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He came on board as Nakheel’s Chairman in 2010, bearing the weight of high expectations. Five years later and halfway through a five-year restructuring plan, Ali Rashid Lootah says Nakheel has turned a corner and believes things will only keep getting better. In an exclusive interview with PW, he talks about Nakheel’s new plans, contentious issues related to affordable housing and the recent downtrend in the realty market.
Where are you now in terms of the goals you set for the company when you came on board?
Our main focus was really to restructure the company, which was in debt, and we managed that. We had to deal with three elements: the lenders and banks, the trade creditors or suppliers and contractors, and the investors — people who invested in our properties. We have achieved all our targets so far and delivered all the housing units that we promised to deliver. We have delivered payments to bank lenders four years ahead of time and [what’s left now is] the trade creditor sukuk that is maturing in August 2016.
We came out with a lot of projects and we keep updating our plans every year. But the main plan was the five year restructuring scheme.
What’s the next step?
The restructuring is now done and we are a totally new company focused on growing. We are investing in our community developments where we are building new commercial and retail spaces. We will be the biggest retail owners in the UAE for sure. By 2018 I think we will have 10-11 million sqft leasable retail space and we will have our residential leasing portfolio.
We’ve also started hospitality projects, which we previously didn’t have.
In the years you have been at the helm, what are you most proud of?
Paying the lenders and delivering the residential units to investors. For me it was important because it was homes delivered to people, homes promised to people.
Is there any project that personally appeals to you?
I like all the projects. I am a development man myself. My background is engineering, so I enjoy doing this job. All these projects are important to me.
You’ve announced quite a few retail projects this year. Will there be more announced soon?
No. We’re focusing on delivering what we’ve already announced. We have existing communities and we want to make sure they get the services they need.
You’ve set a target of Dh7.5 billion from retail leasing in the next three to five years. How confident are you of achieving this?
You will see it in our results next year.
Will you be doing new community projects?
Not for the time being. We are monitoring how the market is behaving. It is a little slow, but it’s natural to follow a cycle. We are trying now to focus our resources on developing retail or residential projects for our own portfolio, for leasing. We are also enhancing our communities in order to provide these services.
What about affordable housing?
We don’t have anything in the current plan. But what is affordable housing? How do you define it? You might look at it differently from the way I look at it. We always have to evaluate and look at the project in a very careful manner. Is it worth building affordable housing on prime land? No. So it depends on what land portfolio you old. If my land is in a prime location, why should I build a cheap product? It is better to hold on to my land and later build the right project that suits my land. If it’s affordable, it should be on relatively affordable land.
Dubai Municipality is proposing a mandatory quota for affordable housing in residential projects. What’s your take on this?
I don’t think the government will interfere with business in Dubai. It’s a choice nobody can impose. This is not the practice in Dubai. Did you hear an official announcement from the municipality? Don’t believe news reports unless you hear it from the municipality.
So you’d rather not have the government impose quotas on developers?
How could the government impose quotas on people [and tell them] what to do? I don’t think the government will tell the people what to build. It’s a commercial question. I mean, everything should be looked at from a commercial perspective. If it’s worthwhile, people will do it. If not, why should people do it?
The realty market has been slow this year. What do you think about current market conditions?
That’s normal in every country. There is always a cycle. But I think all the major developers are well placed and there is enough mechanism to protect the real estate market. The way I look at it, it’s a correction. It is not good for the market to become too expensive.
Analysts say the market could pick up by the fourth quarter. Do you agree?
We hope by the fourth quarter [it will improve] and there are also some estimates that it will happen by the middle of next year. But I don’t have the answer, nobody does. I wish I knew.
Some regulations introduced to curb speculation are said to be making it difficult for end users to enter the freehold market.
But we are still cheaper compared to so many other countries. And also, [the regulations] helped to calm the market, reduce speculation and control the prices.
The Asian stock markets are in the red, particularly China. What impact will this have on Dubai realty?
I think that it should reflect positively on Dubai. I mean, it is still a safe haven. Our economy is totally unaffected by these markets and for investors in real estate, the yield in Dubai is still much better than other places.
What is your advice to potential real estate investors in Dubai?
They should come and find out for themselves. I think before investors part with their money, they should investigate. It’s what I would do. They should not just rely on assurances or press releases or the news. Serious investors go through professional channels, consultants, bankers to give them proper advice. Wouldn’t you do that? You have to do professional due diligence.
How has the journey been so far?
It’s up and down, but it’s a learning exercise. If you really look at what happened after the downturn in 2008, Dubai recovered quicker than other [places]. This is because the infrastructure of the [UAE] is very good. The regulations are all business friendly and they are very clear, very transparent.
Source: Jobannie Tabada, Features Editor, Property Weekly