Hydra: tower projects face 'no delays'
Hydra Properties is a leading Abu Dhabi-based international real estate company. It was founded little more than a year ago but has already launched a host of ambitious projects in the UAE and abroad.
Executive Chairman Dr Sulaiman Al Fahim, in an exclusive interview with Emirates Business, talks of his plans to increase the number of foreigners investing in his company’s developments. He sets out Hydra’s plans for the massive Gate project in Abu Dhabi and reveals that the full launch of this development will take place next year. And he sets the record straight on the contentious issue of linking property ownership to the right of residence.
Hydra has quickly established itself as a major real estate developer, but what was your first project?
We started with the launch of Hydra Towers, five commercial buildings in Business Bay, Dubai. One of them is for businesswomen – the first of its kind in the world. The tower maintains the traditions, culture and habits of, in particular, UAE National businesswomen. Work has started and completion is expected in early 2010.
And how did you follow up that venture?
Our second project is a 45-storey tower near Burj Dubai comprising a hotel and luxury flats – completion is also expected in 2010. In Jumeirah Village we have the 30-storey Hydra Twin Towers – one will contain hotel apartments. After our Dubai successes we launched Hydra Village in Abu Dhabi near Al Shahama area. The project, the first environment-friendly one in Abu Dhabi, will contain 2,500 housing units. There will be large green areas and facilities for recycling waste, and it will be a non-smoking area. Work on this project started last week.
What other projects do you have in Abu Dhabi?
We have the Gate project which is being built over an area of a million square metres near Abu Dhabi International Airport. Part of the land was allocated for the Al Reef Hydra Villas currently being developed by Manazel Properties. We have launched the 27-building Golf Walk project at the Gate, which will have flats costing from Dh600,000 to Dh2m. We have signed a contract with Greg Norman, one of the most famous golf course designers in the world. Norman was in Abu Dhabi recently and has started working with us. Hydra will fully launch the Gate project next year – the existing projects occupy 10 per cent of the area.
Why are most of your Abu Dhabi projects concentrated on Al Reem Island?
Al Reem is the best site for real estate investment in Abu Dhabi at the moment. We have launched 13 towers there, the first being the Marina Spirit, which consists of two buildings. Each will have 30 storeys and we are executing the project with Tamouh. We have started work on the infrastructure and the project will be completed in 2010. Also on the way is Hydra Avenue, six residential towers in the shape of a crescent with shops overlooking the sea. Work will start next month and be completed in mid-2011.
What about your developments outside the UAE?
We attach great importance to the execution of real estate projects outside the country. We started with Hydra Waves in Mexico on the Pacific coast. It consists of four residential towers – work on the first started months ago and will be completed next year. We opted to wait before starting the other towers to study the market.
How do you regard the Abu Dhabi Government’s attitude towards property developers – do you think it provides a good working environment?
The government has provided the correct economic and legislative climate and infrastructure. I believe the most important thing it has done is to draw up the 2030 plan, which guides investors on where in the emirate they should put their money, when I should present my projects to investors and how I should distribute my investments. The plan is quite clear and there is no random construction. I can confirm that Abu Dhabi is attracting foreign investments at a fast rate. Also property prices are rising in a balanced manner. Undoubtedly, what Abu Dhabi has provided for developers has not been secured by any other government of the world. No city or state has set such a long-term plan – most governments set five-or 10-year programmes. The plan contains all the details required by the real estate sector such as residential building heights and information about the necessary infrastructure.
There have been delays in the completion of the majority of developers’ projects in Abu Dhabi. Why is that?
Most of the big projects will be ready by 2009. They will have thousands of residential units and offices but will not meet the market’s needs. I think the year 2010 will witness a balance between supply and demand, to a certain extent, once all the current housing projects are completed. But I stress that high demand will persist since the emirate’s population is growing in an unprecedented manner. Also foreign investment is increasing greatly and plays a big role in creating new job opportunities.
What proportion of your projects is being taken up by foreign investors?
It has now reached 30 per cent and we intend to push it up to 50 per cent. We have launched an unprecedented marketing plan to attract foreign investors, especially Europeans and Americans. We are working on a promotional TV programme in English that will run on several satellite channels in the United States, India, South-East Asia and the Gulf. We aim to market Abu Dhabi as an attractive investment environment and are inviting businessmen, investors and real estate figures to get to know the emirate and the future of foreign investment.
In your contracts do you link owning a property with the right of residence in the country outside Abu Dhabi? And do you think the 99-year ownership rule is a good thing?
We do not link the purchase by foreign investors of our properties with the right of residence. Our freehold projects are for 99 years and I think this is normal. The 99-year ownership law was not invented by Abu Dhabi – it exists in the majority of countries, including America and Britain.
I have met many foreigners who said they were happy with the law and it is important to make the investor aware of their rights and obligations.
You have launched towers at Al Reem Island but the infrastructure is not yet ready. Do you expect to hand over the units to the investors on time?
Al Reem is being built over 15 years and by the end of 2009 a large part of the project will ready – Marina Square, 15 towers, the infrastructure, streets and the marina. Work is progressing very quickly compared with projects in other emirates and I believe Al Reem will be completed ahead of schedule. I can confirm that our residential tower units will be handed over with no delays.
The infrastructure of the majority of Abu Dhabi projects has not been completed and investors say the work is going slowly. They have cited Al Raha Beach as an example – what do you say to that?
On the contrary, Al Raha Beach is going very well and the major developer, Aldar Properties, has completed the infrastructure and has started construction work on the central market. The public expects projects to be executed overnight, but such developments need very strong infrastructure and that takes time to build.
How do you overcome the problem of the rising prices of construction materials, especially the unprecedented hike in the cost of steel and cement?
We have bought a 20 per cent share of Ras Al Khaimah Cement Company and this allows us to secure the cement we need for our projects at very reasonable prices. Also the company sent teams to Turkey, Japan, China and Costa Rica to sign deals for raw materials, labour and engineers and this has greatly reduced the cost of our projects. Regrettably some developers are lazy and want the government to provide them with everything, starting with land, steel and cement, which is not acceptable because they are developers rather than marketers. And I believe development companies can save a great deal and increase their profits if they conclude strategic alliances with each other to buy large quantities of construction materials. Several developers have stopped working on residential tower projects because of the rise in material prices and this is a big problem. Large companies should play a role in protecting the market from the risk of projects being halted.
Do you not think the medium-cost housing market in Abu Dhabi and the UAE in general is big enough, given that demand is very high?
The market urgently needs medium-cost housing which should comprise no less than 50 per cent of the volume of new projects since medium-income people, Nationals and expatriates alike, make up half the country’s residents, if not more.
What does the real estate sector in Abu Dhabi, in particular, and the UAE in general need?
The country needs long-term plans similar to those drawn up by Abu Dhabi, and strong infrastructure should be made available. Real estate legislation should be constantly updated. Also governments should build more ports and encourage investors to stay in the UAE for as long as possible.
Dr Sulaiman Al Fahim, Executive Chairman, Hydra Properties
Sulaiman Al Fahim, who was born in 1977, obtained a bachelor’s degree in business administration and marketing at Emirates University. In addition he obtained a Masters in financial business administration, a second Masters in real estate investment and a PhD in the global real estate sector from the American University of Washington. He worked as a financial adviser to the Dubai Government and later became business development manager of Tamweel, where he played a major role in the provision of Islamic finance. He set up a real estate consultancy and in 2006 established Hydra Properties.
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