By Damian Reilly
You can’t keep a good man down. Mohamed Alabbar, Emaar chairman, says when the economic crisis passes, he will come out fighting
There is something of the perpetually youthful about Mohammed Alabbar. Which is remarkable when you consider what it is he does. As job titles in the Middle East go, they don’t come much bigger than the Emaar chairman. Sixty companies fall beneath the Emaar banner — all of them big enough to put grey hairs on the head of any leader. Alabbar oversees them all while answering to shareholders (something he says he both hates and loves doing), and continually looking for ways to push the brand into Asia and Africa. He’s done it since 1997, so his youthful appearance must be testament to some sort superhuman drive and optimism. That or extremely good vitamins.
Alabbar came bounding onto the stage at the Arabian Business Third Economic Forum and lost no time depicting to the assembled delegates his vision for the future. Dubai, he said, had had its woes, but things now are on the up. The theme of his speech, in a nutshell, was ‘what doesn’t kill you makes you stronger.’
He said: “In Dubai, we’re cautiously optimistic about the future. There is an over-supply, yes, but that will be addressed over the next 20 months. And, as the city gears up for the next cycle of growth, there will be no speculators, no soaring rents, no “flipping” of off-plan units.
“Instead, there will be a mature market, based on real fundamentals such as location, quality and the strong reputations of our developers and contractors.”
No wonder he was cheerful: taking questions from the audience after his speech, Alabbar said retail sales in Emaar-owned malls and hotels were up by between 25 and 33 percent on the previous year. Certainly, then, a corner of the hairpin variety would appear to have been turned.
Alabbar said: “In other countries where Emaar operates, we are not just cautiously optimistic. We’re positively enthusiastic. India needs 27 million homes. Saudi Arabia’s growing population, and new mortgage law has helped create huge demand there. In Egypt, in Lebanon, in Syria, it’s the same story.
“At Emaar, we are now, and have always been, about creating value. In ten short years, we have created value of nearly $33bn. For our shareholders, we have reported a cumulative gross profit of more than $8bn. In the first nine months of this year, Emaar has reported profits of nearly $600m.
“Our outlook for the future is one of transition from a Dubai-based revenue stream to an international and stable stream of revenue. This will be testament to the successful achievement of Emaar’s expansion and diversification strategy.”
In his speech, Alabbar compared to Dubai to a diamond — something beautiful created from incredible heat and “unimaginable pressure.” To hear him tell it, it sounds like an apt description. And yet it was vitally important the city state did not diverge from the strategy of risk taking that had seen it make such a name for itself on the world stage, he added. It was risk taking that had made Dubai great, Alabbar said, and it was risk taking that would see the city bounce back and continue to thrive.
He said: “Dubai has been criticised, in some quarters, for taking risks. I say Dubai should be celebrated for taking those risks.
“The word “risk”, in English, comes from Arabic. It means ‘to seek prosperity’. For those who were born here, for those who come here to work, they are here to seek prosperity. They are here to share in Dubai’s risk. This city will continue to take risks. Because without risk, there can be no reward. So, a key lesson I learned from the crisis is: ‘Take risks, but only if you can manage those risks.’”
While acknowledging the torrid 24 months or so that Dubai had undergone, Alabbar was quick to point out that in the wider scheme of things, the emirate and the GCC had not done so badly and were now well positioned — as well positioned as anywhere, in fact — to kick on.
He said: “The past few years have been challenging, but, here in the GCC, we need to look around and ask ourselves, honestly: ‘How have we really been affected?’ Yes, there were critical news reports and headlines. Jobs were lost. Some companies went under. Several projects were cancelled.
“Yet look at this: Ireland, the UK and Greece have been forced to impose harsh austerity measures to get back on track. On the contrary, in the GCC, government spending is increasing. In the US, more than 300 banks have failed since 2008, and the budget deficit is running close to $1.3 trillion. In the GCC, many of our economies are recording a surplus.”
He added that while we were likely to see other countries having to be bailed out imminently, in the UAE the banks are braced for… growth.
“In Europe, after Greece, and after Ireland, people are asking: ‘Who will be next?’ Will it be Spain, or Portugal who seek the next bail-out? “In the UAE, our Minister for Economy said last week we’re on track for growth of 3.5 percent next year. In Dubai, our debt restructuring is now under control. Dubai itself has launched a bond for $1.25bn. It was many times oversubscribed,” he said.
Closer to home, Alabbar said the half billion dollar bond Emaar had launched the previous month had been six times oversubscribed — evidence, he said, of momentum that implied the beginnings of a new growth cycle, something he said savvy investors were attuned to.
“Under strong leadership, our region’s economies aren’t just surviving. They’re thriving,” he said.
Because of its size and the global renown of its brand, Emaar’s fortunes are seen as as good a reflection of Dubai’s as any. In the good times, Emaar flourished. It is expected that when the economy turns a full circle it will again. Certainly, Alabbar is adamant he has taken lessons from the downturn.
He said: “Among other lessons, running a public company has taught me that transparency, and good governance, are critical to a company’s strength and its success. It may be difficult, it may be frustrating and even unpleasant, but the pressure of reporting your results every quarter makes you a stronger company.
“I have learned that, in business, efficiency is everything. I’ve learned that hands-on management is critical. Delegation is of course essential, but, as a leader, you can’t take your eye off the ball for a second. There are no second chances. Finally, I would say that if you haven’t learnt any lessons from this crisis, then you aren’t fit to lead. Quite simply, you’re out of the race.”