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Mon 26 Jan 2009 04:00 AM

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The Merchant developer

The Group CEO of Ruwaad Holdings talks to Matt Warnock about reasonable approaches to the current financial situation.

The Group CEO of Ruwaad Holdings talks to Matt Warnock about reasonable approaches to the current financial situation.

A couple of years ago, I interviewed a big name architect who had made the rather interesting sideways move from designing luxurious marinas, the field in which he had become internationally famous, to creating high-end watches.

In a time when most jewellery is seen as brash and an off-the-rack suit looks every bit as good as a Saville Row special, a man's timepiece and his car, he claimed, are the only outward manifestations of success that today's man can still embrace.

The current situation removes certain types of investors from the market. We’re likely to see more end-users buying; and buying closer to completion.

It's an axiom that has, in the main, held to be true; but, as I arrive to interview Hayan Merchant, I'm remaindered that there's at least one more expression of achievement that is open to men: their office. Sitting in the Emaar buildings beneath that most towering of all monuments, the Burj Dubai, Ruwaad Holdings' office is a breath-taking ode to modernity - more sprawling penthouse suite than traditional corporate nvironment.

Detractors may say that this is a fitting metaphor for Dubai's real estate industry; its reputation has certainly suffered from a smoke-and-mirrors lack of transparency, whether by design or by accident, until now.

However, this is the company built in the image of its Group CEO; and Merchant is known throughout the industry for his straight-talking, shoot-from-the-hip style.

"What's happening now is happening for the first time since 1929. The current situation is just the same," says Merchant of the economic slowdown. Pessimistic rumour-mongor? Not at all. Just a realist, a pragmatist.

"Whether you're in the USA, the UK or even Russia, at the ground level, it's the same in all these places. All the key cities will have similar stories to tell. Dubai has done an excellent job in marketing itself, so perhaps it takes centre stage a little. However, even 18 months ago, returns in the UK or USA were barely as good as they are here in the UAE right now."

While he may be known for his frank approach, Merchant's answers are also considered. There's something of the academic about him, as he speaks with absolute confidence and draws on studies and precedent. "Banks are clearly making reviews, and this is a transitionary time. Companies need to readdress expected appreciation and yields."

There has been a change of sentiment too, says Merchant, along with a realisation that the previously held sentiments may not have tied in with reality. "Looking ahead to the next six or 12 months, as developers, we'll need to see how things pan out. The current situation removes certain types of investors from the market which could well result in better products and better deals for the general public. Like years ago, we're likely to see more end-users buying; and buying closer to completion."

A realist he may be, but Merchant still has a great deal of faith in the UAE's property market. "At Ruwaad, we're taking a prudent approach and paying a lot of attention to financing and studying the sector's background. But the market confidence is already in place for the sector to continue - just on a more cautious setting.

"Timeframes will always produce hurdles and there are certainly challenges to be faced - over the next few years, financing, for example, will be an issue - although the short-term problems should have little effect on Ruwaad. We've considered all the issues and everything is going according to plan and will be produced on schedule."

If Ruwaad Holdings has produced a textbook demonstration of ‘rolling with the punches' where the credit crunch is concerned, then look up ‘welcome with open arms' for the company's attitude towards the new regulations that are currently being introduced throughout the sector.

"Regulations can only be positive. More regulations equals more confidence from the investor community. This opens up the real estate market to the likes of pension and investment funds."One of the reasons for Ruwaad's steady ship in less than favourable conditions is that it has diversified its interests across other territories.

Most notable is the multi-billion dollar Amazulu World mixed-use development that Ruwaad has master-planned across 16,500 stunning acres of South Africa's Kwazulu-Natal province.

Incorporating a theme park, hotels, a mall, a marina and nature reserves, along with homes, educational and healthcare facilities, Ruwaad describes the project as a "work-stay-play-live environment for local and international consumers, tenants and investors."

More regulations equals more confidence from the investor community. This opens up the real estate market to the likes of pension and investment funds.

"Our South African project has a 25-year plan. This clearly requires much more foresight, both in terms of time and landscape. Wherever we develop, we look for certain criteria. South Africa is the gateway to the African continent in much the same way as the United Arab Emirates is the Middle East's hub. As we move forward, we'll be looking at the wider Middle East and Asia and applying the same rules: locations with promise."

And the UAE's developers, according to Merchant, are ideally positioned to move into these new territories, having gained international acclaim for their expertise in real estate and investment. That said, a new region brings new challenges and demands; Amazulu World differs greatly from the projects typical of the UAE.

"It's a vast development but we'll be building very, very low density homes there, with two-thirds of the project dedicated to landscaping or water. We have no intention of just going in there, making buildings and leaving; that's simply not an option. We're collaborating with the government at both national and local levels - a big part of Ruwaad's strategy for the future - and taking a social and community perspective. Of course, we'll be creating employment locally, but we'll also be more active. Our intention is to influence and improve the community."

It's the big talk we've come to expect from developers regarding liability and sustainability but, in the majority of cases, those responsible for shaping the GCC's cities have come up some way short of their promises.

"The situation is different for standalone developments and master developments," explains Merchant. "All developers have certain responsibilities.

Sub-developers must follow the guidelines set by the master developer. They have restrictions and procedures to adhere to, such as those based on traffic projections.

"Master developers are responsible for the bigger picture. Parking, energy sources, transport, logistics, waste...infrastructure should breed sustainability." And as for Ruwaad - the thinking man's developer - what, exactly, is its approach?

"We're very focused on sustainability, concerning ourselves with the whole life of a project. It's important to bear in mind that there's a knock-on-effect to everything we do. As both a sub-developer and master developer, we make sure we get it right."

If the office from where he calls the shots is anything to go by, Hayan Merchant and his team at Ruwaad are doing just that.

Current Ruwaad developments


Ruwaad has signed a deal to partner Paramount Pictures of Hollywood to develop a signature lifestyle destination at an initial cost of US$ 2.5 billion. With a shortlist of three sites currently under discussion, the destination will be home to a theme park, a large number of family hotels and resorts, retail, food and beverage zones, plus, of course, residential and commercial spaces.

South Africa

The 16,500 hectare Amazulu World on the Thukela River combines a fully-integrated resort with the area's outstanding natural landscape and will include the King Shaka Zulu Monument, a theme park, resorts and spas, a sports village, a mall, a marina, nature reserves and parks, golf courses, an equestrian centre and a wide range of residential, commercial, health and educational facilities.

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