It has been a year of upheaval for Islamic home finance company Amlak. In March, the firm’s CEO and founder Mohammed Ali Al Hashimi announced his resignation; then three weeks later the company’s chairman Mohammed Alabbar, also chairman of Emaar Properties, declared he was stepping down.
But with a new chairman Nasser Al Shaikh and CEO Arif Al Harmi at the helm, things are looking up for Amlak.
After undergoing a major restructuring of its organisation the firm has decided to refocus on its core strength – home finance.
It has international expansion plans, having recently established operations in Egypt and secured a licence to operate in Saudi Arabia.
The firm has also opened offices in Abu Dhabi as part of a plan to expand its operations across the UAE.
Al Harmi reveals what he hopes to achieve at Amlak, lifts the lid on the company’s ambitious plans to expand internationally and reveals what new lines of business it hopes to develop in the year ahead.
What do you think are the biggest challenges that you face in your new role as CEO of Amlak?
I think this is a very challenging role.
Amlak is a market leader in the home finance market and to remain at the forefront is very challenging as there are so many developments happening in the industry.
I think today one of the major challenges will be that the industry we are in is very dynamic and fast moving.
So to be on top of the developments and what is happening is a challenge.
To keep abreast of all that we are talking to the various stakeholders, whether they are the developers or the customers or the regulators, the estate agents and so on.
That I see as the key challenge and how we will get all that information and how we will keep up-to-date with the developments.
Another key challenge I would say is the international expansion we are planning and the process of looking at potential new markets, evaluating those markets and deciding whether we will go ahead or not.
What is Amlak’s main business strategy and what areas of business is it now focusing on?
A:We are now focusing primarily on our core business of home finance and trying to be more creative in that area. There were certainly some other areas of business that we tried to enter in the past but now going forward, our key focus will be on the core business which is providing home finance.
We are also looking at expanding in the local market – in the UAE.
We have a very strong base in Dubai and we are looking at expanding into other markets like Abu Dhabi and also looking at other markets in the region to enter the home finance markets in those countries as well.
Which other areas of business did you try to enter in the past and why have you decided to re-focus on the home finance business?
A:I think like many companies there were other opportunities that the markets were offering, like the stock market, and some decisions were made to try to make the most out of these opportunities. This included various investments into different companies or shares.
Some of them were successful but overall not as successful as we thought they would be. But I think now we have realised that there is great potential in the mortgage business and in our core business.
And therefore the decision was made to focus on this as our main growth area.
Tell us more about the regional expansion plans that Amlak has.
A:In March we got the licence to operate in Egypt and we have now set up Amlak Finance and Real Estate Investments there.
The team is now in place and we have already started booking some mortgages.
We see a great potential for growth in the Egyptian market and we have started working with the developers that we know and we have worked with before like Emaar that announced a number of projects in Egypt.
We’ve already been through the challenges of setting up a mortgage business in the UAE.
And we feel that with our experience in the mortgage market and our tested products in the local market, we have great potential to grow in Egypt. We believe that our products have good potential in the country.
We have seen a lot of positive signs in Egypt. There is good reform and the government is trying to improve the business environment to encourage foreign direct investment there.
We have also recently received a licence to enter the Saudi market and will be setting up a company there called Amlak International Co. for Finance and Real Estate Development.
In Saudi we got into the market through strategic partners – very well-known names such as Al Baraka group and Saudi Investment Group among other partners.
There we will have a 22.5% share in the company while in Egypt the company will be 100% fully-owned by Amlak.
Amlak also recently visited Morocco to evaluate the possibility of setting up business there. How much potential do you see in the Moroccan market?
A:We are looking at a number of countries in the African region and Morocco is one of them.
We are also looking at other Gulf countries such as Syria and Jordan.
We have visited Morocco and we see potential there. When we look into any new country we look at various factors – the potential of the market, the overall economic environment, the potential of the growth in the real estate and we feel that these countries are certainly going in the right direction.
And most of them have a historical relationship with the UAE and there is a move by the governments to further improve the ties.
Also, Emaar has entered these markets so we will start by offering the mortgages for these developments. But most of this is at the evaluation stage at the moment.
The home finance sector in the UAE is now a very competitive one and it is set to become more competitive as more international players enter the market. Are you concerned about how this will affect Amlak?
A:There is more competition and that will put pressure on all the mortgage providers to offer the best and be more competitive in their offerings.
I think competition always gets the best out of people and it is always to the benefit of the customer.
The customer will always get more choice and more offerings if there is competition.
Amlak was the first mortgage company in the UAE and we have the expertise and experience to be able to provide customers with what they are looking for, such as flexibility and high finance-to-value ratio.
We offer longer tenure loans than our competitors.
We have the Islamic proposition and also we have a long list of well-known developers and projects that gives the customer plenty of choice when it comes to picking the property that they want.
And because customers look for convenience, we have a team that goes to the customers and meets them at a convenient location. The overall offering that we have I think is very competitive.
Is Amlak planning to start offering any new products or services?
A:We are focusing now on our core business.
We are looking at how we can do more within our core business – for instance we are looking at what we can do in new markets and new segments as well as what we can offer in terms of value-added innovative products to our customers.
One of the areas we might look at for example is offering finance for mid-range priced properties.
Today the prices have gone significantly higher and with the cost of development it has become difficult for the developers themselves to offer low to mid range properties.
So what we are looking at for example is products or solutions for mid-income individuals to be able to purchase their dream home. So that could include options like more affordable offerings to the customers.
Do you think that offering finance for mid-range priced properties will be a big growth area for you?
A:I think most of the developments or the projects that are in the market have been at the high-end.
The demand is increasing on this area. And now more developers have realised that there is a great demand for mortgage services and they are offering products in that area.
We can look at products that are more affordable in terms of the payments.
How has the growth in the Islamic finance industry regionally and globally helped Amlak?
A:I think the growth in Islamic finance has been great and in fact it has been steadily growing faster than its conventional counterpart.
In the past the position of Islamic banking was not as competitive as the conventional one but that has developed over time and now it is parallel to the conventional offering in terms of pricing.
One important key reason for this is the increased public awareness and knowledge of Islamic finance. Now that customers have got the knowledge and the awareness of this product they are more open to this option and that includes Muslims and non-Muslims alike.
In fact the majority of our growing number of customers are non-Muslims.
People are starting to see that Islamic products have some key advantages over the conventional products.
If we look at the mortgage business for example – for the home finance that we offer for customers buying properties that are under construction, the customers will only start to pay the instalments on delivery so they don’t have to pay during the construction period.
This compares to the conventional product where you have to pay the interest during the construction period.
Features like this make our solution very appealing.
Who are your biggest customers?
A:If we look at the customer base we have now, the key nationalities are British and Europeans, those from the Subcontinent, UAE nationals, Iranians and others.
We also look at them from the point of view of being salaried or self-employed – which is a 50/50 split. And we also have residents and non-residents.
The majority are residents of course but we are seeing more and more international investors coming in to establish their business in Dubai.
There is a growth potential for international investors going forward.
The regulatory framework is positive so more and more international business is coming in.
And because we offer non-residents financing solutions we are confident that will be a growth area for us as well.
We are seeing that more and more international investors are investing in the country and more and more developers are promoting their developments outside the UAE like in Europe and Asia and other countries around the world.
Amlak recently announced profits for the first half of this year of US$28.9m (AED106m) – a growth of 31% since the same period last year. Were you happy with these results?
A:We are happy with the growth and the 31% growth over the same period last year is very positive.
We have had good growth on our core business and we expect this to continue.
The growth is primarily from our core business. Earnings from our core business have increased by 41% and the majority has come from the core home finance business.
This is why our strategy basically is to focus on the core business and to get into alliances with more developers in order to further develop the business.
There are growth expectations within the new markets we are entering.
Dubai is our main core market and Abu Dhabi and Egypt can offer different growth rates.
Have you been satisfied with the performance of Amlak’s shares on the Dubai Financial Exchange?
A:We don’t manage the share price of the company. We manage the business of the company.
And we are focusing now on the core business and getting the right strategic alliances in place with local and international partners.
And we certainly think that with all that we can increase our profitability and improve the returns to our shareholders.
If you had to achieve one thing in your role as CEO what would it be?
A:I would like Amlak to be at the forefront and remain the regional market leader in the home finance sector.
This can be achieved by focusing basically on the core business and what we are best at and what we were created for.
We started in the year 2000 and we were the first Islamic mortgage provider in the UAE.
We are keeping the momentum and we will continue to be the market leader.
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