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18 April 2024

‘Quality architecture will put us on the map’

By Parag Deulgaonkar



Aldar Properties has no intentions of building the tallest tower, nor does it plan to announce the world’s biggest project, according to its chief executive officer.


“We believe good quality architecture will put us on the world map,” says Ronald S Barrott. Although he believes Abu Dhabi will achieve a demand-supply equilibrium in the next five years, property prices – residential and commercial – will surpass those of Dubai in the next few years. Barrott (pictured above) spoke to Emirates Business about the firm’s expansion, diversification and growth opportunities.


Abu Dhabi real-estate prices are cheap, given the wealth level that exists there. Is it restrained by market rigidity?


We have seen prices improve since we started selling units to nationals in 2005 and all nationalities in our Al Raha Beach development in May 2006. Since then prices are continuing to gain value. Abu Dhabi has just commenced its expansion and what we see now is a controlled growth in values.


Abu Dhabi is growing in a sustainable manner and is being properly planned and developed. Aldar is playing a steady developer’s role, as we have 34 million square metres of land under development.


Do you believe property values in Abu Dhabi will surpass those in Dubai?


I honestly believe over the next few years, values in the capital will outstrip values in Dubai. I have no doubt about that. Look at every capital city in any country across the world – the most expensive real estate is within those capital cities.


We believe prices of residential properties will eventually surpass Dubai. On the commercial side, office rents have seen significant growth in the past two years. They have risen from Dh500-Dh600 per square metre to Dh2,500-Dh3,000 per square metre depending on the specification.


We are putting the final elements into Abu Dhabi, that it doesn’t currently have as a capital city. The Tourism Development & Investment Company is developing cultural and arts elements on Saadiyat Island, while we are putting together integrated entertainment elements such as the Ferrari theme park, shopping centres, golf courses and marinas on Yas Island. Abu Dhabi is going to be the best capital city in the world in the next five to ten years.


What we have got to ensure is that we have property and property values that are good, but also affordable as we are developing communities where people will live, work and play. And this is one of the reasons why Aldar has created Aldar Academies. In addition to good quality housing, we believe people also seek good education and health service, which we will be offering.


How much increase do you expect in your property portfolio in 2008 and which regions are you looking to enter?


We are obviously working on our current portfolio, which is $65 billion (Dh239bn) as of now. We have already entered Malaysia in partnership with the Mubadala Development Company, while in Kazakhstan we are in partnership with Al Maabar, which is a joint venture company created by Aldar, Al Qudra Real Estate, Sorouh Real Estate and Al Reem Investments.

We are also looking at Libya, but we have not launched anything. But you will see expansion of our activities both in the Gulf Co-operation Council and overseas next year. We are looking at the options and they are being analysed at the moment.


As your peers in Dubai have acquired international companies, do you have any plans to do so?


We will only do an acquisition if it is commercially sensible for us to do so. We don’t do anything if it does not have a good business base. Acquisition is definitely part of our business plan and we are looking at one of the matured property markets.


Why is Aldar restraining itself from entering Dubai?


We along with Zabeel Investments are developing one of our golf courses on Yas Island. Whenever the right opportunity occurs, we could be involved. We have presence throughout Abu Dhabi and Al Ain.


Do you think there is an urgent need for the UAE to harmonise its property laws?


There is a rationale for harmonisation. We are quite happy with the way property laws have been addressed in Abu Dhabi. The government is considering them properly and carefully, and indeed you have seen fruits of that labour come in recent laws that have been passed. I am sure these laws will be revised and reviewed, and brought up to the need of a modern-day property market.


We have a property market here, which is growing and maturing exceptionally rapidly, compared to property markets in other parts of the world that have taken 50 to 100 years to develop.


When do you expect the Abu Dhabi Government to pass escrow account law?


I have no problems if the government wishes to pass a law for escrow accounts. It is being discussed and is a good idea. I would like to see it there to protect the public.


What should an investor look into when finalising a property developer?


Besides looking at quality offered by the company, people need to see if the company has the ability to deliver what they say they can deliver. Investment banks such as Goldman Sachs, Merrill Lynch, Deutsche Bank and others have come out with reports on our strengths, depth of risk management and so on. These are the proven factors that customers should look at. They just should not go handing over their money to any firm.


Aldar is associating itself with the Abu Dhabi F1 circuit and Movenpick Hotels & Resorts. Is this a way to diversify your basket of investment from real estate to other profitable industries?


We are property developers, property managers, asset managers, fund managers and facilities managers. Moreover, we are vertically integrated and have our contracting company Laing O’Rourke, as well as joint ventures with Besix and Tabreed.


In addition to our academies, we have Aldar Hospitality, which is designed to develop our hospitality portfolio. We have more than 35 hotels to build over the next five to 10 years of which the first seven will be built by end of 2009. So there is clear policy to develop and run a major hotel business. We have signed major agreements with the likes of Accor Hotels, InterContinental Hotels Group, Oberoi Hotels and Resorts and several others. Our business unit will assist to manage those projects and also run our own hotels.


Getting experience and talented people in the real-estate sector is becoming an arduous task. How are you overcoming this problem?


These days it is a challenge for all companies. Aldar has the reputation and that is assisting us. People now want to come and work with us. The world is a very small place and good people are hard to find at all levels be it from semi-skilled to unskilled labour force to the top management. Generations ago everyone used to think locally, but now all think outwardly. The world is their market and not just their country.


Costs have moved up year-on-year due to rise in inflation. We have to pay a proper level of salaries and from Aldar’s point of view, we have always paid good salaries. We have the right incentive schemes in place so people benefit from performance of the group.


How much debt are you planning to raise in 2008? Any plan to launch more sukuks?


We will be raising funds as we go ahead. We have a strategy laid out, but for the moment we are well funded. Our fundraising efforts have been successful as our investors have a very high level of confidence in our group. Even during the latest downturn in the world’s credit market, they were still there to support Aldar.


We are looking at various capital instruments and are analysing which one suits the occasion and timing of the group. We will be back into the market this year.


When do you see a demand-supply equilibrium in the UAE?


In a healthy property market, you need to get supply just fractionally behind demand. If you look at all successful property markets, supply is controlled and the reason for control is to ensure you get a right balance. However, it does not lead to an artificial increase in prices, but maintains a healthy market.


We expect to see a demand-supply balance in Abu Dhabi in the next five years. We have an urban planning authority and we have agreed with them on various levels of assets that can be developed within that set area.


What potential of growth do you expect to see in the mortgage industry?


We already have an Islamic mortgage business called Aseel Finance. The mortgage industry is maturing and we expect to see good growth in the industry.


Does Aldar have plans to build the tallest tower in the world?


We believe good quality architecture will put us on the world map. We have already announced a number of iconic towers and projects such as Aldar headquarters at Al Raha Beach and Central Market. These structures will be recognised all over the world. You don’t need to be the biggest or tallest, you need your projects to be well designed.



Ronald S Barrott

Chief Executive Officer, Aldar Properties


In his role as the CEO, Barrott has overall responsibility for the company, which involves engineering and controlling the company’s current growth in the UAE and future expansion into international markets. In addition, he oversees all project development activities and related businesses of Aldar, generating significant financial returns for shareholders and driving sustainable development in Abu Dhabi.


Barrott is a building engineer by profession with more than 37 years of experience in the construction and development industries.


This includes eight years as a managing director and 14 as chief executive officer and chairman.


Three development companies were founded by Barrott under the Stannifer name: two property development companies in the United Kingdom, and one in the Czech Republic, as well as one operational hotel group.


He is on the advisory board of the British Council of Shopping Centres and was previously a member of the board of International Swiss Based Trust with international interests in the United States, the United Kingdom and Europe, and is a member of the International Council of Shopping Centres.