By Edward Poultney
Asteco's CEO talks about why the region's property market will stabilise as further projects come online.
Companies specialising in property development and management abound in the region these days, with more springing up on an almost daily basis. So when you find one that has been around for over two decades it is worth digging a little deeper. Elaine Jones, CEO and co-founder of Asteco, is something of a living legend on the UAE's property scene. Since moving to Dubai in 1980; "I remember it was the first day of Ramadan, July 13th", Jones has seen sweeping changes overtake the regional real estate markets, from the initial mass development of private villas and houses, to the commercial and residential tower boom. As a mark of her achievements she was named Middle East Businesswoman of the Year 2007 at a regional ceremony in March of this year: "I was very honoured, the calibre of women there was just incredible," she says.
From its beginnings as a leasing and property management company Asteco has expanded to include all the major areas of the property industry, while simultaneously taking part in some of the most innovative developments sweeping the region, including the Palm Jumeirah.
"I actually started working at another company," Jones smiles, "my husband and I had decided to move out here with a view to staying for only two years, and we were newlyweds so we didn't have much money and this job had a car with it. I thought ‘Wow, that's a good move, take that job it has a car'!" That first part-time role, which involved showing people new villas, was Jones' first foray into the property world. "It wasn't quite enough for me, so I moved into the property management side. The first property I managed was Mansoor Tower, it's been renamed Dubai Tower now, but it was Mansoor Tower in the early 80s," she says, underscoring her longevity in the Dubai market. "So I learnt the property business through actually doing it, it was experience rather than qualifications."
Jones left her first company when a batch of new staff where brought in from the UK that she felt did not fit in with the local market. Soon after, she was introduced to Mohammed Ben Sulayem after speaking to a number of people about getting a real estate license to open her own business. "My husband Russell actually encouraged me to go into business for myself," Jones explains. "He thought that I had a certain work ethic that would be best rewarded by going into business for me rather than for other people. Of course, I was also lucky enough to have the huge advantage of being able to take risks and develop the business because I had a husband in gainful employment!"
Not having to worry about its success allowed Jones to pour more effort into her new venture: "In my opinion when anybody starts a business with that sort of edict that ‘I'm going to do this because I enjoy it and I'm going to do it well or I'm not going to this at all' it means that you can approach it from a completely different attitude to someone who's doing it just for the income."
Mohammed introduced Jones to Sultan Bin Sulayem, who was then taking up the chairmanship of the Jebel Ali Free Zone. As he would have less time to spend on managing the family assets he was open to the idea and Asteco was born out of Ahmed Sulayem Trading Enterprises Company. "But saying Ahmed Sulayem Trading Enterprises Company every time you answered the phone was a bit of a mouthful for this little English girl out of Hertfordshire," Jones laughs. "So the next license renewal was made under Asteco Property Management, in addition to the original one."
Asteco was formally founded on 8 March 1985, a date that Jones notes is coincidentally now celebrated as International Women's Day. Despite suppositions to the contrary Jones does not feel that she faced any gender discrimination. On the contrary: "I was always very welcome, I made some extremely good friends, many of whom today are very influential people. Dubai was very different, we were young and in those days we had time to sit and talk. Some elements of life I believe were better but of course many were not - it was a different world."
Jones is certain that the regional events that unfolded around the emirate over the next two decades; the Iran-Iraq war, the invasion of Kuwait and Gulf War, the invasion of Iraq, help make Dubai into a stronger place for businesses to thrive by showing that it could keep itself outside the upheavals. Asteco grew alongside the emirate. "In the beginning I did everything, make the tea, the whole lot! There were only two of us you see. We started with property management, then leasing was a natural function because you need to keep your property occupied. Management is our core activity because it gives you the trends of what is happening in the market, and allows us to give real-time advice to clients as to what they should build and where."
A sign of the evolution is that from solely block management, the company now deals with individual properties and owners and is developing a ‘strata' wing for the equivalent of tenant's association ownership.
"Also when we started the market was wholly GCC-owned property, primarily Dubai, Abu Dhabi and Kuwait," explains Jones. "They would own entire blocks and the rental returns would pay for the buildings very quickly in those days. It's changed a lot now, we've seen the market's ups and downs."
The 1990s saw Asteco become involved in the development of retail premises beginning with The Centre, which led to Deira City Centre and Wafi City amongst others. Other projects included residential opportunities in Dubai such as the Gardens - and the Palm Jumeirah (one of the original schematic drawings hangs proudly framed above her desk): "I don't remember what it was called in those days. Of course it didn't look like a palm, it was just two islands, but the whole thing was very confidential," Jones says. "I have to say that I am lucky, very few people would have had the opportunity that I was given to be involved in a project like that. There are few places in the world where such a development would have been conceived, built and occupied in such a short space of time."
2002 saw non-GCC nationals legally entitled to own freehold property, and this, in line with the ‘brain gain' of returning well-educated Arabs and Asians following 9/11, created optimal real estate conditions. "The Internet and Media cities were leased pretty much overnight, the take up was astounding," says Jones. "The vision to have built that, and at that timing, was quite incredible."
The new global interest in the Gulf's property market led to offers from international companies to buy into, or buy out, Asteco. "I declined because we had something unique," she explains. "We had a number of clients who would come to me and we would work with them all the way through, we're not just an agency and I'm not a sales person, that's not my forte, I have people who do all of that. I am still a property person at heart and there are certain clients that I expressly get involved with because it's my absolute pleasure. I need to have an element of property in my life or else I'm not complete."
Instead Jones instigated a push to bring in top staff from outside the region. The company was restructured over the course of a year with the directors of each business line boasting pedigree from international firms: "So we have their best practices and we take benefit from their international exposure. I'm very much a Dubai girl, I know Dubai very well, but I don't know the other markets because I've lived here for 27 years," she says candidly. "We needed to bring people in who knew about the outside world and it has proven to be an exceptionally good move. It's meant that we have been able to attract good employees from investment or property management titles because we've got people within the organisation that they can relate to. In the property world everybody knows everybody, and references and referrals are always a very strong way to develop a good team. But biggest is not always best, and we want to be the best."
The restructuring was followed by a formal association with UK company Savills, in order for Asteco to be able to offer a broader reach, and gain increased access, to investors. "When you look at a group of strong investors you may well have Irish with Indian, with Iranian. I mean, the world has become so small that actually we almost don't want to differentiate by nationality anymore. Everybody's so mixed up," says Jones. "That's an interesting one as well, seeing how the different groups move, seeing who has what, why people are moving their money out of different economies and countries, the length of time that different groups are looking to invest."
The change in the group's target market has been marked by currency fluctuations and increased access to information globally: "We're seeing a lot of interest out of the Far East, but we're also seeing a lot out of Europe, which has been amplified by the power of the sterling, making this a good place to buy. There are people now who study the market, and that's a major difference between what was happening four years ago and what's happening today. With the internet, and the amount of information that is available, our buyers are very educated. People have to take this business very seriously now."
Regardless of the increased interest from investors outside the region, Jones has no plans to expand the company outside of the GCC, as she says: "We don't want to be all things to all people, we want to be exceptionally strong in the Gulf."
So far Asteco has launched a partnership with Saraya in Jordan, the only exception to the "Gulf-only expansion" rule, and has offices in Bahrain, Qatar and throughout the UAE. Jones is also looking to target Oman, Kuwait and Saudi Arabia, although she admits that the latter will take a great deal of planning as the territory is so vast.
This stretching of Asteco's wings works in the investors' favour she believes: "There is a great synergy, there is a great deal of logic. You need to split your assets because you don't want everything in one place and we can see that there are developments in certain countries that compliment others. So where we believe that Oman is developed with the focus on heritage and eco-tourism while Qatar has put a huge amount of money into education and medicine. So the different countries have different things to offer and different ways to protect our investors against economic changes."
With economic changes and the US/UK/EU mortgage crises being very much the topic of the moment - Jones blames the banks for allowing people to borrow more than they can afford; "The whole world has become where it's always somebody else's fault, noone takes responsibility, and I think lending institutions have got to be a bit more particular" - she is not unduly worried about a domino effect. "Inevitably there will be some repercussions but Dubai has got a totally different problem, Dubai has a shortage of completed property. The level of personal security here still exceeds almost anywhere else. Yes, there's a lot of indirect taxation, but there's no PAYE, people can decide where they want to spend their money. What we do need is more property to get rents down, or we need a greater differential."
By this Jones means marked differences between rents in different locations and buildings, something hampered at present by the lack of finished property, resulting in price hikes across the board, although she predicts that this will change: "Over the next five years we'll see that in certain pockets the premium rents will continue to be achieved but there will be far more difference. There'll be suburbs, out of town locations where property is at a more reasonable cost. It's very important that we achieve that otherwise we will find companies will go to other countries," she says. "Of course being involved in property development we always want to see prices go up but there is a fine line, we don't want to see Dubai becoming too expensive otherwise we lose quality people. With rents being so high expatriates are having to evaluate sending their families back. Also, with Asia being our main source of labour, you can go to India now for example and have a fabulous standard of living, job and opportunity."
"We will start having a more mature market and we need to bring in more affordable accommodation," she continues. "At the moment a secondary location is not actually that far removed from a primary location value-wise just because people are renting it because there's nowhere else to take. But it is coming, look at groups like Nakheel and the developments that they are doing on a large scale."
And Jones plans on seeing Asteco through to this next phase of her adopted homeland's development. "They won't get rid of me!" she laughs. "I'm staying right here. The children were born here, and this is where I'll retire."