After bursting onto the property scene in 2005, and later taking its fair share of the collateral damage when the market crashed, Dubai real estate and services group Omniyat has lately been lying low.
With the exception of the ongoing fallout from its cancelled Beachfront Living project, which is still making its way through the local property regulator, there has been little news from the company for about four years despite it previously revelling in the media spotlight.
It was not accidental, it turns out. Rather, Omniyat has been using this time to regroup and work out the best way forward.
“During the course of this five years we looked at our portfolio and we looked at how we could effectively enhance this portfolio, reflecting the market demand,” Omniyat’s executive chairman and CEO, Mahdi Amjad, explains.
The end result is the company is now shifting away from residential-only developments to more diverse and, it believes, lucrative hotel-residential projects.
“The demands back in 2008 were different,” Iraqi-born Amjad says. “The demand of Dubai has gone more towards tourism and the growth of tourism reflects that.
And after consolidating its portfolio down to AED6bn ($1.63bn) during the downturn, from a high of about AED28bn ($6bn) in 2009, Omniyat is again looking to grow with plans for AED11bn ($3bn) in projects by the end of 2014.
Its return to the big stage has come in the form of three major ventures launched at the three-day Cityscape Global last week. Giving details of two projects, Amjad confirms The Opus will be a revamp of the mega-development it launched in 2008 in Business Bay.
Previously a 23-storey retail and commercial tower that was slated to be finished in 2010, the project will now also comprise a five-star, mixed-use hotel, as well as apartments.
Amjad says the new Opus development is again designed by world-renowned Iraqi-British architect, Dame Zaha Hadid, but will now be the first hotel and apartment project to her name.
To come under the ME hotel brand, which is owned by Spain’s Melia Hotels International group, ME Dubai will follow other ME hotel launches in London and, eventually, Paris and Austria.
Construction is under way and is expected to be finished by mid-2015 with the hotel opened by mid-2016, Amjad says.
The second project, The Pad, is also a reincarnation of the company’s 2007 development of the same name, comprising a 231-apartment, 24-storey tower in Business Bay.
Originally scheduled for completion in 2009, it was pushed back to 2010, then mid-2011 before eventually being put on hold. Amjad says the new development will be “a very cool, hip hotel” and is hoping it will be finished in mid-2015 as the first of a chain of properties under the brand, The Pad.
“We said, again, turning that building into a hotel-apartment would be a significant value increase,” Amjad says. “It increases the value at least 30- 40 percent for the owners who have previously purchased and effectively bringing by far a better product to the market.”
In a sign of the difficulties of the past few years, Amjad says Omniyat has worked with both “investors and our regulator” to redesign the project, which, according to public statements in 2010, was at the time 85 percent sold.
It has also been working with Dubai’s Real Estate Regulatory Agency (RERA) after the official cancellation this June of Omniyat’s AED3bn ($816.81m) Beachfront Living project in Waterfront, which paved the way for investors to submit claims.
The project was to comprise a 29-storey hotel, a 420-storey residential tower and a Rodeo Drive retail strip.
However, reports this year said a group of 30 investors who had put down AED200m ($54.45m) in cash up front to Omniyat — the equivalent of 20 percent of their contractual amounts — had asked RERA to cancel the project.
Amjad says Omniyat had worked extensively on Beachfront Living, but it was in a location with no surrounding infrastructure. The cancellation was the last step in what has been a “transparent process”.
“Three years ago we made a blanket offer to all investors who are serious and effectively have a long-term interest to shift their investment to our portfolio here in Downtown,” he says.
But he also refuses to say how many took up the option, pointing out instead that it has been “successful”.
“The project is completely funded and the entire asset and everything else is completely reconciled,” he says. “It is a process that the regulator will go through on the cancelled master plans. I would leave it to the regulator’s process.”
With the exception of Beachfront Living, Amjad says all of the projects that had been “launched, effectively introduced to the market and were under construction” had been revamped and were being relaunched.
Omniyat had completed three projects — its flagship One by Omniyat office tower, Bayswater office tower and mixed-use project The Square. Another five projects — Binary (commercial), The Opus, The Pad and two as-yet unnamed projects were under construction and due to be completed in 2014-15. Projects on the Palm Jumeirah and Maritime City were also on the cards.
Based on previous public comments, it would have delivered its previous entire portfolio of eight by 2012, or roughly three projects a year.
Amjad acknowledges he was bullish about the future of Dubai before the property bubble burst. In 2008 he told Arabian Business: “I don’t think property prices will drop or that the market will suffer a correction. There’s no reason for the market to adjust, we have a lot of people moving to the region, strong buyer sentiment and plenty of liquidity.”
“Of course what happened in 2008 was beyond Omniyat, Dubai, UAE or the region for the matter,” Amjad says when asked about those comments made five years ago.
“I don’t think anyone has predicted that global phenomenon to be hit that hard, that strong. In America the government was shocked and surprised, let alone us.
“At the time my views were very much particular about how I see the market. I was not predicting a global phenomenon.”
Amjad established Omniyat in 2005 with a focus on “iconic projects”.
It was his second big business venture after setting up Almasa computers in 1995 and growing it into a major IT regional conglomerate with mass regional distribution and a $450m annual turnover in 2006.
Working as Omniyat’s executive chairman from its inception, Amjad took on the added role of CEO in 2009 after a restructure which saw former CEO Peter Walichnowski and managing director Alex Andarakis step down from their positions in the same week.
A few months earlier the company had shed 69 positions (almost a third of its staff) due to the global crisis and was forced to put the brakes on AED8bn ($2.18bn) of projects as it switched its focus to delivering projects rather than launching new ones.
Amjad says that despite the necessary cutbacks, he had retained the majority of his “top performing team”. Staff numbers had increased by 20 percent in the past six months and he planned for further growth of 30 percent over the next six to 12 months. Taking on the role of CEO has allowed him to be more hands-on in the overall operation, he says.
Amjad says the company has evolved into three divisions — investment, development and asset management.
“We have a complete integration between investment structuring and effectively development as well as asset management, which encourages us and drives us to retain our own assets,” Amjad says.
“The hotel portfolio is part of that strategy, so some of these assets are effectively going to be retained by Omniyat and we are focusing a lot on our own portfolio for the future.” It was also now “over-capitalising” its projects, he says.
“We have taken very seriously, along with the government, the regulation that today makes it mandatory to fund a project to a certain level [a 20 percent construction guarantee and 100 percent land payment],” he says.
“We’re taking that threshold even higher internally, so that every project before it is announced is over-capitalised and has a very minimum amount of dependency on off-plan sales.”
With the company eyeing some 7.6 million sq ft of built-up area in the Burj Khalifa District, Amjad says the area was well positioned between the Dubai Mall-Burj Khalifa and the planned Mohammed Bin Rashid City.
Land prices were also low compared to boom prices and therefore ripe for growth with current strong demand, he says.
“It’s not that healthy to see a city that is packed like this,” he says, referring to hotel occupancy rates hovering at 80 percent. “We need to see enough room for growth.”
Amjad says he’s not worried about the Dubai Land Department’s move to increase the transfer fee from 2 to 4 percent on all sales except the initial purchase from the developer.
“The 2 percent increase is not a significant increase when it comes to the property values. The price points today are 50-60 percent of what they used to be at the peak of 2008,” he says.
“But it does make an impact to speculation and I think this is one of the government’s initiatives to really cool down the market… calm down the speculation of people who are effectively in the business of selling and turning around in a short term. They are trying to turn real estate into a longer-term asset.”
Amjad says his own company had put restrictions on flipping, with customers not allowed to re-sell until a “significant portion of the payment has been made”.
He says that despite a challenging few years he hopes the next five years for Omniyat will result in “some very unique hospitality projects” that will “redefine hospitality and hotels in this phenomenal city of Dubai”.
“The short term you will never know, but in terms of long term, if you focus on fundamentals you can always have a better feel of it and the fundamentals of Dubai have proven to be right,” he says.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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