We understand that DAMAC has strategically restrained development plans in the UAE due to the excessive supply of units hitting the market. When does DAMAC expect to begin announcing new projects in the UAE and are there any new projects currently in concept, design or tender?
DAMAC has been one of the leading voices in the property industry since 2019, when my father highlighted the problem with oversupply in the market. The effects of the pandemic on so many industries, including the real estate sector, has provided the market with a natural correction, as a result so many developers had to consolidate and hold off on new projects.
The curb on new projects will bode well for the property market as demand will be able to catch up with supply and we anticipate a price correction going forward.
We do not have any new projects at the moment. We are focusing on selling our remaining inventory with our prime focus on deliveries in our master communities DAMAC Hills and AKOYA Oxygen. We will also be focusing on enhancing our relationship with our current customer base and delivering the best customer experience possible.
Does DAMAC have any new development plans for Saudi Arabia?
The Kingdom of Saudi Arabia is undergoing a phenomenal social and economic transformation under the wise leadership of King Salman and Crown Prince Mohammad Bin Salman. In a bid to diversify its non-oil economy and attract FDI, the government has launched a series of initiatives, amongst which, the Saudi Vision 2030 stands as a blueprint for the future.
The all-encompassing strategic vision, which is designed to usher in long-term social and economic prosperity for the country, is already showing great results. During the recent G20 Summit, Saudi Arabia’s Minister of Investment Khalid al-Falih said that foreign direct investment to Saudi Arabia had risen 12% in the first half of 2020, compared with the same period last year. This is a great indicator of the confidence that foreign investors have in the Saudi market.
Saudi Arabia has a lot of potential and DAMAC has two completed projects there. We do not have any new plans at the moment, but we will be exploring possibilities when we believe the timing is right as we believe this will be a profitable market in the coming years.
Is DAMAC planning to expand into any new market and if so which new cities can we expect to see Damac properties come up in?
We have development teams working in various cities around the world looking for opportunities. DAMAC’s strategy is to target international markets that are customer-led and where we have existing brand equity with customers who would be interested in these markets. We would enter these markets under JVs so that capital exposure would be measured. These markets would also have to be scalable for DAMAC to consider. In North America, our market entry foray was with Marlin Springs for a project in Toronto, which was a JV. However, we are always looking for areas where DAMAC can add value and are exploring new markets such as Maldives, KSA and North America.
What is your forecast for the construction industry over the next 5 years? What opportunities are you hoping that the Expo will create? Which market segments do you believe will provide opportunities for development over the next 5 years in the UAE?
Many analysts have begun reporting somewhat of a market recovery, however, we believe it will be a long U-shaped recovery, perhaps 12 to 24 months. Having said that, Dubai saw a notable increase in transactional activity quarter on quarter. Covid-19 has made villas a much more attractive option as people are seeking private outdoor spaces as social distancing is still being practiced. So, while some property sales have seen drops, others have seen upticks. We are adapting to these changing trends and are doubling down on our established track record of digitalisation to optimise our performance amid these market conditions.
While there will be challenges in the coming year, there are a lot of positive developments that point to increased activity. We are confident that we will see an uptick in property sales in the run up to EXPO2020 and the UAE’s recent 100% foreign ownership law will also help boost foreign investment. Additionally, with the vaccine roll-out we will likely see a resumption of travel and tourism which will time up nicely with EXPO 2020.
Do you have any advice for consultants, contractors and suppliers who are looking to major developers like DAMAC for guidance on the opportunities in 2021.
I think in general the pandemic has shifted attitudes and customer preferences. Many people were not prepared for the economic shock that came with the pandemic and a lot of people were forced to scale back on spending because of the economic crunch. As a result, I think going forward people will be more conservative in their decisions to buy property. There is a need for more mid-range property options for people who might be reluctant to make high-end purchases.
As for property design and layout, I also think there has been a shift from more glamourous design, to larger and more functional spaces to accommodate work-from-home stations and distance-learning spaces for children. Additionally, more and more people are interested in access to private outdoor space rather than proximity to the city center, which is why there has been a massive demand for villas in the past year.