Syed Mohammad Ali & Najia Mahboob

Moody’s believes that the region’s property boom is driven by strong fundamentals and rules out that the bubble being built could be pierced. How would you describe the current real estate climate Dubai?

CEO: For a long time I have been hearing about this: it’s a bubble, it’s a bubble. But people do not go into facts and figures, they don’t look at the multi-national companies from all over the world who are eying this part of the world and asking ‘why are they eying this part of the world? What do they see here?’ For a hotel of one billion dollars, for example, if Atlantis Hotel is coming from the Bahamas to Dubai, they will spend about ten million dollars to get a report about where they are coming to, then they spend one billion dollars on actually coming. So people must understand that this country is so close to every country in the world, that God forbid if something happened in this part of the world, all of the world will suffer. Tell me in which country people do not know about Dubai. There’s so much happening here, so many big companies coming here; why are they eying Dubai, why don’t they go to the UK or Paris? There is an important market here. If this is a bubble, then the whole world is a bubble. Believe me, if this bubble bursts, the whole world will be affected by it. Every big company is transferring their head offices to Dubai. Why? They see some charm in this. They spend a lot on accountants who give them the reports for ten years ahead. They transfer 10,000 – 30,000 staff and their whole headquarters here – why? If it’s a bubble, why would they come?

Do you think that US real estate prices would eventually affect Dubai?

CEO: If you look at real estate in any part of the world you will see that it never dies. It might get sick, but ok, let it get sick. If you have the holding power and the leverages it will return to the same health once again. It has happened all over the world. It has gone up then gone down then again gone up. If you have leverage and the holding power, you are the winner. The same patterns is happening in the US and Europe too, going up then going down then coming back up. The same thing happened in Dubai; in the early 1990s the rate went up to 600-650 Dhs for the price of one piece of square foot land, and then came down to the 300 Dhs. Those people that didn’t have leverages borrowed money from the banks; the market came back up again and now you can’t get a square foot of land for less than 2,000 Dhs. The good part of this country, and not many people will tell you this, is that 50 percent of Dubai’s land is non-free hold. And those people who own those buildings or villas or warehouses are so loaded they don’t want to sell it at any price. So it will never affect them if the market goes down; they have their own buildings, they have their own work, their own standing, limits, and leverages. What will happen to them, nothing! Just find me one tower on the Sheikh Zayed Road which is available for sale. Nobody wants to sell. This is prime location. Even if you put an ad in a newspaper wanting to buy a tower, you will see that you will not get one tower. Everybody wants to hold on to those properties. If they sell to you they will not give you more than 5.5 or 6 percent returns. And if you actually buy land here on Sheikh Zayed Road and construct a tower for yourself, with today’s rates and today’s market your return is a 3.5 years return. This is the reason people don’t want to sell. 50 percent of the land of Dubai is non-free hold owned by the locals and the GCC nationals who don’t want to sell the land. So the thing is that the market goes the wrong way when we have more sellers and less buyers. In this part of the world there are less sellers and more buyers. And only UAE and GCC nationals can buy in this area.

Basically we are talking about limited supply?

CEO: Yes, and if you say in a month’s time 500 apartments are going to get ready you will have 20,000 buyers in wait. And treatment here is so good, so nice, so down to earth that people who come here and stay for 2-3 years do not want to go back. I’ve seen Europeans, I’ve seen Americans, I’ve seen visitors who come for a defined period of time to Dubai and after the period is over they ask their employer either to renew it or they go find another job; they don’t want to go back. You have many factors; first of all is the weather. Second thing, which is probably the biggest thing and a very good thing, is security. Third thing is that you don’t pay any taxes. Whatever you make is yours; it’s all your money. There is security; at 3am your wife can take you to the airport, drop you off, and go back home alone. Where in the world do we get such a secure environment? I’ve seen people get mugged in the daytime in London, Paris, and America. Security is something people really enjoy here. You feel at home; being an American, being British, being French, all your boutiques, all your restaurants, all your clubs are available in this part of the world. All your food is available. So you don’t feel homesick.

In your opinion, how long is this growth going to continue? Ten more years? When can we see demand meeting supply?

CEO: Once everything is full in Dubai. Already we have touched this. On this side it has touched Sharjah, and on the other side it has touched Abu Dhabi. There is nothing left there. There are only a few places where there is water: Sharjah, Abu Dhabi, and Al Ain. Now they are going towards Al Ain. What’s left? Nothing is here. Again, money power. With money power you can build anything and everything. This money power is bringing in all the big companies, through entertainment, trans-roadation, metro, etc. This is very satisfactory for Dubai. Now it’s an entertainment center like Hollywood. It’s the biggest in the world! And the vision of Sheikh Mohammed, may Allah let him be with us for years and years to come, his approach, are very different. When he started this free hold area in the GCC countries, all the neighboring countries were laughing at him and waiting for him to go down. And now everyone is following him. Every country is following him. Look how strong he came up. He wants to bring in more and more people, and he is giving facilities to the people. If you sit with me I can tell you precisely all he has done for Dubai, just to pull people in. There are so many city complexes, like Media City, Healthcare City; all the hospitals in the world are in Dubai now. Why are they in Dubai? Why would such big companies come to Dubai? Everyone from the GCC countries is coming to Dubai. Recently, my friend had a problem with his appendix and he came to Dubai for treatment. He could not get a room in a single hospital in Dubai. He had to wait till the middle of the night before finally being given a room in Medicare Hospital. There is that much need for hospitals and the hospital industry here.
They’re coming up with Healthcare City, Internet City, and Knowledge Village. Now with Knowledge Village, you go there and there is a waitlist. All the big institutions of the world want to come to Dubai to have a college here or a school. This is why I am saying I do not agree with the people who are calling all of this a bubble. How can it be a bubble, what do you even mean by bubble? Do they think that one day they will wake up and find everything vanished from Dubai, gone? There was an article in Newsweek some six months earlier, which my brother had read, and he called me and he said “Mohammed, I have very good news for you, I am excited to pass it on to you” and he said “I just read the Newsweek and I saw the survey that said if there were bubbles and they were to burst, the last would be Dubai.” Dubai will be the last bubble in the world to burst. And mark my words, God forbid if Dubai’s bubble were to burst first, the entire world would go with it. It is so interconnected to each and every country and city. The most you can find is 2-3 percent of people who are here and want to leave this part of the world and go back to their home country. They enjoy the heat, they enjoy the weather; they see homes and offices, cars, schools, and shopping malls, and they see everything is good. Yes heat can be a bother sometimes but that is all over the world; like in the cold, people still have to work, and they stay in their cars with heaters on, or in their homes with heaters on. So it’s the same thing. So heat is not a big issue here.
There is so much to say about this issue, and I’m glad we are having this interview. You can even write a book about Dubai, there is so much information. The projects here will be a landmark for Dubai, and for my family and I. My great grandchildren will come and be able to see all of this. That is very satisfying. Why would I go for something iconic when we can build all this and put one thing on top of the other? For this reason we have taken all the big names from all around the world. We have the best construction, we have the best structure engineers, we have the best project managers, and we have the best contractors of Dubai.

As a private sector operator, what are your expectations? What areas can be further improved to facilitate your operations?

CEO: There are so many areas that have to be improved; no doubt about that. Traffic has to be improved, infrastructure has to be improved. There are some problems which we are facing currently, and Dubai Department of Commerce has promised to provide us with those facilities also. They’re working on that. They also have to work on electricity, roads, and infrastructure, but they are working on it and will provide facilities as soon as they can. Now they are also providing the end-buyer with satisfaction by providing for their needs, like doing escrow accounts. This was a big need because they didn’t want anyone to run away with someone else’s money. Escrow accounts are basically controlling the funds, and they are making sure that all the capital is delivered to the people. That is a huge step and is very appreciated.

Fortune Group was established by perfect home real estate, and in a short span of only 4 years has become one of the leading developers in Dubai. What are your success factors?

CEO: I’ll be very honest with you. The main thing is luck. When luck is not your side, no matter what you plan or what you do, nothing will happen, and if luck is with you, you’ll fly like a rocket. We were at the right place at the right time. We were doing real estate for the last five to seven years before the free road opened. We were a pioneering real estate company in Dubai and as Dubai boomed, we also boomed. As Dubai climbed higher, we also climbed higher. That was the main thing. We did take the first step. The very first commercial tower in Dubai was done by us. Everyone was doing residential properties, and we thought why not change this and go commercial? And now commercial is hoter than residential.
We have always come up with different concepts. The very first building of ours was a commercial tower with a revolving structure on the top. Until now there is no other building like ours on the free road area here in Dubai. So it was nice and people liked it, the reaction was fantastic, people loved it, so that was our starting point. And it was simply one after the other, no strategy. Luck. Yes you do marketing, you do your studies, you make your plans, but I’ve seen people do that and fall.
Then we started looking at diversification, and we went to Romania. We went to Romania because Romania was working on its economy to try and get into the EU, so we said it has to have more potential and billions of Euros will be spent on infrastructure. We all went over there, and my brother went too and helped us a lot. Romania was like Dubai in 2002. You invest there, and really it is booming. Now all the people from Russia, Turkey, Italy, Spain – everybody is coming to Romania to invest there. The prices are shooting up, like they did in 2000 and 2002 in Dubai; the same thing is happening there. The prices are changing every week. The property in which we put shares in one year back is giving 500-600 percent profit. So that’s why we went to Romania. Every other country in Europe is already developed. This was a country that was coming up. It was needed. And we have good connections with the prime minister there; we were introduced in Dubai.

How confident are you that these investments in Romania will receive wide-spread success?

CEO: Very, because they have support from the EU. And also because of the way people from all over are coming into it. Germans, French, British, Italians – they are exhausted, and have nothing to do now. They want to make good quick money, so they come to Romania because it’s just becoming the country. And you probably know that Romania has the most fertile land in all of Europe. It used to be called the Great Pasture of Europe. I don’t think it will come down that soon.

Can you comment on your strategy looking beyond 2012?


CEO: Probably at that time I would like to enter Saudi Arabia. We are also doing some small projects in Pakistan; I would like to go back to Pakistan to do something there also.

This is kind of a reverse strategy – expanding to Romania and then coming back to the GCC countries…

CEO: Yes, well the reason why we would go to Saudi Arabia would be religious reasons. To go and do some projects there and stay there forever, and then do something back home. I hope the political situation in Pakistan will allow us to go and do some projects there. We have plenty of land there available, and as far as politics go hopefully by 2012 things will have cooled down; then we will definitely go to do something there. Also, we are eying Saudi Arabia and as soon as it opens up, we will jump there. If they allowed me to go there today, I would, but they don’t allow me. I have no doubt though that they will open up; just like Abu Dhabi has opened up, Muscat has opened up, Qatar has opened up, Bahrain has opened up, they will also open up. We are waiting to see the light at the end of the tunnel, and we will jump on Saudi Arabia.

Fortune Group is committed to the growth of Dubai, and besides optimizing value for your investors and stakeholders, Fortune Group will continue to contribute and make a significant difference to the city and its communities. How important is the notion of communities for Fortune Group? What about corporate social responsibilities?

Director: Fortune Group takes corporate social responsibility very seriously. We have two versions of that; something which is done from a religious point of view as per Islam is that we are supposed to pay Zakat and help other people, which is done on a personal level. We don’t advertise that. We are involved with many different foundations such as Zia City Foundation in Pakistan that helps orphans and needy people and we happily contribute to that. So in terms of corporate social responsibility, we really work towards making sure everyone is taken care of. We especially take care of laborers working on construction projects. Whatever is in our capacity to do, we do.

How are you contributing to the image of Dubai?

Director: We are very proud of Dubai and consider it as a home. For example, when City Scape was first launched in Singapore and China, we were the first to go over there and participate, to promote Dubai. We introduce the concept of investing in the Middle East to everyone, and making them less fearful of the unknown. We invite agents to come here and see Dubai for themselves.

If I were an individual investor interested in investing in Dubai with Fortune Group, what are the services you would be able to offer?

Director: We will obviously explain the overall project to you. We have a marketing team if you want to see our sights that can take you on a tour of Dubai. It also frankly depends on how big of an investor you are; the extent of services provided will differ.

What kind of investors mostly invest with Fortune Group, are they mostly individuals?

Director: We have both; we have a lot of individual investors, with very diverse nationalities. Apart from that we also have a lot of companies that want to open their offices over here.

One of the biggest development projects is Burj Al Alam; can you tell us more about that?

Director: Burj Al Alam is the tallest commercial tower in the world. It has 108 floors, and reaches half a kilometer into the sky. As for the ranking, it is the fifth tallest building overall. In Dubai it is the second tallest structure after Burj Dubai. Burj Al Alam is a combination of a hotel, retail – by which I mean a proper shopping mall – and offices. The hotel occupies the top floors of the building which will make it “the highest hotel in the world.” The architects who are working on this project are the best architects in the world. For all the different aspects of the project, we have the best in the industry. We have the best team.

How do you structure your marketing strategy?

Director: Basically what we do is, all our buildings have the name Fortune, because we want everyone to recognize Fortune as a brand, and all our projects as sub-brands. Every building has a separate identity, and is a separate entity in itself, but is managed by Fortune. For example, you have Fortune Tower, Fortune Executive, and so on. Whenever we come up with any project, a lot of research goes into it. We always make sure the marketing and the plans are in place before we launch a project. We only have one launch, usually, a pre-launch, and then a formal launch.

What is your ambition with Fortune Group; where would you like to take it?

Director: We hope to make it an international brand. Other companies go to all different countries, do one small project there then call themselves an international company. We don’t believe in that. What is the point of doing single small projects here and there? That is why we are concentrating on Dubai, and we want to be the number one property developer in Dubai. As you know we are currently working on projects in Romania and have become one of the biggest companies there. We plan to expand there. We also want to expand to Pakistan and Saudi Arabia. We also want to expand into residential, hospitality, and construction.

To finalize the interview how do you assess your financial performance in 2008?

Director: We look at our financial performance in two ways. One is our internal financial performance; second, our financial performance in terms of our investors, what we have done for investors. As far as Fortune Group is concerned, we are doing very well. We are still announcing our projects; we have a lot of projects in the pipeline. In terms of investors, all of the investors with Fortune Group are quite happy. As an example, there was an investor who bought some property for 400 Dhs per square foot, and is now selling it at 1800 Dhs per square foot. The returns are really high. We are very competitive in our pricing.