By Shane McGinley
CEO Middle East talks to Masood Al Awar, the first man to sell freehold property in Dubai
Masood Al Awar is running a little behind for our interview at the Shangri La hotel in Dubai. Ever the professional, he phones ahead to apologise, saying he will be precisely seven - not six or eight – minutes late, and requests that I order him a glass of his favourite pineapple juice.
Sure enough, Al Awar merges in the lobby of the hotel at around 11:07. Having used the extra few minutes to take a further scan of his biography, it’s clear that his punctuality is just one of the assets that has helped him stay one step ahead of the pack during a frenetic period for the UAE real estate market.
As proof of this, Al Awar holds the title of being the first real estate agent to sell freehold property in Dubai and he was also instrumental in arranging the first visa for an overseas property owner.
“It was the Dubai Marina project - that was the first ever ownership of a planned freehold. When I started it was a 99-year lease and it turned into a freehold within six months,” he recalls.
Al Awar made the ground-breaking sale while he was at Emaar Properties, the developer of the Burj Khalifa - the world’s largest building - where he worked for seven years.
After earning his stripes at the Dubai master developer, Al Awar worked for Abu Dhabi’s Sorouh Real Estate for two years before deciding it was time to go it alone. He then helped set up Tasweek Real Estate Development and Marketing at the beginning of 2009.
In between selling that first property and setting up shop on his own, the UAE market went on a rollercoaster ride, with prices shooting up nearly as fast as floors were added to the Burj Khalifa and then slumping nearly 60 percent as they went into freefall in the wake of the Lehmans Brothers crash and the global financial tsunami that swept across the world’s stock markets.
With around half of projects mothballed or fast tracked from the design desk to the wastepaper basket, Al Awar again saw a unique opportunity and decided to take a fresh look at the downturn.
Snapping up distressed assets – or strategic property acquisitions as Al Awar prefers to call them – he set up a fund worth around $250 million and began sifting through the roll call of properties on offer.
He decided to target mainly Dubai Marina, Jumeirah Beach Residence and Dubai International Financial Centre in Dubai and Reem Island, Al Raha Beach and Building Material City in Abu Dhabi.
Fast forward to 2012 and the insight has certainly paid off. Al Awar is now set to close the fund at the end of this year and it is set to make a nice return for the board of Tasweek and its investors.
While a return of 10 percent was anticipated when it was launched in 2009, Al Awar says this was conservative forecast and the reward could be as high as double this amount.
“It is a very healthy return for real estate. It is guaranteed double digit, between 15 and 20 percent and I have no worries as I know we will deliver,” he says emphatically. “We thought this fund would be completed sooner but the market conditions did not let it… Valuations took a lot longer as, the more you have to choose from, you take longer.”
Looking back, the return demonstrates the fundamental value that - even in hard times - those with money can rise to the top, but Al Awar recalls that it was not so straight forward when the fund began searching for potential acquisitions.
“We could not get many distressed assets, which is why I said the UAE, when it comes to recession, never had the recession of real estate, it was an economic recession,” he says.
While prices fell by 60 percent in some areas of the UAE, Al Awar says many buyers and developers were still reluctant to slash prices and refused to sell at a loss.
“The reason is that the real estate was never stressed to that extent. People were looking for finance to complete projects but there was no real estate distress… We could never pick up anything at 20 percent or 50 percent of the price.
“Whenever people also wanted to sell the property they were always saying they bought it at twice the price so they want to sell it at a quarter above the price… To them, this was a distressed asset, but it wasn’t a real distressed asset.
“Valuation then was low and the developer and investor wanted high and we would fall anywhere in between… It happened in the US. You could have literally bought a $400,000 property for $25,000. That is called distressed. We wanted those types of opportunities in Dubai,” Al Awar revealed.
In a bid to massage the ego of those Tasweek was targeting, Al Awar rebranded distressed assets as ‘strategic property acquisitions’.
It wasn’t just Dubai and Abu Dhabi Al Awar targeted: “We went to Singapore, Malaysia and I looked at the UK but the returns were a little bit low,” he says.
While owners were reluctant to accept low-value prices for properties they had paid too much for during the boom times, Al Awar says times are beginning to change as developers are left with unsold units gathering dust and landlords eager to offload unprofitable purchases.
“2011 was ‘delay-and-pray’, even before the euro crisis. We anticipated that in 2012 from the first quarter it will be what we call ‘surrender and murder’,” Al Awar says.
“After the summer we saw a lot of influx of liquidity and we have noted that the euro zone is still having its own impact. The IMF says it’s highly likely this will be a second recession or slowdown of growth in the whole globe,” he says, painting a doomsday scenario.
However, again he believes this will be an opportunity for those who are prepared to take a chance.
“Now there are a lot of people and offers that are coming on board… I would have loved to have seen these in 2009. Certain developers are saying ‘we are out, take whatever you want’… They want to protect their reputation. I predicted it from the beginning and it is coming now,” he says.
He believes there are two factors that will dominate the real estate trends: the return on investment and the financial obligation.
“Now the financial obligations are coming more into existence, people are trying to get things finished as they cannot hold off after four years of slowing down.”
So what areas does he see as prime candidates for ‘strategic property acquisitions’? “Dubai Marina, partially Dubai Investment Park, partially Jumeirah Lake Towers… I think we have not examined those opportunities but it is lying on our table right now and we are thinking about it,” he says honestly. If you see another Tasweek $250 million fund launched in the next few weeks, you read it here first.
Outside the wider Gulf, Saudi is a good market to get into, Al Awar believes.
“We are at the moment trying to establish our contact and in the next two quarters for sure we will confirm our joint venture and start in Saudi Arabia. It is a huge market and has an organic market and the real estate components are very attractive,” he says.
Looking further afield, Al Awar believes Europe is also a rich market for assets looking for new owners, and quickly. “Europe is two different markets now. In 2009 it was individuals trying to get rid of their assets, now it is more proper developers. It is a different ball game.”
While previously operating as a financier or joint partner, Tasweek is now moving more into the development field. Earlier this year, the company announced that it had entered into a joint venture to develop, own, operate and market luxury properties in Malaysia.
The deal is with Casabrina Vacation Villas and, under the terms of the venture, Tasweek will market nine boutique Villa hotels under a Shariah-compliant scheme.
The villas are spread over 30 acres of hillside land surrounded by a 130-million-year-old virgin rainforest just under an hour’s drive from the Patronas Twin Towers in Kuala Lumpur.
Each villa offers investors a unique design complete with approved building plans and occupies between one and three acres of freehold hill side land with no restrictions on foreign ownership.
Upon completion, the complex will comprise eleven exclusive six- and eight-bedroom suites nested at the foothills of Bukit Frasier in Pahang, the largest state in West Malaysia.
Al Awar modestly says that it is “the world’s best value for money condo,” and when I scoff like a cynical hack he adds that the claim is “approved and got a lot of awards in quality and construction.”
The project is due to start handover at the end of next year and it is now 95 percent sold out, he claims.
“It is a very good result. The project value is around US$86 million and financing is completed now.”
Al Awar lets slip that the company is also developing a new $60 million project in Morocco, which will be announced soon at a press conference.
“We have already the approvals to do a healthcare city. The components are there: residential, hospitality and a hospital… It will be in Marrakesh, it’s a private equity project.
“It is open for investors to join us… We have signed agreements with some operators and that project will be one of our key markets.”
While his eye is now looking overseas, Al Awar still believes Dubai is a good market and with queues for new off-plan launches seen recently outside Emaar and Nakheel’s sales offices and a healthy vibe at the Cityscape property exhibition in Dubai this year, he may be right.
“For sure, the real estate in Dubai is growing, no-one can take it away. It is growing. I don’t want to use the word recovery… the price is coming to a normal level and professionalism is boosting, and accountability.”
Looking for inspiration, Al Awar turns to a Batman film for his finish line. “To restore balance, you have to invest,” he says, stealing a line from Marion Cotillard’s character in the recent The Dark Knight Rises blockbuster.
One thing is certain; Al Awar certainly appears to be Dubai’s loyal crusader in the continuing fight against the global recession.