Invest Group Overseas CEO Anas Kozbari says his company's success is a result of preparation, hard work and careful analysis of the business environment. What does his research tell us about where the market is headed to next?
Anas Kozbari has always thought big. His childhood dream was to build a career in politics. While this hasn’t happened (yet) due to his early immersion into the business world, he has certainly provided himself with the right amount of education should he change his mind.
A degree in political science and speech communication at the North Eastern State University in USA was followed by a master’s in international law and quantitative international relations from the American University in Washington, DC, and then a PhD in international business from the American University of London.
Kozbari says this education “opened my eyes to the world of business” and he hasn’t looked back since. After graduation he took a job in the family firm in Dallas, Texas, then moved to Saudi Arabia as the general manager of a trading company, where he had his first taste of making “serious and sometimes painful business decisions”.
He then led businesses from Swatch watches to Guess to Benetton, opening shopping malls to developing franchises of international fashion brands.
My name started to ring some bells in the region. It was game on
Kozbari describes his life back then as “glitzy” as the young businessman helped create an empire in less than five years with Al Sawani Middle East Enterprises. And there he could have stayed, but he was restless.
“My name started to ring some bells in the region,” he says in a visit to the Arabian Business offices. “It was game on.”
Invest Group Overseas (IGO) was the name Kozbari chose to describe the “new and differentiated investment business house, both in the region and on the global stage” that he founded with Moafaq Al Gaddah, the founder and chairman of MAG Group in 2005. He says their main business objective was to introduce a differentiated approach to business. “Both of us had the same business code of ethics, together with an eagerness and hunger to build a global footprint.”
In just 13 years, IGO has embarked on real estate and F&B projects, together with a fitness brand, across three continents, with an estimated retail value of over $2.5bn. The key to IGO’s success thus far, Kozbari says, is to “understand the needs and requirements of a particular market and introduce the corresponding product.”
He cites the example the Polo Townhouses and Polo Residences in Dubai’s Mohammed Bin Rashid City, conceived in 2012. “We were the first to develop in the area as we saw the potential. The Polo Townhouses Project was sold out in seven days, with an estimated retail value of around $122.5m.”
He puts this demand down to IGO having made the decision to move away from tower block developments and focus instead on social interaction. “We’d forgotten the word neighbour. You remember when you were a kid and you would exchange food on special occasions?
"I wanted to reintroduce that community idea. So the Polo Residence is comprised of 29 low-rise buildings with a satellite building “The Polo Village” that houses several amenities that you require. People know each other; it’s a community not a colony.”
We’d forgotten the word ‘neighbour’. I wanted to reintroduce the community idea in our projects
Kozbari is particularly proud of his home-grown O Café and Fitness 101 brands, the latter containing gym equipment unique to the region. The plan is to have six branches in Dubai by the end of next year, at which point they will also expand into the US.
And next year, IGO is also planning to launch the 40-storey luxury IGO 101 tower in JLT, Dubai. Ultra-modern amenities include a five-star lobby and concierge services, and advanced electronic security system.
Another residential tower by the Dubai canal in Business Bay, The Vert, will follow in 2020 with an emphasis on open plan design and contemporary furnishings. The estimated retail value cost of those two projects is around $545m.
In 2013 Gaddah and Kozbari spotted another opportunity, this time in Frisco, Texas. He says the decision to branch across the Atlantic was “to diversify our investments by entering more regulated markets” though he also admits the trade-off is a “more competitive and complicated” place to do business.
Still, the price of the 40-plus acres of land in the US was undervalued at that time in a nation still recovering from the Great Recession, so it was a good piece of business. Today Frisco is the fastest growing economy in the USA and the mixed-use project, which Kozbari values at somewhere between $1.1-1.2bn, named The Gate sits right in the middle of the so called ‘$5bn Mile’ and consists of 892 apartment units, 40 villas, 118,930 sq ft of retail space, office space and a 200-room boutique five-star hotel.
Though in its early stages of development it has already been an unmitigated success. A few months after buying the land, the Dallas Cowboys moved their training facilities virtually next door, which has seen IGO’s plot quadruple in value. “You’re talking about the most famous football team in the United States,” says Kozbari. “This has really set the project alight.”
To showcase the work completed to date, Kozbari will unveil Dubai Way on November 9, the first 1.5km of road that has been finished, and is hoping to attract ambassadors and Greg Abbott, the governor of the State of Texas to the event. “This will have a big impact on announcing our arrival,” he says proudly.
IGO is planning to expand its real estate investments in the US market in the upcoming years, as Kozbari reveals plans to launch another Texas development, this time in McKinney. “We believe the market is strong and stable. Interest rates are good, the cost of money is appetising, tax on capital gain is better than ever before and unemployment is the lowest in a long time.”
We were the first to develop in the area as we saw the potential. The Polo Townhouses Project was sold out in seven days
And yet there are many economists who also view the US economy as being dangerously overheated. Kozbari says he is mindful of the risks but also confident. “Is it too good as you said? Yes it is and we can’t just chase a rush. But today everyone is working, everyone is being paid, everyone is buying houses, taxes have been cut for almost everyone. The only time I have seen the trickle-down theory work is this time. You put a job advert asking for a manager and a few years ago you’d get 50-70 replies; now you get five or ten. Look at Amazon and Apple – we’ve never had a trillion dollar company but now we have two of them.”
Kozbari thinks the bigger danger is the ramping up of a trade war between the US and China. “There is an economic Cold War between these two giants, and this is where I am really concerned. There are commodities that they both need from each other so this could really backfire.”
But still, he is keen to point out that the US is still a mature market where there is “ample space” for prediction. “In some other markets you go to bed with one scenario and wake up to a completely different one. For example, Egypt was very much distressed until recently and now it’s on fire – I wish we’d bought land there earlier, and we do plan on announcing a project there soon. In the US there are regulations that give you some heads-up, and when you are close to bankers or financial institutions you will know from the lending process what is happening.”
Not surprisingly for someone with sizeable investments in the UAE, Kozbari is bullish on its economic prospects, thanks to a long list of positives, which includes “world class infrastructure, dynamic government, a solid financial structure and free enterprise.” He will admit that Dubai is going through a “natural cycle” which he says is “a healthy sign for any economy as it corrects and prioritises itself in certain areas”.
Ultimately, he says, Dubai will always remain Dubai. “The brand name is deep-rooted in the region with a solid and ever-growing global recognition. The economy is diverse, and the leadership’s investments in education will bring a momentous and progressive value very soon.”
However he does note that this cycle necessitates careful thought in terms of how to plan accordingly. “For the near future, real estate projects in Dubai should slowdown in order to leave some space for older and present projects to breathe out.”
He reels of a list of changing factors that developers need to be aware of in this climate. “There is competition and over supply; demographic shifts; changes in sales tactics and methodologies due to stiff competition; issues related to fees and charges; consumer behavioural changes and the rising cost of money.”
We believe the US market is strong and stable. Interest rates are good, the cost is money is appetising, tax on capital gain is better than ever
And he says that “minor challenges” could be overcome through “more calculative” measures. “It is clear that it is one of the most regulated markets in the world and this provides a lot of comfort and security to both investors and developers with full clarity on rights and obligations. I believe that the real estate sector can be further strengthened through a regulated approach to the sales process, which would bring a positive impact on the market’s composure.”
He cites the competition from Dubai’s largest semi-government developers as an issue that also needs to be addressed. “I buy land from a master developer and then a few months or years later the master developer starts to build and I can’t compete as my costs are higher than his. And that pushes mid-weight developers out of the market, which I believe is unhealthy.”
Kozbari thinks the other issue in real estate is that prices are declining for everything except for service charges. “A potential customer can ask: ‘I must pay almost 35 percent of what I generate from rent on service charges? No thanks, I will put it in a fixed deposit for 3.75 percent’. So people are pulling away from real estate investments and putting it in banks. And then there are the fees, which are a big hurdle. The government has started to address this, and has been successful in doing so, but we need more.”
But ultimately Kozbari says, “There is no place like Dubai in the Middle East, there is no infrastructure or stability like this. And as for it being oversaturated, I came to Dubai in 1998 and this area [Media City] was the end of the world. So when I hear ‘bad, bad, bad’ I think about the history of the past 20 years that you and I both know, and reply: why would you say that? The vision of this place and its rulers has always been endless.”
He also takes a swipe at those who believe there should be more intervention in the market to help struggling sectors. “When the market is bad then businesses want the government to be socialist, they want it to intervene. And when the economy is good you want free market enterprise. The economy of Dubai is based on a fair game; it is a free market. The government is trying to incentivise the industry but there are limits. Do you want the government to stop spending money on infrastructure and spend it on services or supporting commodities? There is a school of thought that says yes. I would say no. Dubai would not be Dubai if it did that.”
There is an economic Cold War between these two giants and this is where I am really concerned
Kozbari also issues a reminder to fellow business leaders that “we all need to be more insightful with our approach to business... We need to know when and where to prioritise our investments in the many opportunities that Dubai offers. He cites “mid-weight industry” as one such area for growth potential.
“There are fantastically well-equipped free zones where you can have an industrial plant, you’re near the sea, the new airport and the Expo site. I’m looking for opportunities in this space at the moment.”
Twice during the interview Kozbari declares: “If I have a dirham to invest I will invest it in Dubai.” But he says it the second time with a caveat: “I need to know where to invest. You have to get away from the dreamers. You have to protect that dirham.”
As for consumers complaining about high prices he is equally outspoken. “We need to compare Dubai to London or New York or Paris when we have this discussion. Dubai is not less than those cities. It is a brand name. If you want to be in Dubai you have to understand that it is structured to a certain living standard.”
It’s clear that Anas Kozbari is very ambitious (unsurprisingly, he names his inspirational business leader as Amazon founder and CEO Jeff Bezos) and also optimistic about the future of his chosen investment markets. As the interview winds to a close, he shares a business motto that he has developed over the years – “The process is the product”. Asked to explain, he replies: “I truly belief that hard work leads to results. The product itself is always history – look at your phone, it is already out of date – but the way you get to that product is what is important. That’s why in another life I’d be a coach.”
And then he dispenses one final thought before heading off to another busy day. “I have learned from my mistakes, but again I also cashed in on my triumphs. Like Nelson Mandela said: ‘In life you either win or you learn; you don’t lose.’”
“I am a true believer in human interaction. I learned the hard way that fax machines, emails, letters, social media…etc. are only tools of communication and will never replace the face-to-face dialog that any business requires. With direct interaction you eliminate barriers, you create the necessary respect, you build trust; you also share a cup of coffee. Networking is important in all our lives, and likewise in business. It builds confidence among business leaders and within the establishment itself.”
“I am a believer in the ‘progressive process approach’. Everything starts with a hypothesis, then it turns into a concept and finally into actuality. I am a believer in the deductive approach to business and the economy.”
“My message to new comers to the world of business is: education, patience, persistence, and close follow-up. Never leave any work to others. Do it yourself. Be an achiever and a causer of action and not a reactionist. Follow-up. Follow-up. Follow-up! And I also like to say: “a successful business venture is the gap that I have been able to fulfil when others failed to even recognise it.”
“Most certainly it shaped my character. It has disciplined me in many aspects and gave me the tools to move forward in my career. Learnings from my master’s degree is in quantitative international relations has developed my analytical ability to look at situations from different angles and interpret data. All of this gives me the courage to make fact-based decisions. In my opinion, education is key to success.