By Andrew Mernin
In the rapid emergence of Dubai as an international business centre, private developer Damac Properties has stood firm against the government-owned mass real estate titans. Andrew Mernin meets Peter Riddoch, the man behind the company’s global roadmap
|~||~||~|A decade ago, when Dubai was just a sleepy creekside town, a handful of government owned construction giants, rich on petro-dollars, plotted the transformation of the desert settlement into a modern metropolis. With government empires such as Nakheel and Emaar already owning the land on which they would create their ‘masterplanned’ masterpieces, it would seem difficult for a private entity to enter the market and rub shoulders with these giants and survive.
This however, is exactly what was achieved by Damac Properties — a company that now has a portfolio worth AED 15 billion (US $4.1 billion ) with over 52 projects spanning the globe from the distant lands of North East China to the sandy streets of Doha.
“We don’t see competing against the government as any sort of disadvantage to us — they have the advantage in that they didn’t have to pay for the land — but we position ourselves in the market very well and we have become market leaders,” says Riddoch in his stern Scottish tone.
“The government companies are the masterplan developers responsible for putting in the overall infrastructure, then they sell parcels of land to individuals such as Damac,” he adds.
Located in downtown Beirut, the company’s US $150 million La Residence project raised a few eyebrows at its June launch, as Ivana Trump was unveiled as the ‘face’ of the development.
“This isn’t about a celebrity in the sense of just being a celebrity, she’s actually got real added value”, says Riddoch on the choice of Donald Trump’s ex-wife as the anchor of the Lebanese project. The former glamour girl has played a major part in the architectural design of the project and she has also assisted in the interior design within the building. Riddoch says: “We are very impressed with her style, her elegance, her attention to detail and the fact that if you look at what she has done in the past with hotels, there is a real flair there.”
Little over a month after the launch of La Residence, however, Beirut was transformed into a war-zone as Israeli missiles rained down on the provincial town once described as the ‘Paris of the Middle East’. Remaining optimistic about Damac’s project in the Lebanese capital, Riddoch exclusively tells CEO Middle East that he is confident the development will still be a success.
“None of the people who have invested in the project have asked for their money back, the project remains in its detailed design stage and, although we have moved one or two of our staff to neighbouring countries, we still have staff who will remain in Beirut.”
Breaking the boundaries of the Middle East, the company recently came of age as a truly international player by inaugurating a US $2.7 billion (AED 10 billion) project in the Trumpet Bay province of Tianjin in the People’s Republic of China. “We found that the Chinese government has become very switched on to understanding how to do business in a commercial and structured sense and other than the fact that we deal through interpreters, the negotiations were not markedly different from what we have had in other parts of the world.”
Spanning an area accommodating over a billion people, choosing the Chinese destination in which to set up would seem a complicated and laborious task, but Riddoch believes that it pays to look beyond the booming capital of Beijing.
“We looked around China to see the next emerging area and we identified Tianjin province as being the place where lots of international businesses are looking to locate,” he says.
“When the express train is introduced, we will only be 30 minutes from Beijing. It was actually more expensive to set up in Beijing and more complicated, with certain protocols and forms to meet and sign.”
As well as heading to Lebanon and the Far East, Damac has further strengthened its position as a world-beater by launching projects in Jordan and Qatar, with plans to enter Egypt and Turkey expected to be announced later this year.
In the Jordanian capital, Amman, Damac recently launched the US $120 million, 35-storey ‘The Heights’ project, while it also unveiled plans for a 14-tower, AED 1.5 billion (US $400 million) Piazza development in the Fox Hill’s community of Doha’s vast Lusail development.
Last month, the company also signed a Memorandum of Understanding (MOU) with Doha Bank to provide mortgage financing for companies looking to buy property in Damac’s Doha-based development.
The much-publicised poor treatment of labourers in the UAE by certain contractors is something close to Riddoch’s heart. While making all the right noises of condemnation against those that have withheld labourers’ wages, he also believes that a revolution bringing more rights to workers could be imminent.
“There has been confirmation of a revised labour law (in the UAE) which, amongst other things will probably bring about for the first time, some form of trade unionisation,” he says.
“While in the West trade unions have almost had their day, it’s not always a bad thing to for workers to have their voices heard,” adds Riddoch.
While denying that Damac needs a trade union because it “looks after” its workforce, Riddoch insists that he would have no problem dealing with one. “I’ve talked to them often over the years and quite frankly, if you have any human in you at all, it shouldn’t be an issue to deal with trade unions.”
In Dubai — Damac’s birthplace — recent indicators have suggested that, as a result of rapid inflation, many foreign investors are being put off from setting up in the emirate, in favour of cheaper areas of the region (see page 23 for more analysis). And with the city awash with vast construction sites, is there really the visitor numbers to warrant such expansive and ambitious development projects?
“Definitely”, retorts Riddoch militantly. “So long as there are no external factors that none of us can predict, I can certainly see the next five to ten years as being a continuing expansion.”
“Even if a medium-sized company comes to say the DIFC (Dubai International Financial Centre) and brings in 100 people, more than half of them will have families, who will need more things to do, more schools, more teachers, more goods, more supermarkets — so it just goes on and on.”
As Doha emerges as a rival to Dubai in the stakes of booming Middle Eastern business centres, Riddoch, having worked in both areas, is well positioned to compare what he calls “two very different places”. “Qatar aspires to greatness, Dubai has gone a long way to achieving it,” he says. “Qatar has come a long way in a short space of time. When the new ruler took over from his father in the mid-nineties they had a huge deficit and a whole host of challenges. The UAE has had longer to get where it is through the leadership of three rulers,” he adds.
Having joined the Damac group three years ago after setting up the property arm of the Al Futtaim empire in the UAE and a brief stint in Qatar, Riddoch cites his biggest challenge in his current role as “integrating people who are all skilled and experienced from diverse backgrounds, countries and companies and implementing them into the Damac culture”.
It seems that as he progresses in his role, there will be even tougher external challenges for Riddoch to steer his company around. As well as the escalating war in Lebanon — a country that his company has invested heavily into — there is inflation, the rising price of raw materials, and the impending introduction of trade unions, all of which are issues that will have to be dealt with in the near future.
If these challenges can be overcome, Riddoch and his ever-growing property empire can continue to hold their own against the Middle East’s government-owned development giants.||**||