By Claire Ferris-Lay
With development projects in Dubai, Lebanon and more, Avanti Holdings is stepping onto ME's property stage.
Aged only 39 years, Dubai property developer Dr Issam Daoud has already charted an interesting path. He survived a heart attack, lost a huge percentage of his money on the stock exchange and suffered the death of a close family member, all in just 10 days. Despite these tough times, Daoud has every faith in his latest venture in real estate. "Is the real estate market feasible in the long-term for Dubai? The answer is absolutely." He would say that, he is the chairman of Avanti International which is currently constructing a number of developments in Dubai, Ras Al Khaimah (RAK) as well as other surrounding emirates and across the Middle East.
But as they say, no guts, no glory. This certainly seems to be Daoud's attitude, particularly when it comes to his business ventures. "Is there a bubble in Dubai? It's the question everyone is asking. But no, surely there is no bubble that is going to burst, it is a correction.
When I ran Avanti Consulting we trained and coached people in the real estate industry and I thought why am I helping other people make money when I can do it myself?
"There is a lot of cash in the market. We have the money to spend. Just look at the position of Dubai. We have the price of oil and we have access to nearly two billion people, Dubai becomes an excellent alternative for capital." But with the number of buildings coming onto the market every day, would it be fair to say that Avanti Holdings is potentially adding to the number of empty units over the coming years? The doctor disagrees."All of the units that will be supplied by 2009 will not be enough for future demand, if you just consider the tourism sector with 15 million potential visitors. We are still in deficit. Do we have enough clients to feed the market? Yes, I think Dubai has enough for the next 10 years."
It is with this strong conviction that Avanti Holdings, one of the many companies under the umbrella of Avanti International, is now Daoud's main priority. Daoud tells Arabian Property Serenity Lakes in Jumeirah Beach South, its first stand-alone project, is due for completion in two years time. Serenity Waters, which will focus less on tower living and more on lower levels will follow. As well as Dubai, the company has completed and working on projects in Lebanon, Saudi Arabia, Egypt and Syria, Finland and Ukraine. But it is the nearby emirates, such as RAK, with its new business foreign ownership laws, in addition to Ajman and Um Al Quwain remain top priority at the moment. Close to Al Hamra Village in RAK, Fountain Lakes and Old Souk developments are currently being marketed in malls nearby by Avanti Holding.
"If you are investing in other emirates, you are, at the end of the day, investing in Dubai as they are both intertwined. It is important to link people to the fabric of the community because if they grow, you grow.
Avanti developments in RAK will be an alternative for companies who don't want to compete with the high commercial prices in Dubai. Instead of migrating to places such as Turkey we can offer them an alternative for cheaper accommodation while maintaining lifestyle. With more credibility and trust in these areas we will see a lot of money pouring into the UAE and specifically RAK.
"I am also very interested in Abu Dhabi right now. It is very interesting but needs a lot of development, and people to live in them," he adds.
Escrow will make it more challenging for small developers to manage their cash flow which will create a large shift in the market dynamics.
It is an unusual step for someone with a PhD in Leadership to enter into the world of property development but with attempts in television stations and 3D viewing, which got sold to a group of American and European investors for a large sum just three months ago, it would be fair to say that Daoud has had his fingers in many pies. "When I ran Avanti Consulting we trained and coached people in the real estate industry and I thought why am I helping other people make money when I can do it myself?"
As well as wanting to reap the many benefits of real estate, Daoud also claims he wouldn't have anything to do with the industry in Dubai if it weren't for the leadership of the emirate. "When you invest in a country the first thing you worry about is whether or not you will lose your capital. If it wasn't for His Highness Sheikh Mohammed I wouldn't even think twice about investing here. In the long-term Dubai also has branding. Dubai is the Champs-Elysees of the Arab world and the future Monaco outside Europe."
Buy a property through Avanti Holdings and not only will you get a guaranteed price on the secondary market, if you fancy yourself as a small-time investor, Avanti will even furnish the place and guarantee the rent for five years. With this in mind it is not surprising that Daoud claims the small-time real estate investor is on the rise and doing very well.
"That's someone wanting to buy an entire block," he says, after receiving yet another text message. "But it is not just the cash-rich intending to buy entire buildings or 20 plus units, who are dominating the market," he insists. "Of course there is still potential for small-time investors. Today there are totally different genetics of buyers. People have saved money and now want to buy one or two units. European buyers were always skeptical of buying in Dubai as they like tried and tested formulas but now we have reached a stage with proven results, funds, financial institutions and skeptical investors are starting taking serious interest."
He also claims investors will see a healthy return on their original investment. "It might be un-pragmatic to say but a buyer can see up to a 70% return in their investment in just three months. You may be selling a product for one million dirhams but the buyer isn't paying the full price. The return on the secondary market is added value even though you have paid 50%. The earlier you buy from us the bigger your margin is."
Daoud joins the long list of developers to applaud the introduction of escrow accounts for the sale of off-plan properties, which many claim will open the real estate market and create more transparency. "I think the introduction of the escrow is good for the industry. They are a realistic approach to the sector. It will open the market to more foreign investment as they have more trust in the market. We have been using escrow account solutions for more than two decades, however, at the end of the day we set our own perimeters.
"Escrow will make it more challenging for small developers to manage their cash flow which will create a large shift in the market dynamics; land prices will jump sky-high as small developers will migrate from development into land trading.
If the market is set to open for more investors as Daoud predicts, more regulations and rules for third parties such as mortgage brokers, credible real estate evaluators, professional legal advisors must come in place. "How much objectivity do they actually have? We certainly need a code of ethics of every broker as well as a high penalty system for someone who gives the wrong advice. It all boils down to your trust in the developer and your trust in the brand."
Whatever your price, if its Daoud's enthusiasm you are judging the market on, you can't go wrong. But just remember his PhD in Leadership also covered economic leadership. "Neither attempting to be naive nor over-cynical on this market, growing number of new cars and more traffic is witnessed in Dubai, all those new drivers will not be living in tents; that's one thing for sure."