Fakhruddin Properties was established at the end of 2004 as the development arm of the Fakhruddin Group, a family business founded in Dubai in 1963. The group, which specialises in real estate management services, has experienced huge growth in the UAE.
Fakhruddin Properties has grabbed a significant share of the real estate market in a short time. It started with Dh500,000 paid-up capital and its assets are now estimated at Dh2 billion.
Yusuf Fakhruddin, CEO of Fakhruddin Properties, talked to Emirates Business about the company’s success, his vision for the company and its future plans.
Why did your group decide to establish Fakhruddin Properties?
The management witnessed the launch of the freehold title and the tremendous growth of the sector and felt there was a need for a development firm that focused on the freehold market. The company has a full-fledged facilities management division to ensure that every property is in top shape and any problems are addressed promptly.
How was 2007 for your company and what were the profit figures?
Last year was very successful. Our revenues were far higher than we had expected, they increased by 100 per cent compared to 2006 and our profits increased by a similar amount. I cannot give a figure for the profits. We are a family business so profits are added to capital and our assets are now worth Dh2 billion.
What is your view of the property development sector in general?
Judging from our achievement of building up Dh2bn of assets from an initial paid-up capital of Dh500,000 in just three years, the property sector is growing very fast. Last year was very successful for the sector because the government eliminated the unhealthy practices of some developers by introducing the escrow law.
How did the law affect the market?
It has increased the reliability and credibility of the market for both existing and new developers. It has streamlined the practices of companies and ensured they are financially sound. Companies can no longer take money from buyers to invest in other businesses and wait until they obtain the profits before beginning construction.
The law has encouraged more developers to invest in the market. And it has resulted in developers focusing on the quality of their products to ensure they are competitive. For buyers, the law has ensured developers comply with the announced delivery dates, which means investors start obtaining a return more quickly. The risk factor has been minimised – if not eliminated.
How does the escrow law encourage developers to focus on quality?
I differentiate between registration and quality. Not all registered companies necessarily provide the same level of quality – they can still compete in this area. So companies have focused on this element to ensure they are competitive.
What other significant developments did the sector see last year?
The setting up of a specialised body to regulate the market in Dubai, the Real Estate Regulatory Authority, and the reduction of the rent cap to seven per cent were important initiatives. Both moves were intended to streamline the property market.
We have heard that your company will be involved in building Ajman Airport – can you confirm this?
Yes, it is true. Our company will participate in the construction works at the airport.
How will this happen as we know that the Government of Ajman has chosen a consortium of four Australian companies to execute the project?
We will participate under the consortium and will supply local expertise to the project in terms of sales and marketing as well as project development. And we will be carrying out some of the development work.
Are you planning to explore other markets, especially other GCC states?
At the moment we are focusing on Dubai and the UAE. However, our research team is studying promising opportunities in other GCC countries.
What challenges have you faced over the past year and how did you overcome them?
The main challenge is competition. A large number of companies are operating in the market and everyone is aiming to grab a share. However, clients have become aware that not all developers offer the same quality. So our focus is not only on timely delivery but on quality and customer service as well.
What new trends are you seeing in the market and how do you deal with them?
The latest trend is the provision of smart technology-enabled properties. To keep pace with this the Fakhruddin Group has signed an agreement with EON Inks Automation to supply Fakhruddin Properties with the latest top-end home automation solutions.
Smart-home packages will be integrated into the upcoming Grand Lagoons and the Maimoon Twin Towers residential projects being developed on Dubai Creek and at Jumeirah Village South, respectively.
Are you going to offer smart technologies in other projects?
The standard package will be installed at all our projects starting with the Grand Lagoons and the Maimoon Twin Towers. This can be upgraded or customised as required by the property owner.
What do you think about the prospects for 2008?
In general the UAE economy has witnessed growth. The growth in GDP has greatly exceeded expectations and this gives confidence in the UAE market in general and the property sector in particular. I expect the sector will continue to grow.
What new projects are you planning?
In the pipeline are Downtown in Jebel Ali, a commercial residential tower, the Villas in Dubailand, a commercial tower in Dubai Industrial City and Fakhruddin Mall in Ajman. The total investment value of these projects is about Dh4.6bn.
And what real estate developments are already under way?
Work is in progress on the Oasis High Park, a residential eight-storey building at Dubai Silicon Oasis scheduled for completion in December, and Lake Central, a 22-floor commercial tower at Business Bay scheduled for completion in December 2009. The Carol Hotel Apartments at Dubai Sports City is a 21-floor tower scheduled for completion in December 2010. This project is in the pre-launch sales phase.
We have also the Grand Lagoons, a 14-floor residential tower at Dubai Lagoons, Trafalgar Central at International City and Maimoon Twin Towers at Jumeirah Village South, which are all scheduled for completion in December 2009.
What are your expectations for the new developments?
We have clients who are registered with the company and are ready to buy from any of our projects. As a result 50 per cent of the projects that will be rolled out this year will be sold even before pre-launch selling starts.
Why is there such a strong demand for your properties?
We adopt a proactive focus that has led to the company already having a diverse portfolio of freehold properties. We are able to meet the varying needs of customers in prestigious projects including International City, Silicon Oasis, Sports city, Jumeirah Village South, the Lagoons and Business Bay.
What is your company’s vision?
Our vision is based on working in an organised way. Our company manages projects from concept to implementation. Every project begins with identifying the business potential of a piece of land. We conduct studies to understand the potential and how to maximise it to ensure the highest revenues for us as well as the buyers. For example, we studied the developments at Dubai Sports City and found that the need was for an hotel apartment more than anything else.
Are you planning to announce an IPO?
We are giving some thought to launching an IPO but this would depend on the opportunities it would offer.
Do you think your company is capable of meeting future demands?
It is one big family group. Our focus is to have the right people – when you have the right team anything is achievable.
CEO, Fakhruddin Properties
Yusuf joined the family business after graduating from the London School of Economics in 2002. He held a number of management posts before becoming CEO of the development subsidiary Fakhruddin Properties when it was formed in 2004.
Dh500,000: Fakhruddin Properties’ start-up capital in 2004
Dh2bn: The value of the company’s assets last year
100%: The increase in revenues in 2007 compared to 2006
Fakhruddin grows 100% in 2007 with assets at Dh2 billion