Mohammed Al Mubarak likes to tell a story about a helicopter ride he took just over ten years ago, when he was in his mid-20s. The destination was Yas Island and his fellow passenger for the brief flight was the Crown Prince of Abu Dhabi, Sheikh Mohammed Bin Zayed Al Nahyan.
“We flew low over the island and he asked me: ‘Mohammed, what do you see?’” Al Mubarak recalls. “At that time, the island had a couple of ostriches, a resthouse, plenty of sand, plus blue oceans and mangroves on either side.
“So I said: ‘Your Highness, I see a beautiful island’. The response came back: ‘That’s not what I see. I see the future. I see theme parks, golf courses, shopping malls, hotels and homes — all interconnected, and all happening now.”
The day after that trip, Al Mubarak started the long process of developing and creating the Yas Island concept, and for the last decade, he has dedicated much of his life to the project. Now chief executive of Abu Dhabi’s Aldar Properties — a role he took on a year ago — Al Mubarak says that the island’s masterplan has had some 36 iterations over its lifespan.
Yet there’s plenty more to come; it seems that barely a year goes by without a new piece being added to the Yas jigsaw; as well as the Formula One track, there are now a cluster of hotels, the Ferrari World and Yas Waterworld theme parks and Yas Mall, the second-largest mall in the country, which opened almost exactly a year ago.
As well as his various roles at Aldar during that period, Al Mubarak is also the chairman of Miral Asset Management, the company he describes as “the developer of championship products” on the island. Miral owns and operates much of the entertainment infrastructure on Yas, such as the theme parks. In short, as Al Mubarak puts it: “Aldar brings the residents and the businesses; Miral brings the visitors”.
The lure of Abu Dhabi, boosted by the quickfire development on Yas, is proving strong. Tourists to the emirate rose by 17 percent to a shade under two million in the first half of 2015. This is where yet another of Al Mubarak’s major roles fits in; in August he was named as chairman of the Abu Dhabi Tourism and Culture Authority, and as such has a wide-ranging brief to bring in visitors to the emirate, help preserve its cultural identity, and lay the framework for new cultural projects such as the Abu Dhabi branches of the Louvre and Guggenheim, and the Zayed National Museum, which are all being built on Saadiyat Island.
In addition, he also chairs Aldar Academies, the company’s education arm, and Image Nation, Abu Dhabi’s film and TV production firm.
Despite the changes that have taken place on Yas over the course of the last ten years, Al Mubarak says that the next four or five years will also see a huge amount of activity. At the end of August, Aldar announced the launch of West Yas, the island’s second residential community, which will be built alongside the mangroves. Altogether, just over 1,000 villas will be sold to Emirati nationals, with 165 villas being sold in the first phase. The CEO says that first tranche of units has already been sold out, and owners have been told they will get the keys to their homes in 2017.
“And it was one buyer per unit — we weren’t getting buyers buying ten or 20 units — and these buyers are choosing them for their final home,” he says. “That tells me that they believe in the location, that there’s demand for our product, and that we’re ticking the box for everybody.
“With West Yas you have a fully-fledged community, so schools and public areas, plus a large central park that is an added attraction, plus retail and mosques. In the past, we built these projects and six months later all the public facilities would be up and running. Nowadays, everything else comes first.”
After West Yas, more communities are under preparation, with the CEO saying that another large community is currently being master-planned. Across by the links course, a smaller residential project, Ansam, will also be finished in 2017. In total, Al Mubarak estimates that the masterplan for the island as a whole is about 50 percent complete, with the aim being to finish 80 percent of the plans by 2020. That will include the expansion of Ferrari World, the branded theme park, which will see several new rides, some of which the CEO says will create new world records. The first phase of that expansion will be completed in time for the UAE’s National Day (2 December).
“We are always in talks for a third and fourth theme park,” the CEO adds (one of which is believed to be in partnership with Warner Bros). “The vision is to have four — two right now and two in the pipeline. For sure one will come before 2020.
The Yas theme parks, together with those being built by Dubai Parks & Resorts in Jebel Ali and existing infrastructure elsewhere in Dubai could bring in $837m of revenues to the country in 2019, a 78 percent increase on what’s expected this year, according to research released by Euromonitor last month.
Al Mubarak says he is confident Abu Dhabi can emulate Dubai as it bids to become a global destination, and that having eight theme parks all within less than an hour’s drive will give it worldwide appeal.
“Ten years ago, if someone had come and told you that Dubai would be talked about in the same sentence as London, Paris and New York, you might have said ‘maybe it will take more time’,” he says. “Today it is there — ask any family around the world the five cities they want to visit and Dubai will be there. Dubai has done an unbelievable job of marketing itself.
“Then you bring Abu Dhabi into the picture. People tend to forget it’s only a 45-minute drive. We’ve been working very closely with Dubai.
“One of my first decisions as chairman of the tourism authority is to have a meeting with my counterpart in Dubai to talk about how we can have a much stronger connection, and they are very open about that.”
Outside Yas, Aldar is most focused on developing two other sections of its land bank, which, at 77 million sq m, is the largest in the UAE. Those are at Al Raha Beach, adjacent to the firm’s distinctive coin-shaped headquarters, and on Reem Island. With regard to the former, Al Mubarak says that construction has now started on Al Hadeel, a subset of the overall masterplan, and that handover is expected in 2017.
At Reem Island, Aldar launched sales at its Meera Shams development, which is targeted towards mid-income owners, in June. The CEO says the project is already 70 percent sold, adding to a clutch of projects on the island that have seen strong demand. Aldar is also banking on the growth of neighbouring Al Maryah Island, which is host to the Abu Dhabi Global Market, as well as the Galleria Mall, the new Cleveland Clinic and the upcoming Al Maryah Central mixed-use megaproject. There is little space to spare on Al Maryah, meaning that many of those who plan to work there will need to live in nearby locations such as Reem Island.
“There are other plots of land [on Reem Island] that we are master-planning as we speak — we hope to be able to launch them in 2017,” he adds. “It takes three to four years after launch to be completed.”
Further down the line, the CEO says he hopes to exploit parts of Aldar’s land bank that are as yet completely unplanned.
“At Al Raha Beach, my land bank is on the west, so our target is to completely finish Yas Island and then move onto what I call virgin land, so whether that’s Al Raha West or land on the border with Dubai, or some of our other projects around Abu Dhabi.”
Abu Dhabi’s housing market has tracked southward in recent quarters, alongside that of neighbouring Dubai, as demand has ebbed somewhat and the cost of living rises. Inflation is currently at a six-year high, and the capital’s rental market has been dubbed the second most expensive in the world (after London) in a report published by CBRE last month.
But Al Mubarak says the rapid roll-out of Aldar’s pipeline of projects should help to ease supply-side concerns, while completion of several infrastructure megaprojects over the next few years will keep demand steady. Those trends trump even the effect of the low oil price on local investor sentiment, he adds.
“Today I just signed major deals with Cleveland Clinic and Abu Dhabi Education Council [ADEC] for housing at one of our projects — and that wasn’t their full capacity, they still need to house more nurses and teachers.
“Real estate is all about demand and supply. I know that ADEC is hiring new teachers, that the nuclear facilities are bringing in more engineers. The airport [expansion] will bring in 20,000 employees.
“There are 7,500 working at the theme parks, and this will rise to 15,000 when all the theme parks are open. We are at the forefront of making sure all these people have a place to live.”
And with the Abu Dhabi hotel market witnessing something of a return to form, after years of oversupply, that’s another area where Al Mubarak sees opportunity.
“The occupancy rates in Abu Dhabi are in the mid-70s [percent] — Yas is a bit higher, closer to the 80 mark,” he says. “We’re definitely looking to increase the hospitality market at Yas and on Reem Island, where there aren’t many hotels. It’s just a question of whether they are five-, four- or three-star, or serviced apartments. It’s an area we’re looking at heavily.”
One area that is definitely not on the cards, however, is expansion overseas. Aldar is currently working on the Abu Dhabi Plaza in Astana, the capital of Kazakhstan, although that project is at the behest of its government.
“For me, I don’t like taking a lot of risk,” Al Mubarak says, when questioned as to whether Aldar will be exploring any opportunities abroad. “I like to prove myself first, and make sure my imprint is there before I take that risk. In reality, I will not feel comfortable that I can go anywhere outside until I complete these projects [in Abu Dhabi].
“At the end of the day, I will not go anywhere where I have the potential to fail. I need to succeed and prove to everybody that we are the right developer, and can compete with the biggest developers in the world.”
It now seems like a long time since the darker days of 2011. Back then, beset by a growing pile of debt, a $3.44bn loss in the previous year and a 50 percent drop in property values in the UAE capital, the developer was forced to accept two government bailout packages worth almost $10bn. As part of those deals, Aldar issued bonds and sold assets — including housing and retail space, as well as the Ferrari World theme park and the Formula One circuit on Yas Island — to the Abu Dhabi government.
In addition, state investment vehicle Mubadala raised its stake in Aldar from 19 percent in 2009 to 54 percent in 2011 — although that has since tracked back down considerably since then.
Recent results have seen profits rise by 36 percent in the first quarter (to AED602m) and 18 percent in the second quarter (to AED601m), helped by impressive leasing numbers at two projects in the capital, as well as the recurring revenues being posted by Yas Mall.
About 98 percent of the 4,800 units in Aldar’s leasing portfolio are occupied, as is 91 percent of its office portfolio. It all adds up to a stronger platform from which to launch the new projects that will be delivered over the next five years.
But for Al Mubarak, the bigger picture is never far from his mind. “Everything that the government has set forth, we’re moving towards,” he says.
“Even today with the oil price drop, there’s been no change. You might have dips, you might have highs, but in areas like healthcare and education — all these things will continue to move forward.”
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