In his first UK interview, Aldar Properties’ new chief executive talks to Joanna Bourke about how the company is making the most of the upswing, and its ambitions for the UK
Abu Dhabi’s biggest developer is the epitome of Emirati grandeur. From projects that ooze opulence – no-one else can lay claim to developing the first hotel to be built over a Formula 1 race circuit – to a striking, orb-like glass HQ at Al Raha Beach, Aldar Properties is a beacon of glamour and ambition.
Any accusations of style over substance can be quashed, at least in part, by the group’s AED584m (£102m) profit and AED1.4bn Q3 turnover figures announced last week. Clearly the company is doing something right. Particularly after what was a catastrophic period for the whole region back in 2009. The trick now will be managing success through the upswing.
The man charged with this task is Mohammed Khalifa Al Mubarak – former deputy chief executive of the company who was appointed to the top job in July 2014. And, after a year-long search for the right candidate, he is proving the right man for the job.
In a global hunt dubbed “exhausting” by Aldar, it was eventually decided that Al Mubarak was the only person suitably placed to ensure the company’s growth and sustainability in the rebounding United Arab Emirates property market.
He may only be in his early 30s but he knows the company inside out, having joined in 2006 before swiftly climbing the ranks to deputy chief executive and chief portfolio management officer.
A Manchester City Football Club fan – his brother is the chairman, after all – he doesn’t just talk business and is happy to joke about the beautiful game, a trait he picked up during his spell with Barclays Capital in London.
Presumably he is aware that, just along the corridor in his HQ, a colleague’s wall sports a Sir Matt Busby Way sign – the location of City’s fierce rival Manchester United’s Old Trafford football ground? He nods and smiles: “I do allow some things. Though I hope none of you are Manchester United fans.”
Looking out over the white sands of Al Raha Beach, and in the month the publicly listed company opens its 2.5m sq ft Yas Mall scheme, Al Mubarak speaks exclusively to Estates Gazette in his first UK interview, and reveals how the group will trim its debt pile, why it is mulling a British debut, and how he thinks Aldar can help the UAE to become business capital of the world.
Aldar in context
The past five years have been erratic, unstable and hugely unpredictable for the UAE property industry. Aldar escaped relatively unscathed and, in fact, received billions of dirhams in government support after the collapse in 2008 of the neighbouring Dubai property market.
The group – which now employs more than 370 people at its HQ – then completed a government-orchestrated merger with former rival Sorouh Real Estate in June 2013.
This was to cut down on overlapping costs from both businesses acting as the primary development vehicles for the government and to lower borrowing costs. The combined company now has a $12bn (£7.4bn) portfolio, which Al Mubarak says is performing strongly – one of the reasons it has refused to put the brakes on developing its 77m m2 (828m sq ft) landbank.
“We had a successful merger with Sorouh, both in terms of the speed of integration and results. The two businesses complemented one another and, as a result, Aldar today is a more diverse business, and is one of the largest real estate companies in the UAE,” says Al Mubarak.
He believes the new, integrated powerhouse can learn from past mistakes and flourish in the present climate.
“There was a time when the market in Abu Dhabi became crazy,” he says. “There were investments coming from left, right and centre and it created unrealistic growth. And with this came a realistic downfall – the crash. While this was a difficult time from a financial perspective, this period was a good change for us and allowed us to streamline our business and realise efficiencies. This created a new, mature Aldar that is well positioned for growth.”
Roaring results
The group posted a stellar set of Q3 results on 13 November. Net profit rocketed to AED584m, from AED413m in the same quarter in 2013. During the same period, turnover rose to AED1.4bn from AED1.2bn. As at 30 September Aldar held a strong cash position, with AED4bn of cash and bank balances.
Substantially reducing debt was a major target for the firm, and Al Mubarak says it is still very much part of a five-year business plan put in place 12 months ago. Gross debt decreased by 5% in the third quarter to AED9.6bn, and this is expected to be trimmed to AED6bn by 2015-16.
In the first year of the new business plan – which lists priorities such as deleveraging the balance sheet and monetising the landbank – Aldar can tick off a number of milestones. So far in 2014 it has launched AED5bn (£86m) of homes on the market, as well as ensuring its Yas Mall is fully let ahead of this month’s opening.
The development includes 400 shops and a 20-screen cinema, and is poised to rival some of the mega-malls in neighbouring Dubai.
“Once fully operational, Yas Mall will generate AED400m of net operating income from the mall’s recurring annualised revenue,” says Al Mubarak.
Leases signed mean that, for the first time, the Lego Store and fashion brand Joe Fresh will have a presence in the UAE, and Brooks Brothers and Hollister will make their Abu Dhabi debut.
At 2.5m sq ft, it is quite a vision to be rising out of the sand, and the enormity is not lost on Al Mubarak. “Sometimes I close my eyes and I think how time has flown,” he says.
“When I first joined Aldar, Yas Island was just an island with nothing on it, and now you can see what it has become over the past 10 years: a major leisure destination attracting millions of visitors from all over the world – it is just fantastic.”
Abu Dhabi and beyond
And Al Mubarak has no plans to slow down. He is already thinking about phase two of the Yas Mall and beyond the present business plan.
When asked if there is demand for more retail, Al Mubarak confirms he would certainly explore options for a phase two at the mall, but not speculatively. “Yas Mall had a minimum threshold of 40% of space leased before we even started construction.
“We have a 77m m2 landbank and we have a strong grasp of the market dynamics in the region. This allows us to remain the dominant player within the city of Abu Dhabi,” says Al Mubarek. The focus in the medium term is “still very much Abu Dhabi” as the chief executive puts it, in line with the post-crash recovery. But after that, the net can be cast more widely.
“We are always looking for the right opportunities for our shareholders, be it in the UAE, UK or elsewhere. Any project must be commercially viable and in return, create value for our shareholders.”
Some inspiration for present and future projects has been drawn from the UK, with Al Mubarak singling out the Westfield shopping centre in Stratford, Covent Garden and Carnaby Street as strong models for retail. At the same time, the group would welcome approaches from British developers to partner schemes.
“Companies looking at sharp yields on commercial properties can look to Abu Dhabi for opportunities,” he says.
But Al Mubarak is not only interested in returns. He is also a board member of the Abu Dhabi Tourism and Culture Authority and chairman of Farah Leisure, operator of the Ferrari World and Yas Waterworld leisure parks. He is excited by the long-delayed plans for the Guggenheim and Louvre galleries in the emirate. Both are now finally under construction with a 2017 finish in sight.
He is also the chairman of Aldar’s schools subsidiary Aldar Academies, and places a great emphasis on education and future generations that will include the next property masterminds.
Ultimately, though, Aldar is the priority. “Our vision is to be the most recognised and trusted real estate developer in Abu Dhabi and beyond.”
With more than a hint of Emirati grandeur, of course.
Overview of the UAE property market >>
Emirate-by-emirate guide to investment and development opportunities >>
