Dubai's Damac Properties makes London its first stop in overseas luxury expansion
The global investor base in Dubai’s real estate market encouraged Damac Properties to expand into the luxury home market beyond the Gulf region under the leadership of Ziad El Chaar
Ziad El Chaar joined Damac Properties a decade ago to lead the firm's expansion outside its home market of Dubai, which is known for the world's tallest building, Burj Khalifa, and many other luxury towers.
Damac's first stop beyond the Gulf region is London, a safe-haven for property investors and a competitive battlefield for global developers.
As a latecomer, Damac set the bar at a new level by co-branding with fashion house Versace, taking the property-fashion partnership beyond Dubai to London.
Can you tell us more about the London project?
Damac Properties is the first developer from a Gulf country to launch a project in London.
We believe the launch of this project has raised the bar for all real estate developers in London. This is the first co-branded luxury 50-storey tower in central London. The co-branding is done with one of the biggest fashion houses, Versace.
Our project is one of the very few in London that offer 20,000 square feet for amenities. Our amenities are on the 23rd and 24th floors, not in the basement like in many other projects. We have a 900-square-foot swimming pool, a gym, a spa, the residential lounge and roof garden. Every unit has views.
It's hard to find other projects that have the kind of package we offer, including design, architecture, views, degree of personalisation and co-branding with a fashion house.
Definitely, we surveyed the market [before we decided on price]. But our prices are higher than everybody else in the market today because of the quality of the interior and the level of amenities.
One of the big advantages of this project is that as a developer we are an expert in towers. London doesn't have a lot of towers. But most buildings in Dubai are towers. We have a lot of experience in building towers and delivering fashion residence because we have already built two projects by Versace.
We expect to complete the [London] project by 2020. The timing is in line with the finishing of most infrastructure in the Nine Elms area. This is a regeneration area with many new real estate and infrastructure projects going on now.
Are you looking at other opportunities in London?
We always look for opportunities, always in the luxury segment.
We have a lot of opportunities to evaluate. Once we see all the elements are there, we will go and pitch for the land.
We have in our existing data base homebuyers of 45 nationalities. People from the UK are also our current main customers. So we are going to leverage customers from the Gulf, the UK, India, Pakistan, [mainland] China, Hong Kong and Singapore. Dubai is very close to what London is, with many nationalities investing in the real estate market.
We try as much as possible to branch out into new countries that have depth so that we can do more than one project. This is why we wait quite some time before we select a new area to go to, until we are sure we are able to build up a pipeline in that area. Definitely the main target is still to branch out in our core market, which means the gulf countries. We are still looking for places where we can leverage our customer base. We have 15,000 customers and many of them have been asking us whether we will build in London.
Are you financing the project in London or from Dubai?
We are planning this, but we haven't signed any deal yet. We have our team meeting several financial institutions in London and outside London.
Did you experience any shortage of construction workers and consultants in London as many projects are under development in the Nine Elms area and elsewhere in the city?
We haven't felt any shortage. We already have hired some of the best consultants in London. We have Turner and Townsend doing our project management. We have Kohn Pederson Fox (Associates) as architects for the project. We have WSP for the structure.
How do you plan to build up your own local team?
Our commitment in entering a new market is to make sure we use much of the talent in the local market. So we insisted from day one on utilising consultants in the London market. Our chairman has said that he'll select a contractor from the London market.
We have a few people recruited on the ground. But most of the back office functions today are being handled by our mother company in Dubai. We have 2,200 people in Dubai and we have a big set up that is able to serve as the hub for all the international expansion, including into Saudi Arabia, Qatar and London.
In sales, we have teamed up with JLL. We also rely a lot on leveraging our customer base, where we believe it will generate a good portion of sales on this project. Our own sales teams are in roadshows in Mumbai, Delhi, Doha, Dubai, Abu Dhabi, Bahrain, Oman, Geneva and Paris. They are with our selected team preparing for the roadshow in mainland China in September. We are planning Beijing, Shanghai, Tianjin and Hangzhou.
Can you talk about Damac Properties' expansion in Dubai and other Gulf cities?
We as a company started in 2003 in Dubai. To date we have delivered 14,000 units, all in the luxury segment. We have 38,000 units still under development. We are a publicly listed company with a market value north of US$4 billion. We have a development portfolio valued at US$20 billion. Eighty per cent of our portfolio is in our hometown of Dubai.
We will continue to grow our inventory of land every year to maintain our market share. We are the biggest developer in sales. We sold 2.8 billion dirham (HK$5.9 billion) in the first quarter.
The main expansion happened in the Gulf countries. That started in 2005 and I was actually hired to lead the expansion outside Dubai.
What is the state of the Dubai property market? There is a lot of talk about a downturn.
Dubai is a global market. About 80 per cent of buyers are non-residents. We think it is a much better and stable market than anyone who just relies on buyers from one country. Otherwise, any movement in the population of the country and interest rate changes will affect the market. In Dubai you always have a lot of other factors to help maintain the stability of the market.
Dubai is very much reliant on how much we as developers and the government go and market it as a destination. We bring in people from different countries and areas. We haven't explored all the areas yet. The Dubai airport has 75 million people passing through every year. If tourism booms, you need more people to work in the country and they need to find a place to live. The growth in population will always fuel housing demand. But they are only 20 per cent to 30 per cent of the market. Other buyers are for vacations and weekends because of high return.