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Amlak was the pioneer of Islamic home finance in the UAE, beginning business at a time when some regulatory frameworks were lacking and it was not clear whether the industry would succeed. Despite these difficulties, the company boomed in its early years, buoyed by the growing number of expatriates moving to the Emirates, and by the large number of high-end new properties coming onto the market.

However, Amlak found itself struggling in 2006. It faced competition from rival Islamic mortgage provider Tamweel, as well as a growing number of banks offering mortgage products. Amlak shares were among the worst-performing on the Dubai Financial Market that year.

Recently, the company has seen a revival in fortunes. Full year profits for 2007 were AED301m (US$82m), up on AED130m ($35m) for the previous year.

"As a company, we were established in the year 2000, and we established the mortgage industry in the country," says Nasser Hassan Al-Shaikh, chairman, Amlak Finance. "We had four excellent years, but come late 2005, 2006, as a company we lost focus.

"This year was a crucial year for us. We took a step back and assessed our seven-year journey, and we took a decision to refocus on the core business. This is what we're known for, and this is where our competitive advantage is." Amlak also reassessed its whole team, making sure that it had the right talent in place for the next stage of the company's development. It seems to have paid off.

"When the changes happened in late March, we gave an indication to the market that we were committed to 70% growth in our forecast for the year," says Al-Shaikh. "However, with the grace of God, we closed the year with 131% growth in profits. This sets the tone for what's coming next.

What is next for Amlak is an ambitious expansion into several other Middle East markets. It launched its own operations in Egypt in July 2007, and rolled out Amlak Saudi, a joint venture, in October.

"For the first half of this year, our operations will be coming online in three countries - Jordan, Qatar and Bahrain," says Al-Shaikh. "We try to experiment with every market and we try to adapt to the regulations in each market, so Amlak Jordan will be a publicly listed company, that will be taken public from day one.

"In Bahrain, the intention is for Amlak Bahrain to be a 100% subsidiary of Amlak UAE, just like the Egyptian scenario. In Qatar, we partnered with the leading real estate developer there, the equivalent of Emaar here, called Barwa. Our stake there is around 40%."

Amlak will adapt its operations to each market, and will customise its UAE products to meet the needs of the customer base in other countries. Egypt, in particular, has markedly different market dynamics to the UAE, since the mortgage finance market is driven more by local buyers than expatriates and properties may be of relatively lower value. Al-Shaikh, believes that there is a huge opportunity for mortgage finance in the country, following the recent introduction of new regulations for the sector.

"In Egypt, we think that there's a huge opportunity, with the population there at around 17 million," he says.

"More people are exiting from the low income category and becoming middle class, so they can afford to buy their homes, or to buy better homes if they own existing ones. When you look at the shortage of housing in Egypt, the gap is about 350,000 units and the number is escalating. There's a huge opportunity, an untapped market.

Al-Shaikh is not deterred by the thought of setting up operations in countries that are still developing laws to govern property ownership and mortgage laws, such as Saudi Arabia. When Amlak became the first mortgage provider in the UAE in 2000, it was very much a case of working hand in hand with the regulators to develop the industry.

"That gave us a huge competitive advantage in the UAE because that gives you the luxury of setting the rules of the game," explains Al-Shaikh. "You set the rules of the game in a way that accommodates the way you do business, and you set it for other players when other players come online later. We try to do the same in other countries.

"In Egypt, for example, the regulation was passed a couple of years ago - however, we're very close to the regulators so sometimes we would have open dialogue with them and they would check things with us before rolling them out. In one of the countries that I will not name, we drafted the whole mortgage law for them and the property ownership law, and that was based on our experience here and on best practice.

"Being the first player in any market always gives you a great advantage. However, as a business you have to adapt for every market.

He says that Amlak will only enter a new market if it feels the country's regulator is serious about reforming the housing sector. Al-Shaikh adds that the UAE has been leading the region in terms of developing its regulatory environment, and has recently introduced several laws to support and encourage the mortgage finance industry.

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READERS' COMMENTS

Egypt's population
Posted by Janis, Dubai, UAE on Thursday 6 March 2008 at 14:21 UAE time


The population of Egypt is 80 million and not 17 million.

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