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The chairman of Dubai-based developer Damac Properties has said he is looking into adding a regional office in Saudi Arabia following the kingdom’s ruling aimed at attracting more foreign companies.
Starting on January 1, 2024, the Saudi government and state-backed institutions will stop signing contracts with foreign firms that base their Middle East HQ outside the kingdom.
It is unclear whether that would impact Damac but Hussain Sajwani told CNBC Middle East in an interview that he was considering a regional office in the kingdom.
“I think it’s logical that if you’re doing big business with the government of a country to have some presence there,” he told CNBC’s Hadley Gamble.
When asked again, he said: “We will look into having a regional office.”
Last year, Ali Sajwani, Damac’s general manager of operations, who has a strategic overview of the UAE and international businesses, told Saudi publication Arab News that the kingdom is very much part of the company’s future plans.
He said: “We’re speaking to people all the time in Saudi Arabia – developers, the authorities and landowners. We’re actively exploring that market and visit there regularly.”
Hussain Sajwani, Dubai-based developer Damac Properties
Damac currently has two completed projects in Saudi Arabia including a residential tower, Al Jawharah, located on the Jeddah Corniche along the coast of the Red Sea, which includes Damac Residences on the top 10 floors.
It also has Damac Towers Riyadh, twin towers offering luxury furnished and serviced apartments.
In the interview, Sajwani also said he expects the Dubai real estate market to remain “soft” this year and next. He also urged developers “not to get excited” and “dump” more supply in the market.
He said Damac would focus on a small number of high-end villas in the short-term.
Sajwani added that he remained confident in the future of the Dubai real estate market which would be boosted by the emirate’s response to the coronavirus pandemic.
“I am very, very positive on Dubai in the long term… supply will reduce and property prices will come back and come back strong,” he said.
On Monday, Saudi Arabia announced the move which is intended to limit “economic leakage” and boost job creation and is the latest measure designed to encourage firms to beef up their presence in Saudi Arabia’s capital of Riyadh.
Saudi Crown Prince Mohammed bin Salman has pushed a $800 billion strategy to double the size of the city and turn it into a global hub.
The decision lays bare a regional competition over global commerce and talent that has escalated as Prince Mohammed opens the kingdom’s economy while touting $6 trillion in investment opportunities over the next decade.
Dubai long ago established itself as a regional business hub for everything from banking to transport, and is a close ally of Saudi Arabia.
The Saudi government will stop signing contracts with foreign firms that base their Middle East HQ outside the kingdom
Last month, a group of 24 international firms including Deloitte, Bechtel and PepsiCo said at an investment conference organised by Saudi Arabia’s sovereign wealth fund that they were moving their regional headquarters to the kingdom.
Earlier this week, Damac Properties revealed losses of over AED1 billion ($272 million) for 2020, blamed largely on the impact of the global coronavirus pandemic.
Sajwani said: “2020 was a very tough year for all property developers in the UAE and Damac felt the negative impact just the same. With Covid-19 still prevailing across the world, tourism has dramatically fallen, which has been a critical force that drives Dubai’s economy and boosts its property market.”
Damac delivered 2,945 properties last year in Akoya and Business Bay developments.
Sajwani admitted he did not envisage a quick fix from the economic effects of the Covid-19 crisis.
He said: “I anticipate it will take at least 12-24 months to see a substantial recovery. We must remain patient and adopt smart and innovative solutions going forward.”
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