The rise of an empire

“I enjoy working in this business because property is everything. It is fashion. It is style. It is life,” he says.

It is also seriously good money. Part of the Royal Group of companies, which spans everything from television to real estate, Hydra has taken the industry by storm. Less than two years since it was formed, it has already splashed out over US$2bn on a range of luxury buildings in Dubai’s Business Bay, with customers now demanding the same across the UAE and Gulf. Al Fahim, with a Master’s degree in real estate, is likely to deliver returns of over 12% a year for his investors. And as far as he’s concerned, this is only the beginning.

Hydra, thanks to designs from Arabian Concept Development, claims to be “unique” in the industry, with every single apartment and office inside every building it is constructing different to another. Each one, including the impressive Hydra Towers being constructed in Business Bay, oozes the “personal touch”.

“Some people I know are saying that the property market will crash but I don’t think it will. And I know that if there is any correction then Hydra won’t be affected. It is all to do with supply and demand. I know who my customers are, I know what they want, and I know what their demands are,” he says.

But not everyone agrees. Three months ago, writing in this magazine, Mishal Kanoo, deputy chairman of the Kanoo Group, insisted the entire property market in the region was on the brink of a major crash.

He wrote: “The issue here is time. I have no solid idea as to the exact time this will happen but it will, and sooner than you would expect. This is not the government’s fault as some people have said because it did not curb people’s greed. You can’t curb greed. This is a natural economic process that will happen and many will be hurt. But for those who plan ahead, things will be better for them. For those who just gripe, they will not succeed. The question you should ask yourself is, ‘What is my next step?’”

Other experts have lined up behind Kanoo in recent weeks, pointing out that in some parts of Dubai alone, property prices have risen 1000% in three years. With Gulf currencies pegged to the dollar, further rises in US interest rates could have a rippling and crippling effect on the region’s property market.

Al Fahim however is not convinced by the argument, pointing out that over US$30bn of new projects were announced at this year’s Cityscape. The number of foreign investors seeking a piece of the property action in the Middle East has risen by 300% in the past year, and most properties are still being sold in record time off plan — then being re-sold several times over in the space of a few months.

“Our economies are strong enough to sustain that. Look, there already has been a small change in US interest rates but there was no negative effect. The point is that if you want to compete in the long-term then you have to be different. If you only want to look at the short-term then you can continue doing what you are doing now,” he warns.

“A lot of these big companies you see have real estate divisions but they only have short-term strategies. That cannot work. I agree some people may have problems. But the other factor you have to be careful about is location. I am not worried because we have been extremely careful to choose the right locations.”

So far the signs are that Al Fahim’s projects will more than prosper. Hydra’s Downtown Towers project at the Burj Dubai development has already practically sold out, with investors impressed by the architectural and personal touches — the building looks completely different from every angle.

“People like that. You see in the Arab world too many buildings look the same. If you give customers something not just good but different, then you have an advantage over the competition and you are certain to succeed,” he says.

Al Fahim adds: “The other thing people forget is that the really successful property developers don’t put all their eggs in one basket. Look at Emaar, now one of the biggest companies in the world. How much of its work is confined to the UAE? Not that much any more.

“It has spread its investments, and you need to do that to be able to counter any negative effects in the market. It is why we are doing the same thing. The projects we are working on today are just the start. They are a platform for us to expand around the globe. We will start with the GCC because we know this region best, but then move across to the Far East and Europe.”

At the current rate of expansion, Hydra Properties could soon be a world-beater — another US$10bn worth of projects are already pencilled in, and with “a strong profits ratio,” sources suggest the company’s market value will top the US$10bn mark within three years.

At the recent Cityscape Dubai exhibition Al Fahim said Hydra was exploring the possibility of launching new “mega-projects” in Abu Dhabi and other areas of the Middle East, including an office tower designed for women only. The company used Cityscape Dubai to showcase three major projects, including the novel women-only Eve Tower, part of the massive Hydra Towers cluster of five buildings located in Business Bay.

The Twin Towers is a mix of luxurious residential and commercial units in Jumeirah Village, while the Downtown Tower is aimed at the upwardly “mobile executive”, and is located in the exclusive Burj Dubai development.

Other observers, however, suggest that Hydra’s first big project in Business Bay holds the key to its financial future, with more than US$20bn of future work in the pipeline if that turns out to be a resounding success.

Al Fahim, however, refuses to put figures on the business’s value but says that there are not many companies in the world that can “start from scratch and quickly be worth several billion dollars. That is a sign not just that we are doing something right, but that we are in the right industry,” he adds.

It is no surprise that Hydra has already been touted by investment bankers as a candidate for future flotation, however the CEO is quick to rule it out.

“Well it’s not a good time to be on the stock market but in any case I don’t want to be. We don’t need to raise capital and financially we are very strong. When you look at companies that are listed, they are often at the mercy of the markets. They may actually be doing very well but because the market is down they unfortunately suffer.

“I think there are many good reasons to go on the stock market. It is obviously a great way to raise capital. But we are financially extremely strong. Being part of the Royal Group obviously makes my job a lot easier,” he says.

So if not the property market, does he think it is the stock market that will crash? “I’m not saying that at all,” he refutes. “Of course when you look at the figures they don’t look that good. Stocks are down over 60% in many countries in the GCC during the past year. But what I think we are seeing is some kind of correction.

“The share value of some companies was always very high, everyone knew that. But you have to look at the overall picture, and the underlying strength of the Gulf’s economies. Most of them have experienced double digit growth in the past year, and will do even better next year,” says Al Fahim.

He adds: “And when you put all that in context, and the rising demand and the millions of people who are resettling in the Arab world, that doesn’t sound to me like the recipe for a stock market crash. Or a property market crash. Or any kind of a crash.”

When pressed, Al Fahim admits that one or two of his “over ambitious” competitors may run into “some difficulty,” but that is as bad as it will get. “If you look around Cityscape this year, you realise that there is too much negative talk. Yes, a few things look a little hopeful but as I have said, that is the result of some companies going for short-term projects. But the bigger picture? That is very bright,” he explains.

Few would argue that Al Fahim doesn’t know what he’s talking about. His family all have property in their blood, and as an 18-year old he went straight into the business himself, completing an MBA in real estate along the way. Add to that a PhD, and a vast amount of experience in not just property, but also home finance. Al Fahim has covered most of his tracks. “I think my advice to people who want to work in the property business is that you need to understand all the aspects of it. You can’t just say I will raise money, fund a project and make money. If it was that easy we would all be doing it.

“It is true, many people are doing it but not all are that successful. It is a complex subject. You need to understand design, construction, finance, geography, the global economy – just about every aspect of business is covered in property,” he says.

It may be complex, but Al Fahim makes it look easy, winning plaudits not just from his designers and fellow investors, but also his peers. And at last month’s Abu Dhabi leaders summit, former US president George Bush took time out to specifically seek out Al Fahim and commend him on the work he has been doing with Hydra. “It was a nice gesture, and a great honour,” he says.

So does Al Fahim get a kick out of power? “Well, power is nice. Of course it is. I couldn’t tell you otherwise. But I have seen powerful people make mistakes because they abuse the power they have.

That is something you absolutely must not do.

“One of the most important things you must do is keep on learning. I am still learning and learning everyday. I’ll never stop learning. Once you think you have stopped learning, or that you have learned enough, that is when you start to make mistakes.”

So far, Hydra’s Al Fahim has made very few.