Abu Dhabi-based Tasweek Real Estate Marketing & Development believes Dubai's real estate industry has "strong fundamentals" and expects the sector to remain "dynamic and profitable".
In an interview with Emirates Business, Masood Al Awar, CEO, Tasweek Real Estate Marketing & Development, said: "We want to be the first mover in this market and take advantage of the opportunities it presents as it transitions away from the downturn. Dubai's real estate industry has strong fundamentals and an infrastructure that is supported by other economic sectors, so we expect it to remain dynamic and profitable."
Al Awar said the company is targeting income-bearing properties and assets that offer a minimum of 10 to 15 per cent returns.
"We are working on closing many different deals that have different components of short term and long term. Deals will be announced to the stakeholders in due course," he added.
You are currently evaluating properties worth more than $400 million (Dh1.46 billion) in the UAE, whereas last year you decided to invest only $250m. Have you increased your investment portfolio size?
We scout properties depending on the availability of opportunities in our market and not just to increase our investment portfolio. It is quite challenging to make decisions when offerings are double the demand and the due diligence involved requires a lot of effort. Part of the preparation of our $250m portfolio was the sourcing of the best available prospects, which we are once again doing this year. We do not intend to increase the size of our investment portfolio, but if the right opportunities come, then we can easily structure other portfolios or extend the existing one.
The Dubai market has a glut of residential and commercial properties. On what basis does Tasweek evaluate the properties it decides to buy?
We have a very clear investment strategy of targeting income-bearing trophy strategic properties and assets that offer a minimum of 10 to 15 per cent returns. We also ensure that the properties we eye have clear legal and audited financials from a reputable partner and owner. This gives us much-needed focus, given the huge amount of opportunities still available in Dubai.
So far, the only property we know of Tasweek having bought is in the Liberty House. When do you plan to close your second deal?
We are working on closing many different deals that have different components of short term and long term and will be announced to the stakeholders in due course
How confident are you of the Dubai property market since 60 per cent of your investments is targeted towards this emirate?
Our confidence in Dubai is based on the information we constantly gather from our various research activities and channels. We want to be the first mover in this market and take advantage of the opportunities it presents as it transitions away from the downturn. Dubai's real estate industry has strong fundamentals and an infrastructure that is supported by other economic sectors, so we expect it to remain dynamic and profitable.
Commercial or residential market which do you believe will recover the earliest in Dubai and Abu Dhabi?
As of the moment, retail and hospitality offer better opportunities than residential and commercial. The residential segment is bound to pick up soon, though, as economic recovery gains momentum. I believe residential sector and business always support the other commercial and retail sectors.
There is a shortage of residential units in Abu Dhabi. Will the company buy off-plan units in the emirate?
We prefer to keep on purchasing completed properties and joint-venturing with our partners to complete existing projects since we have the capabilities to develop productive long-term real estate projects. However, we are also open to off-plan opportunities, as long as the deal involves an excellent package and a sound structure.
Do you expect the UAE's off-plan market will revive once again?
We can definitely look forward to improvements in the off-plan market, especially as we have seen a lot of governmental support and the introduction of new real estate legislation and laws. This must be accompanied, however, with radical changes to the offerings and packaging for off-plan property sales transactions.
What is your company's exit strategy when it comes to selling your assets?
Our investment strategies have clear objectives and exit measures. We will not be prone to selling our existing assets as this would interfere with our long-term investment strategy.
When we do sell, we make sure that we are purchasing far better properties or entering into high-potential investment opportunities as we balance our short, medium and long- term investment returns.
Where do opportunities exist within the hospitality sector?
There are huge opportunities within the hospitality sector and we are currently considering a number of them closely. In Abu Dhabi, we are looking at furnished apartments, while in Dubai we are exploring a couple of hotels with reputable partners in strategic locations.
The Ritz Carlton is a great asset and any investor would consider it as long as the numbers match their interest or need.
What new strategies should real estate companies adopt now as the global economy moves towards a recovery phase?
Based on my experience and knowledge, I can say that the only way for real estate companies to ensure sustainability is to adopt a customer-focused approach to doing business in today's situation and beyond.
Many organisations and their clients failed to fully support each other during the crisis due to their weak relationships and underdeveloped communication strategies and objectives.
Do you believe that the federal government should have one regulatory body to oversee the realty industry in the UAE?
It would definitely support the sector's future growth. However, we have to take note that this is not very easy and may lead to a complicated setup. It is worth noting that in different parts of the world, different property laws exist in one country.
How should companies balance their internal and external investment offerings to maximise opportunities in the UAE and across the Mena region?
There should be a clear mandate to design the real estate investment offering that can clearly target internal investors or external ones. A single offer cannot match different investors' appetite.
Are you in talks with any regional companies for buying stakes or making equity investments?
We have no such plans as of the moment but if opportunities emerge that promise rewarding returns and a complementary strategy for the company, then why not.
By Parag Deulgaonkar
© Emirates Business 24/7 2010
