“We are finalising plans to announce a township in Bangalore, India, and hope to announce our plans for China and Tunisia later in the year,” Abdullah A Al Majed, Vice-President, Tanmiyat Group, told Emirates Business.
Abdullah A Al Majed has extensive experience in the real estate sector and is known for his ability to analyse and evaluate complicated property matters. He is committed to developing high quality projects in Saudi Arabia, the UAE, Turkey, Jordan and Sudan.
He has always had the ambition to seek out new investment ideas and opportunities and possesses a clear vision in understanding the market’s requirements. He was appointed Vice-President of Tanmiyat Group in 2005.
What are your investment plans for the next three years?
We have some plans that will be unveiled at the right time in the coming months of this year in the UAE and in Saudi Arabia as well.
Which new countries are you entering this year?
Towards the end of 2008 and the beginning of 2009 we intend to expand into India, China, Tunisia and other countries. We are finalising plans to announce a township in Bangalore, India. We hope to announce new plans in China and Tunisia later in the year.
As for Sudan, we have several different investments there, and we are waiting for appropriate conditions to implement new plans. In Jordan, Tanmiyat is very active and will continue to be so.
Do you believe there is an urgent need for the UAE to harmonise its property laws?
I wouldn’t classify the need as urgent, but I do think it is important for the UAE to harmonise its property laws, as this will improve the efficiency of doing business across all of the emirates.
When a firm is familiar with the laws in one emirate, they won’t have to spend time learning the laws of another, thus ensuring development with minimum delays.
Is it tough to get experienced and talented people in the real estate sector?
And if there is a shortage, then we should provide support and training for people (either current or potential employees) we feel have the potential to fill the necessary positions and to add value to the company and the industry as a whole.
How much debt are you planning to raise to fund your projects?
There is always a balance to how much debt one can raise for projects.
I cannot tell you that we have a specific amount in mind at the moment. However, we will evaluate each project and the surrounding circumstances on a case-by-case basis, taking market factors into consideration.
If in the future we find such options are both advisable and feasible, we will certainly look into them.
Do you believe it is the right time to borrow from the market since the US Federal reserve has cut rates? Does it make borrowing cheap?
The Fed rate does make borrowing cheaper, but you have to take many different factors into account: the overall market, the need for borrowing, the amount to be borrowed in relation to the project, and so on.
Do you believe in incorporating high-end technology in your projects?
Of course we believe in incorporating up-to-date technologies into our projects. We are committed to providing the best for the clients of both our residential and commercial projects.
In this day and age when technology is progressing so quickly, it is important we are able to provide customers with all the features they require and fulfil all their property-related needs. But technology for the sake of being technologically superior should not be the driving factor here.
By what percentage do you expect raw material prices to go up this year?
Raw materials are going through a price increase once again, especially cement.
I say “once again” because this has happened before, and it’s a business cycle, which long-term entrepreneurs understand and learn to manage. It does not mean we are sitting by idly; rather, we are continually studying our projects and have complex financial models and investments that we handle in different ways according to the situation.
Has the rising cost of construction and labour hit your bottom-line?
I do not have any figures on this at the moment, but it’s clear the rising costs associated with labour and construction materials have affected every one. It is up to us to plan and act responsibly in order to keep these costs to a minimum and to prevent them from impacting the project and the investors any more than necessary.
Stabilisation is inevitable in the long run as market forces interact and supply catches up with demand, but this is difficult to predict right now.
Your peers in the UAE and Saudi Arabia have acquired international companies. Do you have similar plans?
As an investment group, we see ourselves in various markets with all kinds of prospects locally, regionally and internationally.
However, the acquisition of international companies means looking at each opportunity individually and deciding on a case-by-case basis whether it is the best option for us and for our investors.
Will the real estate market cool down in coming years?
The property market in the UAE is strong and exhibiting long-term growth prospects. More importantly, there is still a lot of room for development in the rest of the GCC, and when you go beyond to the Levant, North Africa, and into Asia, you see many of the countries in the region are now catching up with development, which should have taken place more than two or three decades ago.
Getting good contractors is a difficult job. Do you plan to acquire or start your own construction company?
We are privileged to be working with excellent contractors in the region, and at the moment acquiring or starting up our own construction company is a valid proposition, and we are considering it. A decision to do so will be based on future expansion and how we decide to manage our projects.
Dubai is coming out with new laws and regulations such as escrow account and strata law to regulate real estate development. What impact are they having on the real estate market?
We believe these laws are a good thing. They provide a sense of security and stability to the market, and protect the credibility of developers and the interests of investors.
Investment banks and property consultants point to rising delays in completion of various projects. What is the status of your projects in the UAE, Saudi and Turkey?
Our projects in Saudi Arabia, including Al Mohamediya, Al Khalidiya, and the Prince Abdulaziz bin Musaed Economic City, are all moving forward.
In the UAE, two of the towers in the Business Bay’s Commercial Heights have already begun excavation and foundation works.
The villas in the Living Legends have now been approved, and we shall have a construction update soon. Ajman Marina is also seeing a great deal of attention locally and regionally.
Tanmiyat eyes India, China this year