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Sun 3 May 2009 04:00 AM

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Fighting back

Chairman and founder of private developer Damac Properties, Hussain Sajwani hits back at media critics.

Fighting back
Damac’s Sajwani believes property prices in Dubai will stabilise in the final quarter of 2009 and early 2010, and rise again in 2011.
Fighting back
Fighting back
Damac Properties has expanded rapidly across the region into Jordan, Lebanon and even the Far East.

Chairman and founder of private developer Damac Properties, Hussain Sajwani has seen Dubai bloom from a desert town to a 21st century metropolis. A key player in the emirate’s real estate boom, the property mogul is optimistic for both his home city, and the company he founded over 25 years ago.

Hussain Sajwani is running late as he swings into the bright room set on one of the top floors of Damac’s new offices at Dubai Internet City (DIC). Perhaps it is not surprising: the chairman of the Dubai-based developer has a lot on his plate these days.

The media put themselves as a judge between two parties and a dispute. If you bought something from me and you’re unhappy, you can go to the media.

Damac, the largest private developer in the Middle East, has found itself at the sharp end of international media criticism over the past few months. There have been rumours of cancelled projects and disgruntled investors, but Sajwani’s frustration is clear as he sets the record straight.

“Globally, I think we have an issue with the media,” he says, frowning, immaculately turned out in a snow white dishdasha, and polished black sandals.

“I think the negative side [of the media] is because of the tough competition. Everybody tries to break a story. Unfortunately, it is about getting the big headline regardless of how accurate the story is,” he argues.

Just three weeks ago the property firm was forced to issue a statement strenuously denying that its Hyde Park project in Cairo and Al Jawharah development in Jeddah had been cancelled, amid reports that pressure on investors to pay their remaining installments on time, or face action over breach of contract.

“Overall the media put themselves as a judge between two parties and a dispute. So if you bought something from me and you are unhappy, you can go to the media,” he says.

“I have 10,000 customers. Every customer that has a dispute is going to come and talk to you [the media]. The media should ask about the overall subjects of the industry, but they should not go into the issues of each individual customer. If you write something that is not accurate, it is unfair.”

While sensitivity is running high in Dubai following a spate of scathing stories in the British media, Damac, like all property companies in the region, still has its own issues to address. The group, which is part of conglomerate Damac Holding and employs 7,500 people worldwide, has been forced to axe three percent of its global workforce since October. It has also had to draw up a consolidation programme for its portfolio, which will see the developer prioritise certain projects.

“Our company had a plan for a soft landing. It was a harsh landing, so we’ve had to take some measures,” Sajwani explains.

“I think we realised the problem at a very early stage, and we were one of the first companies to take action in the first week of October,” he points out. “We have restructured the company and downsized the number of employees and offices. We have also switched our focus from launching new projects and buildings, to focusing on delivery and dealing with customer issues.”

It is all a world away from 1983, when Sajwani founded Damac as a local catering company servicing labour camps, schools and universities. Over 25 years, the conglomerate, Damac Holding, has through its subsidiaries diversified into everything from insurance to ceramic manufacturing and pest control. Subsidaries include the Bahrain-based Al Ahlia Insurance and Al Jazeira Service in Oman, which specialises in catering and service support.In 2002, Damac Properties was established to exploit new laws in Dubai allowing foreigners to own freehold property.

The legislation brought a slew of developers to the market, all eager to cash in on what was the start of a six year building boom in the emirate. Damac’s property arm grew rapidly, expanding regionally into Jordan, Lebanon, North Africa and even the Far East. In 2008, Damac delivered 2,300 units and has pledged to hand over another 7,100 by the end of 2010, as the developer concentrates on the delivery of existing projects in response to the downturn.

Sajwani is candid about the events in Dubai over the last few months, admitting that the scale and speed of the downturn took him by surprise.

“We were not expecting such a harsh landing. Prices have dropped, and the confidence in the market has been shaken. Buyers have been scared,” he concedes.

When the decision-makers’ own money is at stake, they have the ability to move and make decisions. The Dubai government owns the biggest property firms.

If any more confirmation was needed that Dubai’s housing market has been ‘shaken’, Swiss investment bank UBS last week warned prices could drop 70 percent from their peak last summer.

Some analysts say that values are already some 40 or 50 percent down and that, coupled with a shortage of liquidity hitting mortgage provision and corporate lending, means investors are running scared.

On falling house prices, Sajwani is conservative, but welcomes the overall correction in the market that has made homes in Dubai more affordable.

“The market has gone down between 20 percent and 30 percent, depending on the location and area. I’m talking about the overall market, I’m not talking about one desperate seller who is willing to sell his apartment [at a cheap price],” he says.

“This is healthy and good and gives an opportunity for newcomers to buy,” he continues, predicting that Dubai’s real estate market is “close to the bottom”.

Sajwani goes on to argue that if the world economy shows signs of recovery this year, then Dubai will follow suit, with prices “stablising” in the final quarter of 2009 and early 2010 and rising again in 2011.

Real estate valuations aside, Sajwani defends Dubai as fiercely as you’d expect from someone born and raised in the emirate. Other than its prime geographical location in the Middle East and outstanding infrastructure, Sajwani says the emirate is particularly well placed to deal with the challenges thrown up by the global crisis because the government’s money is at stake.The Damac chairman reasons that because the Dubai government owns or has large stakes in the many of the big developers in the emirate, it has been in its interest to move quickly to avert a recession.

Indeed, the government has announced a string of financial stimulus packages in the last seven months. In September, the UAE central bank announced a $13.6bn bank lending facility to increase liquidity, and in February a portion of money from a $10bn bond programme was allocated to six major Dubai government-owned companies, believed to include developers Nakheel and Emaar.

“When the decision-makers and the leaders’ own money is at stake, they have the ability to move and make decisions,” Sajwani says. “The government can take action very quickly, and the Dubai government and Sheikh Mohammed own the biggest property companies.”

“This is not the case with Singapore or Hong Kong, where there will be a governor, president or politician sitting at the top; their money is not at stake.”

“Here they can make decisions quickly, and that is a very big advantage,” Sajwani adds.

“They have done that, by merging [mortgage lenders] Amlak and Tamweel and with the $10bn bond issuance.”

Like other developers in Dubai, Damac says that it is relaxing payment plans and allowing investors to swap off-plan purchases for units on projects nearing completion.

“We are working with our customers on different plans and how to help them through this tough time,” Sajwani insists.

He also says that the current downturn will be a period of consolidation with many smaller developers disappearing, leaving only “a dozen” big players in the market.

While ruling out plans to make acquisitions, he stresses Damac will not look to raise debt this year, and that it is up-to-date with all payments to its contractors.

“2009 is going to be a tough year, where the world economy is having a difficult time, the banking system is not lending and a lot of companies are firing people,” he warns, before brightening up.

“But in 2010, things will stabilise. Because Dubai is a tax haven and has a good infrastructure, people will come back.”

FB 10 years ago

this guy was treating marketing real estate like a joke....... free plane, free island, free car, raffle draws it makes a mockery of real estate business and for the region!

Kaptain 10 years ago

Prospects are bright.. Consolidated year / quarter.. In negotiation with the customers.. Investors are safe.. Decision making is quick.. Stakes are high.. Future is bright.. This is the summary of 3 reality just think of the opposite of the all of the above.. This person either doesn't read newspapers or takes pleasure in firing people..

Gordon 10 years ago

I am sure Mr.Sajwani never read these comments but he should know that his Customer Service is simply catastrophal and arrogant, they ignore to answer emails, even addressed to CEO,s! Not a big surprise that his practices are investigated by Land Department and RERA, and the majority of his foreign customers says they want never more invest with Damac.

macca 10 years ago

Damac is a perfect example of how Arabs can prove the stereotype wrong. Honest, promise keeping and very straight dealing, a great example of leadership, and a company that employs many locals at all levels, a great example of the way to go.

vijay 10 years ago

people who are shouting at Dubai/Damac does not know the reality in US and europe. The real REAL ESTATE disaster was created by US. Yes Dubai stretched itself a bit more, but then this does not means end of DUBAI. There will be some pain for few months, but then life will be back again. You can wish away a city like DUBAI. The learning from this ressession/correction, will lay the foundation of great leap and in next 5 years Dubai will be top destination for entertainment, sports and liesure.

Very serious 10 years ago

This article is nice in a way that it brings up the confrontation of businesses and media in such a time! It was a time that Dubai was building on media hype and Developers were making stories and media were selling them. When the market collapses like this the developers go back to reality and media try to see more reality side of the market by focusing more now on the fact. I agree with Mr.Sajwani that media is trying to get attention by publishing any kind of news regardless of the credit of the news and if it’s fair or unfair! They publish any kind of number irrespective of the course of the data. However I would like to remind Mr.Sajwani to also get back to reality in term of the numbers that Damac is announcing. Are they also fair? Are they credible? Can you announce a project delivery on 2009 and delay it for two years and bully investors for breaching contract?!!! Here we go about Damac: Is Damac Having 7000 plus staff? Are they counting all the contractors’ staff as well?! Can they prove that they are really delivering on their promise again which is around?? The Media should be realistic but also developers like Damac should be held responsible for their claims.

Mohamed Djirdeh 10 years ago

Mr. Sajwani has every right to ask the media to be very objective, but the only, and last resort property buyers have is THE MEDIA. Is he trying to deny us even that!? The Media should report on any item even if it is one complaint of an individual buyer. I think developers like Damac have done a bad hand to investors and thus to Dubai. It will take a long time for Dubai to get back investors trust, simply because not that investors lost money, but total lack of accountability of developers. Even RERA property court is overwhelmed and poorly responsive. Mr. Sajwani where else do we go, except THE MEDIA.

Geoff Dickinson 10 years ago

I am a DAMAC customer and it has been a personal disaster for me. I bought in to HAZ Tower in June 2007 nearly 2 years ago. For the first year the property was on hold due to a dispute with Helal Al Zarooni. They finally issued contracts for the development renamed as Commercial Square in September 2008. Since then a fence and a portcabin has gone up. Nearly 2 years on I have paid 40% the project is not listed anywhere, I can not sell it. DAMAC refuse to give my money back. I have instructed lawyers who over a 5 week period have written 4 hand delivered letters to DAMAC and they have not replied to any of them. I understand delays, I understand the crisis. But developers can not take peoples money, keep it for 2 years, do nothing, refuse to give it back and refuse to reply.

Mohamed Djirdeh 10 years ago

Thanks Mr. G. Dickinson, same with me with Tanmiyat Group. I bought a THREE B/R apartment on Dec 06, completion Dec 08. Paid 20%. No construction has been done, only a fence was put up few months ago. Feb 09 received first ever communication, letter of waiver of payment till end of April. On 02 March 09, second letter claiming FORCE MAJEURE. Can you believe 3 months after completion!!! Visited RERA no registration of contract!!! Now last resort the courts which want AED 30,000 as fees and a similar amount for lawyers!!! I suggest let us start a DEFENSE FUND? I suggest DUBAI CARES/GOVERNMENT should set up a defense fund. Where else can we go MR. SAJWANI????? THE MEDIA. Yes THE MEDIA

paul 10 years ago

I went to a DAMAC product launch a couple of years ago (for the buffet, which I have to say was ok but not great). The chairman spent the first 15 minutes of the event giving a speech dedicated to explaining why Dubai property was cheap and good value by international standards and why Dubai would absolutely and definitely NOT CRASH. I think this sums up Dubai's problem - there was no humility to acknowledge a great deal of luck for the windfall, and no appreciation that there was a huge speculative bubble element in the market that simply could not be sustained. Instead the property companies convinced themselves that it could all last forever, and poured money into bigger and more absurd white elephant projects. They say that pride comes before a fall. Look back to 2007 and 2008 and there was a lot more that pride on display. It was bordering on pure arrogance.