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Real estate still a good investment

Friday, Aug 07, 2009

Dubai: The real estate sector is still a good option for investment, despite the current global economic slump, a top UAE businessman says.

"It is believed that [in] the long term business investors could have more than 20 per cent profit if they invest in real estate," Eqbal Al Yousuf, president of Al Yousuf Group , told Gulf News in an exclusive interview.

"There is no other alternative market for investors and Dubai is still the Middle East's business hub and an attractive destination for investors since its doors were opened to foreign entrepreneurs.

"There are still opportunities for good investments and real estate has the best potential to develop new business in the UAE market amid the economic crisis."

Eqbal Al Yousuf holds two degrees, one in computer sciences and another in economics from the University of Minnesota, in the United States. He joined the family business, Al Yousuf Group , one of the largest business houses in Dubai, 26 years ago immediately after graduation in 1983.

In an exclusive interview, Eqbal elaborated on his views on the country's economy. Excerpts:

Gulf News: Like most countries globally, economic crisis hampered many businesses in the UAE, can you tell us how much your business has been affected?

Eqbal Al Yousuf: The economic crisis is a global one and the Dubai market has been affected but not as [badly] as it appeared [from media coverage]. The impact of the economic downturn in the UAE compared with Europe and the US is similar to the contrast between heaven and hell. The baseless unrealistic coverage about the impact of the economic crisis on the UAE has severely affected our morale. However, the effect of the downturn on Al Yousuf business is not really big ... [In] the real estate sector, which represents 50 per cent of the [company's activities], the drop is 5 per cent.

Considering Al Yousuf is one of the leading companies in the UAE, how did you manage the situation?

To save our business we played the role of observer during the global economic crisis. We finalised the ongoing projects but we [put a] hold on all the investment plans since December 2008. However, now it is the time to start up new business plans.

On the other side, we reduced the company cost by terminating the contracts of a number of Al Yousuf employees.

Do you believe that Dubai has started recovering from the crisis?

Dubai's market didn't collapse or suffer as badly as it appeared in the international media. What happened in the market is more a morale than a materialistic issue. People are holding their money trying to protect their businesses. Also banks became very strict and didn't facilitate loans and cash flow procedures. In business you should not be optimistic or pessimistic ... you should be realistic and rely on facts only.

Yes, the UAE market has been affected by the economic downturn but we should not forget that this is a global crisis.

People who have [been] badly affected by the economic downturn are those who went beyond their financial capacity and set up businesses. Those are small entrepreneurs and are few.

Dubai market needs this correction as what happened in 2008 was illogical as prices soared, leading to a great chaos ... I feel that the UAE market now is more stable and embedded [with good opportunities for investors].

Do you think you might move away from real estate into other sectors that you had never thought of before?

No, definitely not. There will not be any change in Al Yousuf policy.

We will keep investing in the real estate sector and I am thinking of buying property immediately if banks allow ... cash facilities. I believe that there will not be a drop in the real estate sector any more. However, the prices of properties and rent are excellent and reasonable.

Al Yousuf Motors is one of your main businesses, what is your plan to improve this sector and increase sales?

Al Yousuf Motors represent 15 per cent of the group business. It encompasses the company's operations in motor vehicles, motorcycles, marine engines, and generators, golf carts, water vehicles, boats, spare parts, car leasing and taxi services.

Actually we are facing a 50 per cent drop in motor sales. At the moment and during the downturn we can do nothing towards improving motor sales. We are in a transitional period [and] should watch the market carefully before ... developing any plan.

However, the reason behind the drop of motor sales is banks. [There is always demand] but banks don't facilitate loan procedures.

What about future investment plans for Al Yousuf? Do you have plans to invest abroad?

The company [put a hold on] all the investment plans since December 2008, but now it is time to go on with our new projects. We are looking to invest in the family entertainment sectors.

What we have [in terms of an] entertainment sector in Dubai is not enough. Dubai lacks indoor sport centres ... However, it has good potential for new, different sorts of investments. We want to bring something new to the amusement sector in the UAE. Currently we are planning to have a go-cart project. Entertainment sectors still need indoor sport centres for tennis and football.

In terms of investing outside the UAE, we do have investments in Europe and the US and this is a critical mistake that Al Yousuf committed [in its] history. Al Yousulf was a Dubai-based company from when it was established in 1953 until 2007 when we decided to expand our business in Europe and the US and especially in the motor sector.

Our business loss could be estimated at up to 60 per cent. So no more investment outside the UAE and I don't recommend businesses abroad.

Will there be new opportunities for good investments and what is your prediction for business in the UAE market?

There is no other alternative market for investors and Dubai is still the Middle East's business hub and an attractive destination for investors since its doors were opened to foreign entrepreneurs.

There are still opportunities for good investments and real estate has the best potential to develop new business in the UAE market amid the economic crisis.

Meantime, the profit of real estate business is over 20 per cent, but in the long term. However, real estate investors who think that they can achieve this profit in two months as happened in 2008, are wrong. Dubai's market is living a new era of prosperity.

It is just a matter of the market regaining its confidence again.

Background: Al Yousuf group

Al Yousuf Group is a major business group in the Middle East. It was founded by Yousuf Habib Al Yousuf in 1953 to play a major role in the emergence of the UAE and Dubai in particular as the economic model for the region.

Al Yousuf has developed partnerships with many of the world's leading brand names.

Al Yousuf is a family-owned commercial group with a diverse portfolio of motors, technology and real estate.


By Zaher Bitar, Staff Reporter

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