & Steve Nosrat

The report by EFG-Hermes estimates that more than 100,000 new apartments will hit the market by 2008 alone and that the total supply of housing in Dubai will double by 2010. How would you assess the real estate market in Dubai itself? What’s the climate?

MT: I think it’s very obvious for everybody, I mean in the world, how Dubai was, how Dubai is, and how Dubai is going, under the auspices of His Highness Sheikh Mohammed, the Vice President and Prime Minister of the UAE and the ruler of Dubai. He has already announced his vision up to 2015. Regarding 2010, I don’t believe at that time the demand and supply will be equal, that investment will stop or anything new will happen. There is still a lack of residential and commercial buildings in Dubai. You can see how the demand and supply for residential is. Everybody tries to be on time and give a completion date to the customer, but it has happened, due to infrastructure problems and other things, that some developers might not be in the position to do whatever they promise. Of course, they try to do their best. I am pretty sure that till 2010 and beyond we will have a shortage. And Dubai is developing and developing. Since January 2008, RERA, the Dubai land department, has regulated the way for genuine developers to be in the market. So investments will increase due to the security that will be given to the investors and the end users. Now, everybody has to be committed to the rules and the regulations. I believe it will still be booming. Don’t forget that the price is also going up due to the shortage of supply, building materials, and the price of the land, the plots which will be sold for the developments.

Many experts are comparing the Dubai market to that of Singapore, where, after the exponential growth, properties suffered a 25-30% drop in prices. Do you see something similar happening here in Dubai?

MT: I don’t think so, because of the geopolitics. Dubai is in the Middle East. The Middle East is the center of oil and oil is the center of revenue. Everyone believes the recession of the euro will continue; the money is in the Middle East. People who earn money in Europe and in the United States come to Dubai and they invest here, in this region. Demonstrated infrastructure and very good security, as well as the facilities that exist here. Statistics from the Ministry of Tourism of Dubai show 202 nationalities are living in Dubai. So you can imagine: if one has money, where does he have to invest? In a bank in Europe or the US? In Singapore? They will come to Dubai, they will buy the land and develop it or they will buy the units. Comparing the last quarter of 2007 with the first quarter of 2008, 47% of those who invested have resold their units and they have got out their interest. Where else can you find this?

This influx of money is based on speculation. By how much is the price inflated by the speculators?

MT: It depends on different factors. One is demand and supply, another is the price of materials, construction materials especially, which have gone up: rebar, cement, all these things. So the price will go up, and this is good for the investors and for those who want to develop. Of course, the government of Dubai is formulating and regulating everything to be on the right track, so the investors don’t feel they will lose something. If the investor feels they will not gain something, they will not invest in the place anymore. So the regulations are clear, and every day it will be more officially regulated in the best way, so the end users, the customers will have peace of mind, to be sure of having their own units. It’s not an easy job, but the government is trying to balance between the gain of the investors and protecting the interests of the end users.

So, by how much do you predict property prices will grow in 2008 and 2009?

MT: I believe already for 2008 between 40 and 50%, and for 2009, 40 to 60%. This is what I hope.

SN: It was in the news yesterday, even though there is inflation, the actual plot pricing is not being affected by inflation as much, and the current plan of His Highness Sheikh Mohammed is to complete buildout by 2015. They’re expecting there will not be any price adjustments, even up to 2012. We’re definitely on track for the 2015 plan. This came from analysts out of New York. The other figure that came out is that over 33% of the world’s population will live within 4 hours of Dubai. Which means there’s no reason for anyone to go anywhere else in the world. If you were living within 4 hours, you’d have all the amenities, all the resources, everything imaginable, here in this region. Being oil rich, with having Abu Dhabi close by, with having all the facilities, business, and finance, everything surrounding, and this being a tax haven, there’s no reason why investment would stop coming to this region.

To get closer to the investment itself. Azizi Investments was formed on October 1, 2007 and already is one of the region’s fastest growing private property developers. Can you share your story with us?

MT: In October, the idea came to our minds, and in February we officially registered our company. Our main business was oil, gas, petrol stations, refineries, as well as, 2 years ago, banking, Azizi Bank. Our chairman and the founder of this company, Azizi Bank and Azizi Group, has been coming here more than 16 years, and he decided to enter the property development market, which was booming, in a different way. We decided to establish a property development company to enter the market on a very large scale, very aggressively. We started to plan for the first 3 years. For the first year, we decided to hit a target of 15 million square feet; in 2009, 50 million sq ft, and in 2010, 100 million sq ft, which in total makes 165 million. In four and a half months we have more than 23 projects, and within 2 months we will have nearly 60 projects for 2008. I believe no private developer has entered in such a short time with this number of projects. We have already learned lessons from the past, for developers, so we are not going to make mistakes. We are trying our best. The most important thing is, we started with millions of dollars for the name of our company, a brand campaign. Our main target is to get the trust of the people. Our image, our main slogan is, ‘What we promise, we deliver.’ And we will do it. This is what we want to prove to people. When we buy land, we want to develop it. We are not a broker of land. We are going to be a part of the development in Dubai. And after that, if we are successful, in 2009, we will try to start going out of Dubai, as well.

SN: To add to that if I may, as of right now, we have completed over 5 million sq ft of land acquisition. Within 2 months we will complete our total landbank of 15 million for 2008. So our total purchase of land for this year will be completed in 2 months. We will then start purchasing the landbank for 2009. As the doctor pointed out, by 2009, towards the end, 80%, if not 85%, of our development will be purely focused in Dubai. The other 15-20% will be in the surrounding areas, such as Abu Dhabi and other areas within the UAE area. The total investment for the 3-year project is 170 billion dirhams, the majority of which will come from Azizi Group investments and assets. Secondly, we are in negotiations with third-party finance companies, and of course, thirdly, the money that comes into the escrow account, pays for the construction for the clients.

In May, four property developers were being investigated by the Dubai real estate watchdog over what appears to be the non-delivery of products. You stated, starting this year, each project from the day construction starts to delivery will take an average period of 18 months to complete.

MT: It depends. Are you talking about Burj Dubai, are you talking about Key Plus 100? We cannot fix the duration of a plot for 18 months.

In this context, how challenging will it be to deliver on time, taking into account all the shortages and challenges of the market?

MT: Nobody can predict everything. The important thing is if you are experienced enough in the field and plan in the right way to get some grace period. Even if we are 100% sure that we are going to deliver within 12 months, as an example, we will never say 12 months to our clients. We will add at least 4-5 months to that, and we will take 16 months. That is very important for us, because we have come here to get the trust of the people. If we can get that, we won’t have any problem. This is success for us. We are going to make sure that whatever we commit to, we reach that commitment. Those lessons we have learned. We are being very, very, careful about whatever we commit to: when we commit, and what we say.

SN: I’d like to add one thing, because I was at the property show 2 days ago and they asked the same exact question. Coming from the States, and Las Vegas especially, they’re building 4-5000-room hotels within one year. So if the commitment is there, and the responsibility from the developer is there, it can be done. When you’re talking about shortages of cement or steel or anything else for that matter, we’re in a place that we can actually go overseas and control the main elements of our construction. So if Azizi Investments needs to go overseas to China or whatever country and bring in, we’re liquid, we have the assets to buy the main elements. We will do that. But we will not be late delivering to our clients. 100%.

So in this context are we talking about some backwards integration or some expansion plans into industries which are real estate-related?

MT: Frankly speaking, our main aim for Azizi Investments as a property developer is to do all the work that is needed. In the building and property industry, more than 200 industries are inter-related. We will try to facilitate the main, core job we have, whatever comes. As Steve said, we are going to make sure to have all the material at the right time for our commitment to our end user and customers.

I’m quoting some statistics: Azizi has ambitious plans to have 55 projects in Dubai over a built-up area of 15 million square feet, in 2008, including Al Furjan, where you have obtained 12 plots. Can you give us a brief overview or introduction into your main developments and where Azizi would like to take the level of properties?

MT: Al Furjan is among these 55 that we are going to have in 2008. These are the very first projects that we have, 12 plots. Al Furjan is one of the zones that belongs to Nakheel as a master developer, which we purchased the plot from. Nakheel is 10 residential and 2 commercial. A few weeks ago, we successfully launched Al Furjan and Nakheel when we got the approval, and it was sold out on the same day, the 25th of July. When we get the approval of the master developer, we launch. These 10 residential are G+11, one, two and three bedrooms, and the two commercial are G+7, which is offices and such. One residential and one commercial were launched the 25th of June, and were very successful. These were the first projects we did. We also have different projects that we are planning to launch, most probably during the Cityscape exhibition. We have 5 plots in Palm Jebel Ali. Palm Jebel Ali is a very luxurious location, and we are going to make it really different- the complexity of the creative design, as well as all computerized, electronics with the latest, high-tech technology. And we are going to make it completely furnished, with maybe one or two buildings as a landmark. This is what we intend to do. In Mina Rashid we have other projects, and Jebel Ali Village as well, and also in DWC, Dubai World Central. It’s beside the international airport, which is in Jebel Ali. This is the future plan. Up till now we have 11 plots there, just residential, and we’re going to have more plots, as well as commercials. So these are the projects that we are looking for.

Can you elaborate more on your landmark projects which you will launch there in the future?

MT: Frankly speaking, we are negotiating with different architectural groups as well as the consultants. At this moment we have not finalized it, but we are thinking also about having cooperation and somehow a joint venture with one of the very famous brands, which can add value for our projects as well. Different negotiations are still going on, and in due course we will announce.

A question for Marketing: with all these developments and 55 projects, how are you going to communicate? In other words, how are you going to structure your marketing communications and grand strategies?

SN: Good question. Since February 20, we’ve spent, as the doctor pointed out, millions and millions of dollars in really introducing the Azizi brand into this region. Recently, prior to our launch, as of the beginning of June, we started introducing more the projects, the concept designs of our buildings. And within the next few months you’ll see more and more advertising going outside of this region. 6 out of 10 investors come into this region; you know we have the majority Iranians, Russians, Indians, Pakistanis of course Asians, and British as well, coming into this region, so you will see Azizi Investments being advertised across the world in a major way. Also, as part of the Azizi strategy, by 2010, towards the end, we will have an office in New York, we will have an operation in Russia and different parts of the world as well. Having a presence in these different countries, we will have to do local marketing as well, by introducing the brand and following up. We believe building that brand is the most important thing. And Mr. Azizi from Day 1 has pointed out that we don’t want to really stretch ourselves too thin like some of the other developers. We don’t like to name anyone or say what they’re doing is good or bad. But we’d like to master this region before we decide go anywhere else. By doing this and being the best in this region, then we can go and earn other people’s respect and other people’s business. So most of our advertising brand- and product-related advertising will be in this region. Once we decide to enter another part of the world, then you will start seeing 6-month to 7-month advertising on the brand like we did here in Dubai, and it’s been very successful.

MT: Just one thing; we started the brand campaign and ads to inform people about our projects. After that, I don’t think we are going to make any ads; we would like people to talk about us, if they trust us and if we have done a good job. The best ads are mouth-to-mouth, what people say about us. Because of that it’s a very, very important task for us to commit to whatever really we can; and whatever we say, we have to do. Regarding going abroad, out of Dubai, as Steve said, if we go, it’s to go bigger than here. One of our plans is to go to Ukraine after 2009. If we go there, we’re going to make a city, not a building.

What is the long-term vision for Azizi brands? What would you like it to be associated with in the future?

MT: As long as the world market allows, we will be in it. As long as clients ask us to continue, we will be there for them, wherever and whenever to deliver.

SN: I’d also like Dr. Taheri to talk a little bit about our green initiative. As you know, we’re responsible and conscious of the whole green movement, and this is part of Dr. Taheri’s initiative for the company and his strategy, and what we’ve given. And also, if you wouldn’t mind, business development and what differentiates us from the other developers, and then talk about our green communities.

I have two questions concerning this. Earlier this year the Real Estate Regulatory Authority in Dubai reported that about 500 developers are active in the market. There are many well-established developers as well as many newcomers. How do you set Azizi apart, how do you differentiate?

MT: First of all, with respect to developers, we are very new. We will try to be one of them, and if we can help all developers, we will try to. We have listened, and we have learned so many lessons from those that have been in the market. We’re trying to do whatever we say we will. Let the future show what it will be like. We are trying to be the best, this is our mission. Not just us; everybody would like to be best; there is competition. But anybody could have success if whatever they commit to, they do. They have to study, they have to help each other, and they have to really learn from the past.

If we were to identify one core competence that sets you apart from anyone else as a developer, what would it be? What is your specialty?

MT: Maybe some people think it’s design, or more height in a building, but I don’t think so. People have different tastes, some like resale, maybe they would like to be in high rises or towers. What I believe in is good quality. Good quality is very important. And completion dates. These two things are very important. Whatever you promise, you deliver, and you have good quality. Especially the completion date. Because the people who buy from you are planning their lives, when they want to shift to these places, and how. So quality and completion date are very important.

SN: I wanted to add something. One of the biggest differentiations between us and the others is, one, us having the ability to be liquid. We can react very quickly, and that’s why we work so well with the master developers. When there’s an availability of large-scale landbank, we can move within 48 hours with cash transactions. That’s number one, very importantly. Number two, with all the plots we’ve bought, till today, we’ve made sure that these are plots that are not for resale. In everything, we’re there from A to Z. We have a business development department that by the end of this year will have over 120 employees alone. The skill sets within this department, if not at the same level as the best consultant, will be higher than the best. Which means that we will have the same level, if not higher, than actual consultants’ employee banks. We can monitor everything from the architects, project manager, MET managers, project engineers, you name it. And Dr. Taheri, if you want to add a little bit on the business development, of what their function would be as well.

MT: I think it works well for a company of such a large scale to have its own consultancy engineering company. We are going to strengthen our business development department, our engineering department, and within a few months maybe we will have our own engineering consultancy for design and supervision. Meanwhile, we have tried to have our engineers at the same level as the very best engineering firms.

‘Giving back to our communities and finding new and innovative ways to do so is a source of pride and differentiation for us here at Azizi Investments.’ How do you give back to your communities? How do you address corporate social responsibility in Azizi Investments?

SN: I think by building environmentally-friendly communities. Look at the current situation, 67% of the people living in this region don’t own a house. They’re renting, they’re working here, like people like myself and yourself. We come here from the United States or Europe, working here for a couple of years and we’re renting here. If you look at our Al Furjan community, our whole plan around this first launch was to tailor for people that want to work here and that want to live here. That’s one thing that differentiates us from other developers. There will always be speculative investors buying up land and selling it, but we really want to build communities that people will want to live in and work within those communities as well. Number two, Azizi Investments having the privilege of being part of this real estate boom in Dubai, we are going to give back to the communities by helping, donating lands for hospitals, or schools, or whatever it is. We have to. As corporate citizens living in any country, you have a responsibility not only to your customers, you have a responsibility to the environment, and you have a responsibility to the government. And with this green initiative coming up, we’re working very hard to get platinum certification. You have to spend millions to do this. If we were here for a quick profit and a short time basis, we would never be looking at these kinds of initiatives. Dr. Taheri, how many platinums are there in the world?

MT: 17.

SN: 17 in the world. So for Azizi in the first 6 months to be looking at becoming the first platinum in Dubai speaks a lot about our vision.

MT: Regarding the environment, frankly speaking, there are rules regulating master developers. Even if there were not any rules, we would go for the best. We believe in healthy buildings, cities, and how to use material. This is very important for the health of people and the future, so we are trying to be part of this, and to initiate as much as possible. Which is the platinum.

To finalize the interview, you have had a successful career in the UN and traveled all over the world. What is your personal ambition for Azizi Investments? Where would you like to take the company?

MT: Whenever you are talking about development, in any field, you yourself will develop as well. When you want to make, or build or develop, it’s very long and serious, and not an easy job. When you commit to something, you have to do it. In 30 years in different careers, what I have learned, which I’m still learning, is to be patient. Let’s go smoothly. The shortest way is not always the safest way. The important thing is always look at the target you have to reach. And how to reach the target, how to plan, how to foresee, and how, when, and with whom you go. All these factors come if you think it over, learn the lessons, and have a good heart.

Thank you very much.