After a highly successful Cityscape Global, Azizi Developments is set to launch two huge new projects by the end of this year. The first, a $6.8bn development in central Dubai, is set to be completed by 2020. CEO Farhad Azizi reveals why he believes the time is right to keep on building
If anyone wasn’t already aware of Azizi Developments and what it is building, a visit to the most recent Cityscape Global will have underlined its undoubted size. Festooned everywhere you walked, the blue signage of the Dubai-based developer was a reminder as to who was a key player at this year’s property event. Already well on its way to becoming one of Dubai’s largest developers, Azizi will soon double its multi-billion dollar portfolio following its recent announcements.
Formed in 2007 by Afghan businessman Mirwais Azizi, the firm has been growing at a hurtling pace since it started to deliver its first Dubai-based projects 18 months ago. That was when Arabian Business last met with Farhad Azizi, the chairman’s son and CEO of the ambitious family-run firm. At that time, Azizi had been slowly emerging from the after-effects of the devastating property crash in 2009 and was about to finally deliver the first towers in its Al Furjan residential master development, where it had acquired 24 plots.
Fast forward a year and a half later, and its fortunes have completely transformed, from an estimated $1.5bn worth of projects at that time. The company has delivered nine projects, including the high-end Royal Bay on Palm Jumeirah, and its current portfolio stands at $5.4bn, the majority of which is accounted for at its landmark Meydan development, where the company is building new offices to accommodate its growing staff.
Following last week’s announcement that Azizi is to build a $6.8bn community project in the heart of Dubai, that portfolio will rise to $12.25bn. The mammoth development, to be located at an unannounced location in prime “central Dubai”, includes residential, commercial and retail space, with 105 mid-rise and high-rise residential buildings boasting 30,000 apartments.
Work is scheduled to begin in November, with a deadline for completion before Expo 2020, and will have a distinctly “British feel”.
“The project won’t entirely have a British design or architecture, but will draw inspiration from that culture,” says Azizi, speaking about its inspiration.
“More than design, the project is inspired by the lifestyle of Great Britain and its multi-cultural society – an aspect that complements Dubai’s own multi-cultural environment,” he adds.
Building for the future
With such a large number of properties due to come on the market from Azizi, not to mention a raft of other billion-dollar developments announced by others this summer, there has been talk of whether Dubai will face a problem of oversupply in the coming years.
Azizi dismisses any concerns about demand, insisting that the company is “aligned with Dubai’s Vision 2021 which aims to showcase the emirate as a land of opportunity and a preferred destination to work, live and invest in”.
“The government wishes to not only provide residents with high living standards, but also attract international audiences to Dubai, including Arab youth who as research has shown, continue to view the UAE as the preferred choice of countries to live,” he says of his faith in the future of Dubai as a destination for ambitious jobseekers. The growing number of jobs in education, hospitality and tourism “will in turn boost the construction sector and create thousands of jobs,” he adds.
Judging by the firm’s own sales, he remains confident in Dubai’s property market. “Every month has been better. Every month the demand has been growing,” he says. “Every month I hear something like, ‘Oh, there are so many people leaving Dubai’, but then there’s so many people moving in to Dubai as well, and that’s not being highlighted.”
The target market for this new development also bucks the recent trend of developers offering mid-priced properties, in that it will be aimed at the mid- to upper-level segment. When asked why he has chosen to aim higher, Azizi replies that “it is designed as a place for everyone who is looking for a unique lifestyle.”
How that will look in practise is of course not yet known. However, if that “central Dubai” turns out to be one of the obvious large patches of empty ground still available in the heart of the city, then that will indeed command a premium fee for location.
For now, the focus of Azizi’s immediate attention remains on its French-styled Azizi Riviera waterfront project at Meydan, where several leading developers in the emirate are building projects, including Meydan itself. Azizi’s project of 70 buildings will be rolled out in four phases, and in line with the Ruler of Dubai’s wishes for the site, is at the low density end of what they’re building.
The point was underlined by Dubai Crown Prince Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum when he visited their stand at Cityscape. “One of the things he [Sheikh Hamdan] said, which we really are implementing in this project, is, ‘My father and I prefer smaller, low-density buildings, with sporting facilities for kids and grown-ups’,” Azizi recalls. “And that’s what Riviera looks like. It is not a high-rise community; it is five or six-storey buildings that look like they do in Europe. It’s spread out and it’s less crowded.”
Of course, the cost of the land is reflected in the height – if it’s a short building, you pay accordingly to the build-up area. But Azizi thinks that it is worth the price. “There’s demand for smaller buildings and more focus on community build-up. There are so many people living in congested areas,” he says.
Construction is already underway, with first deliveries expected by the end of 2018, and most of the rest delivered by 2019.
Market reaction seems to suggest that there is a need for such a project. Sales at Cityscape Global, permitted at the annual event for the first time since 2008, were brisk for Azizi. During the exhibition, it recorded $350m in transactions. On day one of the three-day event, the entire phase one and 50 percent of phase two of the project were sold out.
Azizi has a theory, based on recent sales patterns, that this strong demand is coming from tenants who want to own homes. “They live here for five years and they want to become landlords,” he speculates. “They don’t believe in just renting and going back to wherever they have come from. They feel comfortable. So the trend in the type of buyer is changing, especially the young buyers.”
The aforementioned affordable housing was a major buzz trend at Cityscape – particularly from Union Properties’ $2.18bn Motor City development and Arada’s $6.5bn Aljada project in Sharjah – but Azizi says there is still strong demand for mid-range and luxury properties.
“There is demand for luxury, but for a type that is affordable,” he says. “Some of the clients who used to invest a lot in luxury properties are less and less likely to do so. There were a lot of Russians [buying luxury], but because of the rouble [currency] devaluation, investors are thinking more about the rate of return, rather than whether it’s affordable or luxury.”
Buildings of the future
Despite the vast amount of projects at hand in Dubai, Azizi admits they are always looking to new areas for developments, and that may extend to new emirates, and maybe even further afield.
“Obviously as a developer, we’re always looking out for new projects. We’re looking at Abu Dhabi, Sharjah, and more areas in Dubai. We’re taking baby steps in other emirates,” he says.
Hospitality projects may take Azizi to Ras Al Khaimah, as well as Abu Dhabi and Dubai. “We are interested in looking into properties that we can turn into a hotel and keep it for the group to run it. It has not been finalised yet, but we’re looking within the UAE, at Ras Al Khaimah specifically and Abu Dhabi and Dubai,” he says. “Hospitality is something we really feel that we can expand into because it’s so similar to the rest of our business.”
The focus will not always be so strong on Dubai and the emirates, however, and that may take Azizi back to familiar territory in Germany, where it has a number of smaller housing projects in Frankfurt.
“The German plans are ongoing. They’re not as big as in Dubai, obviously, but what you get from doing business there is the experience of working in a very developed and mature market, when it comes to the standards of design and the way things are done there. You don’t have an escrow account, for example, but there are so many other regulations and that is always a good lesson to take from a market like that,” he says.
Azizi says they’re also look into more opportunities in Germany and in the UK as well. More specifically, in London. “We’re looking into opening an office there where our focus will be on properties in Dubai because we have a lot of clients coming from Europe,” he says. “But if we come across a property there to develop we’ll be very happy to develop in the UK or in Germany. That idea has been very much welcome to the banks that we spoke to and some of the real estate companies.”
He says while a high-rise type of development would be appealing, they’re also open to residential developments. “We’re looking into iconic properties. However, something residential would make more practical sense. So a mixture of both would be best, but it hasn’t been finalised yet.”
An ‘Iconic’ development is something that interests Azizi. Plans for a major tower in Dubai were due to be announced at Cityscape, but have been put on hold while details are being finalised. “We’re looking into something. By the end of the year we should be finalising it,” Azizi says. “It will be something iconic for us and for the whole city. It will be something special, and that’s what Dubai is. There’s always a wow effect [in Dubai].”
Following Cityscape, Azizi hinted at plans to announce two mega projects in Dubai before the year-end, worth a combined value of $13bn – and this excludes the iconic tower launch.
The first has already been revealed – in central Dubai – with a second to follow in the coming months. The sheer ambition of both suggests that Azizi Developments is rapidly becoming not only one of the emirate’s largest developers, but also the most interesting.