Damac’s founder and chairman Hussain Sajwani.
Damac
When Dubai developer Damac Properties listed its shares on the London Stock Exchange at the end of last year, the initial response from investors appeared lukewarm. Its shares after all were listed at the bottom of its price range and the company raised $379 million, shy of its $500 million target.
Four months later, Damac’s shares have risen more than 35%, mirroring the buoyant mood around Dubai’s real estate market where prices have rebounded from a global economic crisis-induced slump and a slew of new projects have been announced.
Damac, which is developing Donald Trump-branded luxury mansions, last month said its full-year 2013 net profit tripled to $642 million as property prices soared in its home market. Meanwhile, the developer has been holding roadshows in Singapore, London and the U.A.E. and is on the cusp of a potential $500 million Islamic bond sale.
Here, Damac’s founder and chairman Hussain Sajwani tells the Wall Street Journal about the company’s growth plans.
WSJ: Damac is still very much a Dubai-centric company. Do you have international aspirations that would diversify your revenue streams?
Mr. Sajwani: “Dubai is very much our core market, with over 80% of our revenues coming from the emirate and, while we have diversified into other geographies, such as Saudi Arabia, where we see significant opportunities to leverage our business model and generate value, the attractiveness of the opportunity in Dubai means that it will remain at the heart of the business.”
“Dubai has many characteristics that we feel position it very strongly for future growth: its location, transport infrastructure, rapidly growing economy, safe haven status and attractions, both as a business and leisure destination, all point towards continued demand for property underpinning sustainable growth in the real estate sector.”
WSJ: Dubai’s real estate market is booming again – are there any risks of a new bubble being created?
Mr. Sajwani: “2014 is a very different market to 2008; the lessons of the last cycle have undoubtedly been learned, and the measures put in place by the government and the regulators have been effective in controlling the excesses of the past. What is driving the Dubai real estate market now is strong and sustainable underlying demand, not speculation, as a result of economic growth in the region and Damac is very well positioned to benefit from this long term trend.”
Visitors inspect the Damac Towers by Paramount Hotels Resorts at Global Cityscape 2013 in Dubai.
European Pressphoto Agency
WSJ: Damac may be issuing a sukuk soon. Can you tell us more about the group’s upcoming projects?
Mr. Sajwani: “During 2013, we acquired land with the potential for over 2,000 new units, and we continue to look for land acquisition opportunities. We currently have exciting projects ongoing alongside a number of luxury brands including Versace Home, the Trump Organization, Fendi Casa and Paramount Hotels and Resorts and we will look to leverage these opportunities to create further flagship projects as we expand across the Middle East.”
WSJ: What is Damac’s outlook for the near future?
Mr. Sajwani: “We see Expo as an enormous opportunity for Damac, with recent estimates suggesting that Dubai will need to double its hospitality capacity to more than 150,000 rooms by 2020.”
“We have been expanding our hospitality operator Damac Maison in response to demand, and are now offering DAMAC Maison’s services to customers in respect of 16 of the company’s current pipeline projects, comprising over 8,000 units. The tourism market has performed extremely strongly, with 66 million people passing through Dubai airport in 2013, of which 12 million were visiting Dubai. As the World Expo in 2020 approaches, the number of visitors bound for Dubai is expected to grow to 20 million, with an accompanying surge in demand for hotel rooms, residential property and services.”
Q&A: Damac Chairman Says World Expo an Enormous Opportunity
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