Picture the scene. It’s 2002, and Mohamed Alabbar and Robert Booth are sitting in Al Hakawati café off Sheikh Zayed Road in Dubai.
The Emaar chairman and one of his top executives are having one of their regular catch ups. “He points to the Defence Lands across the street and tells me ‘I want to build a development that the whole world will want to come and see.’”
Fifteen years later, Alabbar has gone on to become one of the world’s greatest ever developers, with his Downtown Dubai project the feather in a very impressive cap. Booth, who left Emaar in 2014 to start his own boutique property company, Ellington Group, is quite a chip off the old Alabbar block himself. He has the swagger, the charm and most importantly, the results.
“All our buildings are either under design or construction. Those under construction are 90 percent to 100 percent sold. We’ve done this with zero marketing and some good effective PR. It’s purely been word of mouth; 50 percent of the people who come into our office end up buying something,” he says.
Founded only two years ago with co-partner Joseph Thomas, Booth now has 11 properties under development spread across MBR City, Downtown Dubai, Emirates Hills, Jumeirah Village Circle and the Palm Jumeirah. But these are certainly no ordinary properties. From day one, Booth set out to create high-end properties that replicate his own passion for design, architecture and art. The tagline is “Live in Design”, where residents can enjoy a “community within communities”.
It has already brought seven projects to the market and sold 1,500 units. This year will see the release of 14 more, comprising another 2,400 units. With an average price of AED1.2m ($328,000) per unit, you can see the doubling of revenues over 2017 to reach AED1.5bn ($411m) for this year alone. By the end of 2018, revenues could have crossed the billion dollar mark since Ellington’s inception.
Its marquee projects such as Belgravia and Eaton Place in Jumeirah Village Circle and DT1 in Downtown Dubai have already won acclaim from both investors and residents for their top quality and, just as importantly, immaculate after-sales service. Take its Belgravia Heights project, due for release shortly – current projections show it will be completely sold out, again with zero marketing.
Booth says: “We noticed the market becoming more sophisticated with an opportunity to create a real design-led real estate company and the market is craving it. There are consumers out there who are willing to pay a bit extra for this – either for renting it or buying a home in something that’s thoughtfully designed.
"You need to be passionate about the business. You can take a billboard on Sheikh Zayed Road and spend 30 million dirhams for it. My view is that I’d rather take that money and put it into our product. It’s proven to be very successful for us.”
He adds: “Around 60 percent of the buyers in Belgravia are end-users. Investors, however, move quicker than end-users. When they see the quality of the product, they want to move in straight away. End-users will bring in their family and friends and then explore the option to purchase the product. And many end-users, when they see our product, move in themselves as it is much nicer than where they are staying.”
Walk around Booth’s show homes – which, interestingly, are built within his actual offices in Burlington Tower – and it is difficult not to be impressed by the quality, class and attention to detail. Booth’s biggest push, and what he believes makes his developments stand out from the rest of the crowd, has been to develop strong communities, not just buildings. Small touches can make a big difference, such as regularly inviting his buyers to the site to see the latest progress, and an onsite lunch for the workers during the topping out ceremony.
We noticed the market becoming more sophisticated with an opportunity to create a real design-led real estate company”
When Belgravia was handed over to buyers, he and his partner, Joseph Thomas, personally visited all of the residents with a gift basket and welcome note. In January, his team were back there washing every resident’s car and leaving a “thank you” note from Ellington for living there.
He says: “I’m a great believer that within every project we need great communities. We want to touch customers where it’s important, and make them happy. It’s why 30 percent of our buyers are repeat buyers. That’s impressive! People come to our office and buy units and then tell their friends. Our first buyers came through our sales people and our friends. After that, the rest of sales was through word of mouth.”
He adds: “We focused on every detail in our first building (Belgravia) – we had 181 units and 101 of them had zero snags. This is unheard of in the industry. Customers were hugging our sales staff and thanking them. We have a waiting list to get into the building to rent – that is remarkable. The rental yields are 15 percent over what you get in the marketplace.”
That said, property is no easy market to be in. Ellington for now is only focused on Dubai, which has an annual requirement of around 25,000 residential units. With Emaar already having captured around 50 percent of the market, that leaves everyone else to fight for the remaining share.
“If a developer can capture about five to eight percent of market share, you have a sizeable business. So I went with the mind-set of capturing five percent of the market share, which I think we can easily achieve, given the nature of our product and positioning.”
Like many experts, Booth expects the Dubai property market to flat line in 2018, suggesting that with capital values under pressure there is a softness in the market.
He says: “There’s still a market out there… the world doesn’t stop. You still need to build homes. Dubai’s capacity is for around 25,000 units annually but it does not get delivered. The number of units actually delivered is around 40 to 45 percent less. So there is an undersupply. There’s a softness in the market for inferior products that will get to nowhere, no matter where we are in the cycle.”
In so-called micro markets such as Downtown Dubai and Dubai Marina he still sees the potential for a price rise of up to three percent – so much so that “I would completely urge my son if he had a million dirhams to invest in Dubai in the right product, yes, and also go to the right developer.”
He is also confident that the market has matured enough to make it harder for undercapitalised developers to make an entry, thanks to new regulations brought in by the government after the 2009 crash.
He says: “If you look at the previous cycle, there was too much leverage in the system – in Dubai during 2008 it was a 100 to 1. Lehman Brothers went down when they were at a leverage of 45 to 1. So you can imagine what happened to Dubai. The government was smart as it took this leverage out of the industry through strict regulations. Now it is a challenge for a developer to enter the market as you need to be much better capitalised.”
He adds: “The regulations state that for me to sell a building I need to own the land 100 percent. So I should have 20 percent of the building constructed or I have to post a letter of credit or a bond with RERA for that 20 percent. The leverage now is good, so only serious players can come in and top that off with the market being competitive. Gone are the easy days and that is because of government regulations, which are fantastic for the UAE and Dubai’s property industry.”
The government was smart as it took this leverage out of the industry through regulation. Now it is a challenge for a developer to enter the market”
So what next for Canadian-born Booth and Ellington? For now he says taking on any projects outside Dubai is just not on the agenda.
“There’s an old saying in North America that, as a developer, if you have to get on a plane or a train to see a site, it’s too far away. If you can drive to it, then develop it,” he says.
And Booth has certainly driven to a lot of building sites over the years. He started his career working in Canada for the gigantic Asian developer Li Ka-Shing, on a $3bn Vancouver project. By the age of just 29, he was in Toronto working on a project to build 16 high rise towers in Downtown Toronto.
It was then that a chance meeting took place which would change his life. Alabbar was in Toronto in 2000, and Booth was invited to meet him as Alabbar was busy putting together a masterplan for Dubai Marina.
“As I got to know him over the course of the year, we would meet and talk and have lunch. One year, he invited me to come to Dubai,” says Booth.
Moving to Dubai in 2001, he joined Emaar Properties PJSC, holding various senior roles, including CEO of its North America region and CEO of the overall Real Estate division. He was instrumental in the development of Arabian Ranches, Emirates Living, Emirates Hills, The Greens, and The Dubai Marina, bringing over 40,000 residential units onto the market.
His crowning achievement was his involvement with the flagship Downtown Dubai project, where he oversaw everything from hiring masterplanners to launching the hotel, retail and residential components, including the Burj Khalifa. Having defined international build standards, he maintains his role at Emaar as advisor to the chairman, while serving as an independent director on the advisory board of Indian business conglomerate Piramal Group’s real estate division, and the STC Aqalat board that was set up to monetise the company’s land bank in Saudi Arabia.
He says: “I was young then, and in many ways, Emaar was a start-up too. The joy of creating something out of nothing is really fun for me. And now with Ellington, this is the third start-up and I’m still excited. I can do something really innovative and really exciting in the marketplace. My son asks, ‘How do you have so much fun at work?’ I tell him it’s like sports when I go into the office. It’s not like work, I love what I do.”
Judging by the numbers, so do his customers.
“Dubai in short order has become a global city. In 2001 when I arrived, the population of Dubai was 900,000 people. Today, it’s 2.8 million. But in reality, Sharjah, which is just adjacent to Dubai has 1.4 million residents. So we actually have a metropole of over four million people. With Emirates airline and the lifestyle here, everyone wants to come to Dubai.
“I look at the vision of the government. They are constantly investing in infrastructure. The WEF ranked UAE number one worldwide in infrastructure; higher than Switzerland and Singapore. The ports, the rail network, the roads, the airport is all burgeoning. We talk of Expo and the $7.5bn investment for a six-month show. If you look at the private and public sector over that same period, they are investing over $100bn – they’re expanding the canal, building roads, a new airport, more planes… so whenever you have a government committed to growing infrastructure, you have an economy growing.
“In Vancouver, my home city, Expo came and went but the big benefits came after. People came to Canada and said they want to buy a home there and for 20 years it grew because of Expo. So in Dubai, there will be a lot of legacy benefits. And more and more people want to see Dubai and when they do, they like it and buy a home here. So I am gung-ho about Dubai.
“Business cycles are not going to end. There will be major and minor business cycles, there will be ups and downs, but what I’ve learned since 2001 is don’t bet against the vision of Dubai.”
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