Ronald Barrott

The size of the gap between supply and demand now in the Abu Dhabi real estate market has been estimated to 29,000 units, and is expected to reach 83,000 units by 2017. What is your opinion, how will the supply and demand behave in the future?

Demand is outstripping supply considerably at the moment, as you just stated. It would take us about five years to catch up with the demand. At the moment we are working very closely with the Urban Planning Authority to set the levels of development for retail, residential, hospitality, and all classes of development, including industrial. Because what we need to do is to plan on supply and demand. All sound funding markets are based on balancing supply and demand. It’s not healthy to have supply ousted by demand or demand ousted by supply. It doesn’t work. All mature property markets that perform are when you get that balance right, and that’s very important. The government is very aware of this, and one of the reasons they set up the Urban Planning Authority was one, to lay the network out and framework for the expansion of this capital city of Abu Dhabi, but also to deliberate how they monitor how they set the development of these various facets, to ensure that we balance that supply and demand. So there’s going to be a period of five years it will take us to catch up and get to that point where the market is stable.

What are the major factors behind fueling this massive growth?

The success of Abu Dhabi. I mean, Abu Dhabi has been developed on a stable economic growth model, which means you have developing business that need to be populated; people need to move in to the country. No longer are these people coming in for three to five years as expatriates, they’re coming in for career moves, because the world has changed, people see the world as their market place when it comes to employment; no longer do they just look at their own countries. People are coming here with their families to relocate, and this becomes their home for the rest of their life, as long as they are happy in the careers they’re in and life. So a lot is changing in the world and a lot is changing in Abu Dhabi; people come in to populate these companies and these people have the same needs and wants as they do elsewhere in the world, so you have another layer of businesses supplying those needs, and they need people to populate their companies, so it goes on. Added to that we’ve got some of the most beautiful topography in the world. We have a fabulous climate, our winter just happens to get a little bit hotter than most peoples’. We go inside because it gets too hot in our winter; most people in most countries go inside because it’s wet and rainy and cold outside. So we’re just the opposite. For eight to nine months of the year we have a fabulous climate, so tourism is going to be an important part, but it’s a supporting role, it’s not the main event. But tourism is building in Abu Dhabi, people like what they see when they come to Abu Dhabi; it’s a very mature city, it’s a very controlled city. It’s expanding from 1.3 million to 3 million in the planned period of 2030. Aldar as a main developer is heading that development. We’re setting the standards of development for other companies to follow, both in terms of authority of our master plan design, and quality of the buildings we are delivering which are somewhat different from what has been built in the UAE today.

You mentioned you are setting the standards of development for other companies. Is that part of your strategy or how would you Describe Aldar’s strategy?

It’s part of our strategy, yes, to build quality buildings and sustainable communities in all respects, both in terms of design, and sustainability starts from design and a master plan. You’re looking at a white sheet of paper with a pencil and decide how you lay out a master plan, how you lay all the pieces out that go in that master plan. Sustainability is all about reducing people’s reliance on the motorcar, to integrate transportation systems, to make sure that people work, live, and play within a sensible distance of their own offices. Therefore, you are cutting down their carbon all the time. The government is very aware that we are a country that has a high carbon emission per capita. A lot of new industries we’re creating, some are related to oil and gas but some are new industries. For instance, we’ve got Mazdar which is a new city being built, which is a zero carbon city. So that’s being set up to help people look at their lifestyle and how they live, but also to bring in research and development into new energy fortes, new energies that will replace oil in vehicles, and new industrial techniques to make industry more environmentally-friendly. Within the center of that city is an MIT University, which will be populated by some of the best brains in the world.

There is a lot of interest they have had in Mazdar from all major corporations around the world involving looking at these new industries and new sciences, and that in itself will generate more population, more jobs, and more income into the economy because the whole city is being expanded based on a sustainable economic growth model. We’re putting in the Guggenheim Museum and the cultural area on Saadiyat Island, which is being done by TDIC, which is an under the umbrella of the Abu Dhabi Tourism Authority. People often say ‘why are they doing this?’ We’re doing it because this is a capital city that doesn’t have these things. Most capital cities have them because they have evolved over fifty or a hundred years; we’re just putting them in a little bit quicker. We’re developing the Yas Island; it’s a motor circle, it’s three theme parks, one is Ferrari, and a water park, it’s golf courses, it’s all forms of lifestyle retail hotels, resort hotels, and long-stay hotels, short-stay hotels, three, five, and seven star hotels, 3.5 million square meter shopping mall and entertainment, because we don’t have those things at the moment, so when we finish Raha Beach on Yas Island we’ll have phenomenal facilities that will be some of the best in the world if not the best in the world. The whole city is growing, and through that growth we’re putting in those components; we’ve got interest from multi-national corporations around the world to come and locate their regional headquarters here, and some of them their world headquarters, because obviously we’re a very efficient tax nation here, and world corporates are now looking at how they make their businesses even more efficient. What’s important also to worlds’ corporates is where they locate their staff. They’re very conscious that their staff needs to be in the right environment. You need a right environment because they spend so much of their day in the offices. They’re also very environmentally-conscious these days. A lot of corporations will not take offices unless they are sustainable and have been designed to meet the guidelines for sustainability which is recognized by the World Environmental Agency. It’s been one of the best guidelines to use. So these companies are looking at us to ensure that we can provide that environment, those offices. Because we recognize people’s thoughts beyond their career; they know they’re going to join this company but the next question is education, health. We can always provide them with nice homes, or a nice environment, especially in this part of the world, but they’re interested in education for their children. We have Aldar Academies, set up specifically to design and run schools. We already have a first school up and running, we have a second school opening up for three to eighteen year-olds, based on the British system. We’re coming through on the American system, the baccalaureate system, the Arabic system. We have 22 schools to build; we have 40 hotels to deliver…in our hospitality division. In addition we are building hospitals with Mubadala.

A part of your portfolio is includes the developments of hospitals? How are you progressing?

We’re already building Cleveland Clinic, which is a joint-venture with Mubadala the investment arm of the government. We’re looking at an integrated health system, to put in place this integrated health system, because the existing health system needs to be enlarged and improved, and all foreign-nationals get health care provided. We’re active on Emiratization, with Aldar we have a leadership program, so we are training our Emiratis in leadership and communication, we’re sending our Emiratis overseas on scholarships to take degree qualifications in property and real estate management. We’re sending our Emirati teachers overseas to take further degree courses to bring them up to international standards of teaching in Arabic and in English. We’re doing the same for hospitality, so we’re bringing on our local Emiratis to present the culture as well. So we’re doing this as a business in addition to developing new communities. It’s all part of building into development and what we do with the culture within which we live, the Arabian culture. And we’ve got a walking international cosmopolitan population here living in harmony and in respect of one another. Everyone enjoys the Arabian Arabic culture that we’re in. And it’s great to bring it on, and things might be different sometimes but it’s part of the culture of the country.

You mentioned to be developing some of the iconic projects such as Al Raha Gardens, Al Raha Beach and Yas Island. How important is the tourism sector in your developments?

Yes, we are developing the tourism sector with the forty hotels we’re building and running. We’ve got major household names that will be the managers of the actual hotels themselves, but in addition to that, that’s not even touching the surface of what we’re doing. Our program is over $70 billion underway. We’re a three year-old company. We are a public company in all respects, so we have a high level of disclosure, transparency, and reporting levels to our shareholders. We have the systems and corporate governance of any public company anywhere in the world. That’s just been borne out by recent credit-ratings by Moodies and SNP, moodies gave us A3 and S&P gave us A- which gives the same rating. For a three year old company of our size that is a true compliment from the market. We’re also developing throughout the other Emirates; we’re in Al-Ain, we’re in Ruwais, we’re overseas in Kazakhstan, we’re doing a major development scheme in the center of Kazakhstan, along with Al-Maabar which is our investment locale here. Al-Maabar is already overseas themselves directly, in Tunisia, Morocco, and Libya. We’re in contact with our colleagues in Nepal, where we’re master planning the expansion of that city.

Are you also eying some other geographical areas, like major markets in Europe?

Well, we’re keeping our eye on the markets but our capital role is to develop the capital city of Abu Dhabi; that’s our focus. Yes, in years to come we will move overseas in a larger manner, but our primary task is to develop this city. And we’ve seen from the projects here today it’s just one of many projects. Our project was 11 kilometers of water frontage. It has over 25 kilometers of actual water frontage when you look at the water courses that run within the development. It’s quite a phenomenal scheme. In Al-Dana which is the business district, it’s five minutes from the international airport, 45 minutes from Dubai, seven minutes from downtown Abu Dhabi. It’s a fabulous location built on sustainability. It’s got four phenomenal buildings, the headquarters, the world trade centers designed by Foster & Partners, Norman Foster designed the main entrance building which are the arches that you go through to go into Al-Dana, it’s quite phenomenal architecture by design. And it’s quite unique in so much as all the cars disappear. Once you’re off the road, you don’t see another car. The pedestrian does not come into contact with the car at all. It’s quite unique in this part of the world and probably anywhere else in the world.It’s very good for sustainability, and we will use solar-powered cars for moving people around short distances, and we’ll encourage the ownership of those cars and transportation within the urban environment. Then you’ve got the Super Tram to take you into the city or to the airport. The Super Tram runs at tram speeds in the urban area, and runs at high speeds on long runs. So a lot of thought has gone into it. We are developing a capital city, and we are treating that with respect that it deserves. And we are delivering on our part the vision the government has, and that vision is a tremendous vision, because it’s looking at all aspects of what is a sustainable community. What people usually don’t realize is that Abu Dhabi does not rely on oil and gas. Through its worldwide investments and the local economy, it is sustainable today, even though they have got many years in oil and gas, having roughly ten percent of the world’s oil, and five percent of the world’s natural gas reserves. The country is in phenomenal shape. It already influences the world’s financial markets, and it’s about to take it’s place within the hierarchy of the capital cities of the world. It will certainly be one of the capital cities every investor will want to visit, and should visit.

Speaking of your individual investors, who are the people coming to invest in Abu Dhabi? Where are they from? What is their profile?

All nationalities that work as players in the UAE. We’ve got investors looking to come here from around the world. Major institutions are looking to come here, the same way they are most mature property markets in the world. They’ve got the confidence in the quality that Aldar is delivering. We’ve got more progressionalism coming through, and Aldar is setting the benchmark for those to follow, both in terms of professionalism, the way we run our business, our corporate governance, the way we operate as a public company. We’re unique in the market at the moment, but there are a lot of companies that are seeing how we are doing it and are following. And that’s good news; it’s good news for Abu Dhabi, for the UAE, and for the Middle East as a whole.

You are one of the leading companies in Abu Dhabi. How do you assess your competition? Which company poses a major threat to you?

We have competition in setting standards. We have set standards and other companies can follow. Aldar will always be the leading edge. We will deliver what we say we will deliver: quality. When people buy a property from us, they know that that property will be what they receive. It will be in the building they received, next to the building that they saw on the master plan. It will be in line with the graphics, the artist’s impression of lines that they’ve seen here today, the models. That’s what they are going to get delivered to them. We believe in selling using the Misrepresentation Act; we know it’s not law here, but throughout Aldar, all our people, which form our very good team, all believe that the customer should be treated properly and correctly, and have confidence in what we deliver. If they have confidence and trust in Aldar, that’s the best form of marketing you can ever have. That knowledge is going around the world. It’s going around the world with people spreading the word for us, and that’s really important for us and for Abu Dhabi.

How do you cope with some of the major challenges in the real estate such as a shortage of cement and labor?

It’s my team’s job and I to resolve it, that’s what I am here to do. I am here to keep the business’ purpose, to maintain the internal structure, to handle its dramatic growth, so that’s the job I do.

Can Abu Dhabi become a victim of its own success?

No. You can never be too successful. As long as it’s planned and as long as it’s capable of, then you can handle any success. And we are successful and we’ve only just started. It’s going to get even more successful. Anybody in the world who has not been here should come. And that’s going to be another problem: having enough hotel rooms to accommodate people. So hotels are being developed as quick as we can over the next two or three years. We’ve put on line in the next year seven hotels. The following year we put another couple of thousand on the market. So it’s happening. If you’re here today, hopefully you’ve looked around, and been into and seen the city; it’s a quite comfortable, safe, and excellent environment where everybody lives and works together very well indeed.

What are your targets for ten years down the road; what would you like Aldar to be in Abu Dhabi?

A truly international company respected by its peers around the world and respected by anyone it comes into contact with, and to be a world player located and headquartered in Abu Dhabi. We’re an integrated property business; we’re developers, and managers. We have our own joint-venture construction companies, district-calling companies, telecommunications, all companies that we need that benefit from what we’ve created. We are partnering with best in class. We’re creating a lot of benefit out of the businesses that are related to us, and we’re here for the long-term. We’re not here for the short-term; this is not the old ‘sell and move on.’ We are here for the long-term to look after that various things we’ve created.

I can imagine that you are playing a central part in Abu Dhabi’s strategic plan 2030. Do you have any projects or plans you would like to announce?

Not today. We have things on our program and you’ll be seeing them in the very near future.

Is there any final message you would like to address to our audience, our viewers and readers about Abu Dhabi and Aldar?

If they’re investors, our shares are available. Forty percent of our shareholding is worldwide which is not very publicized for everybody but most people are in the know, or aware of that. We’re an international company from virtually all across the world. If you’re a tourist looking for an interesting place to stay in 2009 onwards, this is the place to come. It’s an interesting environment where you’ll get a real feel of the Arabian culture. You have some of the best resorts in the world to stay in, and you’ll be within ten minutes of the fabulous city. We’re an island city with 200 natural islands around us, with a tremendous amount of kilometers of coastal waterways to explore and enjoy.

And there is plenty of space to develop.

Yes, it’s fabulous. We’re enhancing what we have, we’re not going to destroy it, and we’ve got to do that very carefully. For businesses, there is great business to be done here, for all business involved in industries from building to the service industry to the businesses that are normally needed in a capital city. There’s great opportunity here. People just have to be brave and come. Yes, we’re located in the Middle East, but you couldn’t be in a more pleasant, safer environment than here. A lot of countries around the world, a lot of cities around the world look up to Abu Dhabi for how people live in such a cosmopolitan city together; it’s a showcase for any other city in the world.

Well, those are all the topics I have for you today. Thank you.

Thank you for the interview.