Damac is the UAE company most often associated with glitzy property developments, eye-catching marketing stunts ("a free Bentley with every luxury apartment") and, most recently, glamorous golf course projects with Donald Trump.
But in the somewhat spartan Dubai majlis of the founder and chairman, Hussain Sajwani, pride of place is given to a plaque marking its origins in a very different business: "In recognition of outstanding food service performed to the United States army during operation Desert Storm," it reads, a reference to the work Mr Sajwani's firm did during the first Iraq war in 1991.
"We worked for the Americans all over the world, in Somalia, Bosnia and the Gulf, and also for big American companies like Bechtel," says the 57-year-old.
The food business is still part of Damac Group operations and serves both as a reminder of Mr Sajwani's first business expertise and of his ability to cultivate important friends in high places on an international scale.
He is putting those skills to good use again as Damac gears up to take advantage of the recovery in UAE property prices and also considers an initial public offering of shares, with the London Stock Exchange one of the possible IPO venues.
With the early stages of the potential IPO process under way, he is constrained as to what he can say, but concedes: "For a company of our size and our structure, all these options are open. It depends on the advice of the banks. We are talking to several institutions but haven't yet hired one regarding any IPO."
On the reasons for an IPO, still regarded as "hypothetical", he says: "We have cash and bonds as a cushion, and a debt/equity ratio of only 10 per cent. So we don't really need the cash. But it might provide cash for expansion, or it might be a way for the owners to take some money from the business. But all our options are open."
He and his advisers will not speculate on the value of any IPO, but Dubai market professionals have begun talking of a market capitalisation in the single-digit billions of dollars.
That's a long way from the food business, which Mr Sajwani got into in the 1980s, supplying catering services to workers in the energy sector in Abu Dhabi. Despite the US army contracts, the food business was too small, with low margins, for him: "You'd make millions, not billions, in catering," he says.
In 2002, just as Dubai was at the lift-off stage of a six-year real estate boom, he decided property was the future. His family had "dabbled" in property in Dubai, and he had previously developed some mid-market hotels in Deira when the collapse of the Soviet Union led to an influx of visitors from that part of the world.
But the Damac Properties firm that emerged in 2002 was anything but mid-market. It built top-of-the range developments and marketed them aggressively, with off-plan sales as the key to the business model.
Mr Sajwani says he was one of the few to see the crash coming in July 2008: "Sales suddenly dropped dramatically, and when I was told it was because of the summer lull, I knew it was worse than that. We took fast action to cut costs and preserve cash. By May the next year, we were out of the woods and had a cash floor to protect us," he says.
Damac got through the crisis, he says, by careful husbanding of cash, controlling costs, reining in some projects and, when necessary, applying strict measures against buyers in difficulties.
The crisis sparked a string of complaints and legal actions against Damac. Some sued successfully: "Of course, when some customers found they couldn't pay, we had to take the properties back," he says.
Despite some signs that a property "bubble" may be reinflating in Dubai, with rising prices and an increase in off-plan sales, he thinks things are very different now: "Rera [the Dubai property regulator] has imposed tough new conditions on land sales and on escrow accounts. They are very tough, but that's a good thing for Dubai.
"But we have to get rid of the legacy of leverage and greed. Some speculation is good, it's like spice in food, it adds to the taste. But we don't want to be in a situation again where people are 80 per cent leveraged, that isn't good for anybody," he adds.
The Damac property business model now is based on three principles, he explains: "We hold no debts for land. That is always paid 100 per cent at the beginning. Second, escrow accounts are independent. We won't transfer cash from one account to another, so each development supports itself.
"Third, we retain cash reserves, in fixed deposits or government bonds, sufficient so that if the market turns we can support the construction schedule," he adds.
Against the backdrop of Dubai's economic recovery, Mr Sajwani's thoughts are turning again to expansion. Saudi Arabia is one area, with typically upmarket projects in Riyadh and Jeddah well advanced, while Turkey is another "on the radar screen", he says, although there is nothing definite there yet.
In Egypt, he is in the final stages of settling what became an ugly dispute with the government that has rumbled on for the past year, and in Syria he believes "the political situation is difficult".
"I don't see us investing in either country," he says.
Like many family businesses in the Gulf, the issue of succession is also on his mind, and is a possible explanation for the IPO speculation. He says his son, studying in the United States, is "too young" to be involved in the business.
"But anyway we already have a modern corporate structure," he adds.
fkane@thenational.ae
THE SPECS
Engine: 1.6-litre turbo
Transmission: six-speed automatic
Power: 165hp
Torque: 240Nm
Price: From Dh89,000 (Enjoy), Dh99,900 (Innovation)
On sale: Now
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Expo details
Expo 2020 Dubai will be the first World Expo to be held in the Middle East, Africa and South Asia
The world fair will run for six months from October 20, 2020 to April 10, 2021.
It is expected to attract 25 million visits
Some 70 per cent visitors are projected to come from outside the UAE, the largest proportion of international visitors in the 167-year history of World Expos.
More than 30,000 volunteers are required for Expo 2020
The site covers a total of 4.38 sqkm, including a 2 sqkm gated area
It is located adjacent to Al Maktoum International Airport in Dubai South
RESULTS
6.30pm Al Maktoum Challenge Round-2 – Group 1 (PA) $49,000 (Dirt) 1,900m
Winner RB Frynchh Dude, Pat Cosgrave (jockey), Helal Al Alawi (trainer)
7.05pm Al Bastakiya Trial – Conditions (TB) $50,000 (D) 1,900m
Winner El Patriota, Vagner Leal, Antonio Cintra
7.40pm Zabeel Turf – Listed (TB) $88,000 (Turf) 2,000m
Winner Ya Hayati, Mickael Barzalona, Charlie Appleby
8.15pm Cape Verdi – Group 2 (TB) $163,000 (T) 1,600m
Winner Althiqa, James Doyle, Charlie Appleby
8.50pm UAE 1000 Guineas – Listed (TB) $125,000 (D) 1,600m
Winner Soft Whisper, Frankie Dettori, Saeed bin Suroor
9.25pm Handicap (TB) $68,000 (T) 1,600m
Winner Bedouin’s Story, Frankie Dettori, Saeed bin Suroor
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Killing of Qassem Suleimani
AIDA%20RETURNS
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More from Neighbourhood Watch:
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Barbie
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RESULT
Arsenal 0 Chelsea 3
Chelsea: Willian (40'), Batshuayi (42', 49')
