Damac MD says Saudi projects on schedule

Dubai-based Damac Properties, which currently has three projects in Saudi Arabia, is looking to expand further in the kingdom. Managing director Ziad El Chaar tells Argaam that the company’s waiting to find the right land at the right price.

Q: What is the status of your real estate projects, both residential and hospitality, in Saudi Arabia?

A: Damac Properties from a real estate perspective we have 15,500 units completed across our portfolio. Of that, one project— our first in Saudi Arabia— called Al Jawharah, a residential tower in Jeddah, was completed last year.

We have two other projects in Riyadh, both of them are topped-out and we hope to deliver both of them within a year. One of them is a serviced hotel apartment project by Paramount and the second tower is a serviced hotel project by Fendi. Both of those are part of our hospitality offering.

Q: Do you have any expansion plans for Saudi Arabia?

A: We are a Dubai-based company and 90 percent of our business is Dubai, but the areas that we look to expand are Saudi Arabia and Qatar. They are the two regional countries where we see potential. We are on the lookout for strategic land parcels in Saudi Arabia and if we can get the right land at the right price, we certainly would be very interested.

Q: Has the slowdown in the kingdom’s construction sector affected Damac’s projects?

A: It hasn’t affected the two of our projects as they were at quite an advanced stage of development. One of them we have completed and the other two are already topped out.

Q: How do you think the Saudi government’s latest diversification plans will affect the  real estate sector?

A: The Saudi government’s recent initiatives are beneficial for the economy. The free land (white land tax) is a big one. If land can free up for purchase and development, the opportunities are there.

For us, it is not just the approval of the white land tax, is also the subsequent consequence of that implementation. From a developer’s perspective, land price has to fall within a certain bracket. But because of the situation in Saudi, the only land that we can get to fall within the bracket is in not a prime area.

We need [first] to see the white tax being implemented, and also the behavioral patterns of the land owners post-implementation. Then we can assess whether to enter into a partnership, a JV (joint venture) or buy our own land.

Q: How will the real estate and tourism industry change over the next two years?

A: When you have the government continuing to spend, when all other economic factors in the market continue to grow, when we see countries like China opening up and airlines adding more routes from China to Dubai… We think from a tourism perspective it will grow. We are bullish in the tourism industry.

And with the government’s drive to get over the softening on real estate, we are optimistic. We think the real estate market in general in the region has been softening. But that was a good thing. 2012-14 saw 50 percent price growth, if that had kept growing we would have created another bubble.

We see rest of 2016 being a steady market, with a potential price appreciation again in 2017-18 leading up to things like the Expo 2020.

Q: How will events like the UAE’s Expo 2020 and Qatar’s Football World Cup affect tourism?

A: The tourism sector in Dubai, even before the Expo, was growing 7 percent every year. The drivers for tourism in Dubai, whether it is safety, security, connectivity, are strong.

We have two properties in the Expo 2020. But these were already under development before the Expo announcement. Expo 2020 was the cherry on the cake, but it wasn’t the cake. Dubai was going to do well irrespective of the Expo.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com