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Building blocks

John Bullough, the CEO of Abu Dhabi based-Aldar Properties, tells Claire Ferris-Lay why the real estate developer is concentrating on UAE the capital amid the downturn.

John Bullough hasn’t had many sleepless nights recently but he could be forgiven for having a few. The CEO of Abu Dhabi-based Aldar Properties has spent the best part of the last year not just battling the UAE’s declining property sector but also overseeing the development of Yas Island, home to this month’s inaugural Grand Prix race.
“I don’t suffer from sleepless nights but when I am awake my brain is constantly running over — I keep thinking of new things that need to be addressed,” he laughs. Yas Island is one of the state-backed developer’s biggest projects. The first phase of the $40bn development, which began in 2007, occupies a total land area of 2,500 hectares, of which 1,700 hectares are claimed for development. As well as hosting the city’s F1 race in November, the island will also house three separate theme parks — Ferrari World Abu Dhabi, the Warner Bros theme park and a water park — seven hotels, a marina, a large shopping mall and a golf course.

With a television audience of millions, getting the first phase of the development ready in time for the race has been Bullough’s biggest challenge. In the lead up to the UAE’s biggest event, the CEO has spent most days on site as he prepares to hand over the project to the race organisers, Abu Dhabi Motorsports Management. “The quality of what is delivered at Yas Island is a major focus. On November 1 around 600 million people will be staring at our creation so this is a massively important showcase for Abu Dhabi, for the UAE,” he says.

Although Yas Island will be the five-year-old company’s biggest completed project to date, it is the first of three huge developments that will be finished in 2010. Next year, two phases of Al Raha Beach, Aldar’s new headquarters, the coin-shaped building that dominates the skyline as you enter Abu Dhabi, and the Ferrari theme park, will all be completed.

All of this has been achieved during one of the region’s largest property crashes. Although Abu Dhabi’s residential market has managed to sustain the cost of the housing better than neighbouring Dubai — where the city’s residential vacancy rate currently stands at 25 percent compared to less than 5 percent in the capital — the crisis has caused a slowdown in sales across the country as banks tightened their lending. According to Proleads Group, around 400 real estate projects worth more than $300bn have been put on hold or cancelled in the UAE.

Aldar hasn’t entirely escaped the fallout. In July, the developer announced second quarter earnings that fell short of analyst’s expectations as it revealed that as much as 15 percent of customer payments were overdue. The real estate developer posted a 70 percent drop in Q2.

In August 2007, the developer announced its first project outside of its home region; a tie-up with South Johor Investment Corp (SJIC) in a deal that represents the largest foreign real estate development in Malaysia. This was followed in October 2007 with plans announced to build a mixed-use development in Kazakhstan.

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