- City Fajr Shuruq Duhr Asr Magrib Isha
- Dubai 05:33 06:52 12:16 15:13 17:35 18:54
(SATISH KUMAR) | |
Although it may look like Nakheel is preoccupied with its iconic projects in Dubai, the real estate development company is “quietly” and in a “well-measured” way growing its exposure to international markets.
The company, which has investments with MGM Mirage in the United States and the Mirvac Group of Australia as well as an existing development management team in London, has struck a joint venture with City Developments Limited of Singapore.
Nakheel, which has a portfolio of projects worth $60 billion (Dh220bn), including The Palm Triology, The World and The Universe in Dubai, will be exporting the methodology and technology that it has used in the reclamation process to other locations.
“There are a number of countries that are interested in understanding how we go about it and came to talk to us about what it might mean for them,” said Nakheel Chief Executive Officer Chris O’Donnell.
O’Donnell spoke to Emirates Business about Nakheel’s expansion plans, joint ventures and new investments.
How is work progressing on The Palms, The World and your other projects?
We have now handed over all the shoreline apartments and 20 villas to customers on The Palm Jumeirah, which is first in the Palm series. The Atlantis project will be finished by September this year, while construction has commenced on a large number of hotels on the Crescent.
So by the end of 2008, Palm Jumeirah will be transitioned from being predominantly a construction site to a real community that residents are able to enjoy.
We are also building a sales centre on the Palm Deira later in the year. The majority of earthwork is completed on the Al Furjan project and a sales centre will be coming up there in two to three months. In short, we have quite a lot under way across the organisation.
Can you explain the structure of Nakheel and where does Istithmar real estate fit into your business plans?
Nakheel is set up as an international real estate company. The majority of our projects are here in Dubai and we are really trying to set our focus on various segments of the market through Nakheel Hotels, Nakheel Funds Management, Nakheel Retail and Nakheel International. We have broken down Istithmar real estate and merged it with our international, hotel and retail business units.
You launched projects worth $60bn by 2008.
We will be bigger… but exactly how much bigger nobody knows. We are focused on the implementation of the vision that we have delivered to the marketplace here in Dubai and that is what we will be focusing on in the next two to three years. What that means is that we will be producing and launching more “individual” projects within the projects already under way.
In the next five years, Nakheel Retail, which is currently running Ibn Battuta Mall and Dragon Mart, will be developing about a million square metres of retail space with major centres at the Waterfront, Deira and International City.
We own a number of hotels in overseas markets and are looking at growing this portfolio. But we are taking it a little bit easy over the next couple of months just to really see how the overall property markets settle after the sub-prime issues that we have experienced in the last few months.
We are investing in major development projects, mixed-use development projects, hotels and office building in the UK and the US. We will consider investing there wherever an opportunity provides us with the sort of financial returns we are looking for.
You have spoken about over-reliance on labour and moving towards mechanisation.
A lot of labour in Dubai is relatively unskilled. If you can do a job with two highly skilled individuals versus 10 unskilled, I think you are better off using the more highly skilled people.
Do you follow what you advocate?
Yes, we are aligning ourselves with more skilled contractors and contractors who are opened to utilisation of a more skilled workforce and mechanisation. For instance the introduction of Leighton Holdings with Al Habtoor Engineering in this market merges the knowledge and skill of Leighton with the local knowledge of Al Habtoor.
Inflation is rising and so are raw material prices.
We take into account increasing costs before we commence any project. So we do not see that being a major concern for us, as inflation is built into all our projects.
You have a presence in the United States and Australia. Which other market are you looking to enter this year?
We are managing the MGM relationship in Las Vegas and have just entered the Grand Avenue project in Los Angeles.
We have taken a stake in the Mirvac Group of Australia and have entered Singapore through a joint venture. Moreover, we have an existing development management team in London, which is part of Nakheel International, with projects on the ground.
Along with Mirvac and Leighton, Nakheel is bidding for a major waterfront site in Sydney, called East Darling Harbour. We will continue to look at markets that we have talked about. Besides, we are looking to get more exposure into the Eastern Europe and Russian markets as well.
What kind of synergy or returns do you expect from your Mirvac investment?
Mirvac is an Australian company, which is broadly spread across investment, funds management and the development sphere. We see an opportunity for them and us to enter Australia, Dubai and other parts of the world through joint ventures.
From our perspective, we may be utilising their design and development skills as Australia’s largest residential developers. They have some innovative designs, which by including in some of our developments, we can benefit from.
Any plans to increase your stake?
I think a 12.5 per cent stake is enough for us at this point. We have always said the investment in Mirvac was to show our interest in their business, which could lead to further joint venture development work with them. And I am confident that this will happen.
Are any more such “like-minded” investments on the list?
There are other groups like Mirvac in various other markets around the world. But we are looking to align ourselves with “like-minded” organisations.
Is Nakheel still committed to dollar borrowing?
The market still has a desire for dollar borrowings. All our previous borrowings have been in US dollars and I presume we will continue along similar lines.
Do you see this as a problem?
Certain projects have been delayed in Dubai, driven by many things such as the recent labour amnesty and raw material shortages. What that comes down to is ensuring that contractors logistically plan out projects more efficiently than perhaps they have done in the past.
Do you plan to replicate your iconic projects in other parts of the world?
Do you plan to foray into other emirates?
Not at this stage. We are very focused on Dubai and are ensuring we deliver good quality products to our customers. We are growing our international business, but that is not to say that we would miss out on opportunities in the Emirates or other GCC countries.
When will we see a demand and supply equilibrium happening in the UAE?
Demand will continue to outstrip supply for the next three to five years and that will predominantly be driven by capacity constraints within the construction industry.
Chief Executive Officer for Nakheel, O’Donnell directly oversees all company operations and developments, and plays a key role in the strategic direction of the company. He reports to Nakheel’s Executive Chairman.
O’Donnell has over 30 years’ experience in the property industry. Before joining Nakheel in June 2006, he spent five years as managing director of the Investa Property Group in Australia where, under his leadership, the Australian Stock Exchange listed company increased its funds under management from A$800 million (Dh2.7bn) to A$6.2 billion.
A number of transactions were conducted during this period including a hostile takeover of Principal Office Fund (A$1.9bn) in 2003 and the acquisition of one of the largest residential property companies in Australia, Clarendon Property Group Pty Limited (A$645m) in 2005.
O’Donnell has also held other senior executive positions with prominent Australian organisations including Lend Lease, Leighton and Westpac Banking Corporation.
With a keen personal focus on sustainability and environmental issues, he was appointed a Director of the Green Building Council of Australia in 2004 and, during that year, was recognised by the NSW Government Department of Energy Utilities and Sustainability and named as the Green Globe Ambassador.
|
Follow Emirates 24|7 on Google News.