Lee Smith

Abu Dhabi real estate market is considered one of the fastest-growing in the region with development worth more than Dhs 460 billion. How do you assess the real estate sector in Abu Dhabi? What is the future hope for Abu Dhabi?

I think the future here is very exciting. Abu Dhabi is the capital city of the UAE, and it’s also the largest emirate of the federation of the United Arab Emirates. It is growing; the whole region is growing and Abu Dhabi has to project itself as an international capital city. The market is very much driven by that. The growth of Abu Dhabi is going to increase. We have the 2030 report, which has come out from the Executive Council and the government of Abu Dhabi. It projects that we will grow from a population of 900,000 to somewhere round about 2.8 to 3 million by 2030. We need to serve that growing population and that is where Tamour is assisting Abu Dhabi. It needs to increase the developments and to work with the Abu Dhabi government in their various departments to provide high-quality residential and commercial developments to pace it for the increase in the commercial industry that will eventually be coming into the capital. That’s the strategic plan for 2030. The urban planning council together with their consultants projected the future for Abu Dhabi in 2030 with regards to issues like commercial, tourism and the residential population in general.

How would you compare the real estate environment in Abu Dhabi and in Dubai?

I think in some elements they’re very similar. The laws are very similar; the laws in Dubai and Abu Dhabi are really going to apply to most of the UAE. Each individual emirate has its own separate ways of dealing with things but in essence they’re similar. The difference between Abu Dhabi and Dubai is that Abu Dhabi started a little bit later than Dubai. Dubai established itself very quickly and Abu Dhabi is following, but it’s not copying, I think it’s clear that Abu Dhabi has got its own strategy for development of real estate. However, it does look at the existing markets that are here. It’s very difficult to get information because we’re a very immature industry here so there’s not very much information so we have to look at places like Dubai and the rest of the industry to get some kind of understanding of how trends are going. We always say, within Tamouh, that Dubai and Abu Dhabi have very different identities; a capital city and a major financial centre or tourist centre such as Dubai.

Would you say that Abu Dhabi is less regulated or more regulated?

I would suggest that Abu Dhabi is well regulated; it’s an on-going process. We are looking at the property laws, regulations and codes; they are evolving as we grow. You can’t start a new industry with completed legislation. For example, it has taken English law three to four hundred years to become what it is in property. We are very keen to look at other models, not just in the UAE but also others such as Western European models. I suppose we just need to look at what is the best out there and bring it to Abu Dhabi and the UAE.

Do you know some specific legislation that is being brought to the UAE?

In our start-up, we look at the Malaysian, Indonesian, Singaporean property laws. They were very similar to what we have tried to achieve here. We also looked at English laws, North American laws and even as far as Australia. These range from established industries to fairly new industries – 30 to 50 years old – and we’re only two or three years old as an industry in Abu Dhabi and 10 years old in the whole of the UAE. It’s always our goal to make sure we get the very best of what we can provide. As well as adapting the shari’ah laws that we have here; they’re important and ultimately they will drive what laws we choose. We have to keep in mind the cultural and religious sense of the laws.

Tamouh is part of Royal Group, which is a major diversified conglomerate in Abu Dhabi. Can you tell us more about the structure of Royal Group and how Tamouh fits into this structure?

Royal Group is a very diverse group, ranging from communications, televisions to retail, catering, and high tech companies. We have quite a diverse range of services that has grown over the years. Tamouh fits into that as part of the real estate arm of Royal Group. We are a sister company with Royal Group; we are not the largest in terms of personnel but we are the largest in terms of our presence in Royal Group.

Do you see some collaboration with other companies within Royal Group?

Very much so. We do have a lot of interaction within Royal Group and with the companies they represent; such as construction companies, technology services that some of the companies are helping us with, such as the district cooling system that we’ve got through one of the Royal Group power companies and they are looking at providing us with a district cooling system for our projects. There are, in certain areas, quite close links between companies. However, we still go out into the market, we are not completely dependent on each company. Each company stands alone when it works outside the Royal Group.

Tamouh was established in 2005 and already it’s the fourth largest developer in Abu Dhabi. What are your key success factors?

We just recently have moved outside Abu Dhabi into overseas developments. Our main flagship is Reem Island. We are one of three master developers on that island, which is just off the coast of Abu Dhabi city. We are currently developing between 50 and 60% of the total land area of Al Reem Island. The area of the island is around 800 hectares of developable land and Tamouh is the owner of 60% of that. We have a development program that will go on to 2025 to 2030, depending on the market. We see ourselves as the long-term investor in the Reem Island and we feel we just can’t build it that fast. So, we’re taking our time with the development. We will probably be one of the first developers to deliver our first project, which is Marina Square and our target is to finish that by the end of 2009 to the beginning of 2010.

How do you see your long-term strategy?

From Tamouh’s strategy, our ultimate goal is to be a global player. I think, to establish that, we need to be very clear and put down solid roots. We are an Abu Dhabi based company and the majority of our developments are in Abu Dhabi. Once we have established ourselves in Abu Dhabi, then we will move out into the rest of the UAE and the Middle East. So, our ultimate goal is to be a global player, not just in developments and real estate, but as we are an investment company we would be looking at other areas and industries to make investments.

Why would an individual investor be interested in investing with Tamouh or in Abu Dhabi?

Abu Dhabi can offer a lot of things. It is a very vibrant market. It’s a very stable market; politically and economically, which is one of the attractions for a lot of foreign investors. We have a diverse culture here; in fact, we have around 165 different nationalities all living in one area. That must be a record! There are so many people here all living in relative harmony and we are all doing what we came here to do. From my point of view, it’s a very good area; the services, facilities and infrastructure are good. It has a different culture but not too different that you are lost, but it’s a very good culture to immerse oneself from a family point of view and a business point of view. The emphasis on the Middle East is now growing and a lot of people are aware of what is happening in the Middle East for various reasons. Its location is very important as well. Traditionally, business used to skip this area; London to Tokyo, London to the Far East and Australia. The emphasis is now put on stepping into the Middle East, as a hub, to go to those areas as well as emerging markets such as China and India. Abu Dhabi, Dubai and the UAE are in the perfect position to serve those markets.

Regarding the individual investors investing with Tamouh, could we say they are mostly from Europe?

No, from our records and intelligence, we see, again, a wide diversity of investors. Investors come from the Far East, there are a lot of investors within the UAE and the GCC, not too many North Americans – I think we’re a little too far away and perhaps not on their map yet, but a lot of Europeans – Italians, French, English coming to invest in some of the properties, Korea, China, India, Indonesia, Malaysia and Australia. We have talked to investors who are very keen to come into this market, and it’s a very high growth market. It’s very important to establish yourself, as you can see from some of the companies coming into Dubai and Abu Dhabi; they are big names in the commercial world.

Is this on the Abu Dhabi scale or just Tamouh in particular?

It’s with Tamouh, as with Abu Dhabi and other companies. We have some of the biggest investment companies talking to Tamouh about investments. Some of these companies are from as far east as New Zealand all the way to Texas! So, it’s quite a wide range of companies.

What are some challenges that Tamouh is facing? Shortages of labour and contractors?

In general, the construction market has put a lot of demand of resources over the last two to three years. Like all construction companies, we need to source our resources very early, such as materials, and non-skilled and skilled labour. It comes down to good timing; if you plan well you resource your labour. However, there is no getting away from it; there is generally a shortage of labour, the prices of some raw material, such as cement and steel, are premium. For us, it makes us plan our next development to make sure the resources are available. Inflation always going to be a problem as these prices go up and continue to go up and that eventually has to be passed on to the consumer who will have to pay more money. We don’t want to do that and we try not to. From Tamouh’s point of view, we started our first development around four years ago, we sold it about two years ago and the prices have risen but we’ve stuck by our original prices – we made a commitment – and that’s because we made good planning at the early stages, we sourced our materials and resources to ensure we don’t have to back to the individual and ask them for more money.

Do you think, in the future, resourcing might get more difficult?

I think what will happen is, the markets within the UAE will expand. Regarding cement, steel and aluminium, we are starting to build our own smelters and cement factories and we will probably import more cement eventually. We’re just gearing ourselves up, from a resources and raw material point of view, far better than we have over the years for the simple reason that Abu Dhabi and Tamouh were new and the market was not sufficient to meet the demands. There’s a lag but I’m sure over the next two to three years that will be taken up.

How are you progressing on your projects?

Very well. We are on schedule to complete our first flagship, which is the Marina Square development on Al Reem Island and that is due at the end of 2009 or beginning of 2010. We are looking at launching the next two phases of Al Reem Island, which are City of Lights and The Cove. They are all sold, we are in design phase and we should be breaking ground in the next six to eight months to be ready for delivery in around 2011 to 2012.

Could we say that you are a global company? Do you have strategic international partners?

I think so. For anyone to go global you really have to have solid roots and that is what our target is, it is to establish ourselves with good fundamentals, good corporate governances, policies and procedures. No one is going to global companies that don’t have those and we wouldn’t work with people who didn’t have solid foundations and understood the market. That’s what we’re establishing and over the last three years we’ve gone through the process of establishing ourselves, building ourselves up and concentrating on delivery; it’s very important that we deliver our projects and deliver the quality that we say we will. We’re marketing, from our point of view, as developers of a building rather than individual apartments. It’s important that people have confidence that Tamouh can deliver and people are confident and that’s why we’ve been awarded the Vietnam project.

Is this how you are going to build global recognition?

I think so. I think it’s important for people to recognise us. We want people to recognise the name Tamouh as synonymous with delivering projects on time within the budget and delivering quality and giving people what they want. Good communication with investors and customers is important. It’s no good me delivering Sports City in an area where there are no people or where people want houses. It’s no good me delivering pent houses and seven bedroom luxury houses where no one can afford them. So, it’s important for us to deliver what people want and need in those areas, whether it’s social housing, villas, complexes, retail or commercial. The whole spectrum of development is important to give people what they want.

Is there any particular message you would like to convey?

Before people judge the Middle East, Abu Dhabi and the UAE from the outside, I think they need to experience it and I encourage people, if they really want to invest, to come to the UAE, Dubai and Abu Dhabi, and talk to the people. I think it’s important to have dialogue with people. We are gradually coming out of our region and spreading the word and we have a lot of companies who do that, such as Emirates, Etihad, Al Dar and Emaar. However, that’s just a tip of the iceberg. There are a lot of solid, good quality companies within the UAE that are probably not as well known as those companies but I think if anyone is interested in investing, whether it’s a personal investment or a corporate investment, they really need to come and talk face-to-face with the people here. I think it’s important because that’s when they will get a much better idea and understanding of the people, culture and environment and of this region.