There’s an air of relief about Farhad Azizi these days, and with good reason, too.
Despite nine years of building, Azizi Developments, of which he is CEO, has never been able to deliver a project in its home base, Dubai, much to the frustration of its owners. But that is about to change.
The first phase of its Al Furjan residential master development is scheduled to be handed over to property owners in May.
It may have taken a while, but Al Furjan is only the beginning. Azizi Developments has $1.5bn worth of potential property projects on its books. If they all come to fruition, the firm would finally rise to be among the largest private developers in Dubai.
Frustration has been a key driver for various arms of the Azizi family’s conglomerate. Azizi Group was founded in 1989 by Farhad’s father Mirwais, initially as a trading company, in Tashkent, Uzbekistan, north of the family’s native Afghanistan.
The fledgling group developed business in textile manufacturing before branching out into the lucrative oil and gas industry, and then a private banking group including Azizi Bank, which is now the largest financial institution in Afghanistan, and Al Bakhtar Bank.
“My father got frustrated in the oil and gas business with the banks, so he started his own bank,” 31-year-old Azizi explains.
The Azizis first ventured into the Dubai property market when Azizi Snr bought 86 offplan villas in Dubailand, a giant entertainment and residential development launched in 2003. But delays in construction irked him; the millions of dollars he had shelled out as a 25 percent deposit on each villa was effectively frozen. (Scores of investors were eventually refunded their deposits after the project was officially suspended in 2008).
Riled, he established his own development firm, Azizi Developments, in 2007. The company invested in a number of plots in Al Furjan and began building apartment blocks. But more frustration was around the corner when the global financial crisis struck.
“We started sales in 2008 and we had sold more than 100 units in two buildings that were launched. The construction had just started; the contractor had moved to the site but the digging had not started,” Azizi recalls.
“There was good demand, the market was okay but in July-August 2008 things started to slow down. Our clients [property buyers] approached us and they didn’t want to continue the project. They were not able to continue the payments.”
The majority of the buyers, who had paid deposits of between 10-15 percent, wanted out. With the help of the Dubai Land Department, each case was handled individually and deposits were handed back to almost everyone.
“Everybody got paid except one person, which was AED76,000 [$20,690], but we cannot find him,” Azizi says. “We had to pay AED149m [$40.56m], which was not from the escrow account. That was already spent on the design, marketing [and] land payments.”
The Azizi Group, which now has a total turnover of $1.5bn, was able to finance the payments. Azizi admits that without that support, it is unlikely the development company would have survived what was a debilitating crash across the Dubai property market.
Azizi says the business then turned its attention towards his homeland in Afghanistan, where they duly delivered numerous projects in the capital Kabul after the US pulled out its troops following a decade of conflict.
“The city had to be rebuilt,” he says. “We got involved in large infrastructure projects, such as building sewerage systems, and township projects. We built every project with complete services, including electricity.”
The developer also found success in Frankfurt before reviving its Dubai projects in 2013. Three years later, Azizi Developments is set to finally deliver its first project in Dubai, ending many years of frustration.
“To buy a plot in 2007 and then to deliver them [apartments] in 2016, for any developer, it’s a major loss, because those plots were fully paid for. They’re not plots on a payment plan of ten years. If I had those funds invested in our own bank, I probably would have doubled it by now,” he says.
Of the 24 plots in Al Furjan, ten are under construction, eight of which are open for sales. A total of 856 apartments — a mix of three-, two- and one-beds — will be handed over to buyers this year.
Azizi says the market has changed since he launched the first Al Furjan towers. The latest developments — which are not yet for sale — include 550 one-bed apartments and studios, with some two-bed apartments, while the apartments were typically much bigger in the first builds.
“The studio is a product that is in demand. We have had many investors and clients who want to get a smaller property, where a young couple could live, or [ a] business executive,” he says.
Also in demand are hotel apartments and Azizi plans to use six of the 24 plots to cater for that new segment.
“There are many people here that want to be pampered and have good properties where somebody comes and cleans their property, their laundry is done and there’s a restaurant downstairs,” he says.
Two of the six are already under construction, with two more due to start this year, and the remaining two are due to start construction by early next year.
For each two buildings, he says there will be a different operator, the first of which will be Candace Hotels and Resorts.
“We have been in discussion with several operators — big names. For the first two we have an operator signed but it’s going to take 18 months before the property is ready. We felt that they could provide a lot more service to the product than going to some of these big brands, who can be very rigid. With Candace, they want to have a very boutique type of hotel apartments, but with flexibility and clarity from day one.”
Azizi says they have not sold any properties off-plan, delaying sales until some construction has taken place on the site — a decision apparently influenced by their own experience as buyers in the Dubai property market.
“Most of our clients are not engineers and they don’t know what’s happening in the market and the improvements that have come with escrow accounts being in place,” Azizi says. “They could look back at what’s happened in 2008 and 2009 [when] some got their fingers burnt and they’ve been a bit careful. Projects got delayed and that’s their biggest concern. They want to know when it’s going to be delivered and if it’s not going to be delivered on time, how they will be compensated. They want this clarity.”
He says this is what happened with the company’s most recent launch on The Palm Jumeirah, where construction is 25 percent complete on its Royal Bay Residence. The $95m project, located next to the Anantara Hotel, includes 90 luxury boutique fully serviced residential apartments, and is the first of three developments for the company on The Palm. The project caters to customers’ growing demand for variety in price points, Azizi says.
He is also building a residential project in Healthcare City, a premium, nine-floor development located next to the Marriott Hotel. Construction is due to start this year.
“We want to be in all parts of Dubai. We have land in Dubai World Central, which is [now called] Dubai South, we have land on The Palm and in Healthcare City. We have land even in Ajman, in Emirates City,” Azizi says.
He is also in discussions about a possible joint venture or an outright purchase on three plots in the Business Bay-Downtown area. In Ajman, plans include a 50-storey mixed-use tower, with construction also due to start this year. Azizi says the company will also dip into the villa market, with talks ongoing over a cluster of 50 villas in Al Zorah, north of the City Centre Ajman mall.
“We love villas because you can finish quick as a developer. We don’t want long-term projects for five years,” Azizi says.
Now a fully fledged developer, Azizi’s plans to expand are continuing unabated, with key decisions to be made in June-July. It goes some way to showing his confidence in the Dubai property market, which is supported by Azizi Developments' sales figures last year, which reached $217m.
While he says the market is soft right now, Azizi argues that the Dubai real estate sector remains strong.
“I can only look at our numbers, which have been good. We ended the month of February with the highest sales we have ever had,” he says. “I think it’s the fact that our buildings are getting delivered on time; there were many [sales] through references, not through marketing. I think when we deliver [our first Dubai projects] in May, our sales will increase even further.”
Dubai is one of those cities that does well in both challenging times and good times, he says.
“If everything is up, you’ve got to go to the top city,” he says. “If things are a bit on the soft side, you’ve got to go [to] the best place where the risk is minimum; it’s still Dubai.
“I personally would invest in Paris, but not in Prague. I would put Dubai into the category of Manhattan, Paris, Sydney, Hong Kong, Singapore. Dubai is one of those hubs that will do well, regardless.”
Abu Dhabi, where Azizi Developments opened offices six months ago, is also on the company’s radar for possible developments.
“One of the things that is missing in Abu Dhabi is freehold,” he says. “It’s mostly leasehold [for] 99 years. We’re looking into properties that are freehold. We’re looking at the islands, not in the main city, but projects that are upcoming. There’s nothing concrete there. The more we go there, the more we like it.”
The Azizi Developments ambition doesn’t stop there, with possible international expansion into Canada and the UK, more projects in Germany and investments in areas that are in need of rebuilding, such as Afghanistan.
“My father would like to expand the development business to three different areas: Afghanistan and areas similar to Afghanistan. We would not be shy of looking into Iraq and Syria eventually, because we have the Afghanistan experience,” Azizi says.
Hospitality is also on Azizi’s radar. “We would like to buy properties that are already built and running. We’re interested in building from scratch, but the biggest preference is to buy.”
The company did come close to buying a four-star, 440-key hotel in London, for $140m. But then Azizi Snr was refused a business visa and granted a permit to enter the country for only a limited period. Once again, irritation at the uncontrollable hurdles before him saw Azizi Snr walk away from a deal.
But the days of frustration appear to be finally coming to an end, as a new era awaits for Azizi Developments.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.