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“Just like buying that Fendi suit or Versace dress, you can now buy a Versace apartment”

Interview - November 30, 2015

Damac Properties is bringing limited edition designer residences to the UAE with its collaborations with interior design branches of high-end fashion brands such as Fendi, Versace and Bugatti. Ziad El Chaar, Managing Director of Damac, provides an insight to the real estate landscape in the UAE and the impact of Expo 2020.



If we look at the luxury segment in the real estate sector, would you agree that there is like a higher competition in that segment of the market? And what are, in this context, the distinguishing features of Damac offering, especially in collaboration with global iconic brands?

We’ve been committed to luxury real estate development from day one. We established this company in 2002 and we offer luxury at all levels. All the co-branding projects that we’ve done come with value addition from the brand, for instance our collaborations with Versace and Fendi. Both groups established interior design companies in the last 30 years. Gianni Versace was more interested in houses and hotels than fashion. He wanted to bring fashion into the houses; same thing with Fendi. We use those brands for lifestyle: just like buying that Fendi suit or that Versace dress, you can now buy a Versace apartment. So there are unique interior design elements infused into that project, which make that project very unique.

A similar concept was applied to our collaboration with Bugatti. We started working with Bugatti when they launched their interior design department. Bugatti is now doing interior design homes and also fashion. This has also happened with Paramount Hotels & Resorts, because Paramount Studios wanted to bring entertainment to hospitality. And this is a perfect mix because what do you want when you are in a hotel? You want to be entertained. Paramount is all about family entertainment and they introduced the family concept a lot in hotels and hospitality, so it was a perfect mix for us.

Through these collaborations, we are bringing into the market the limited edition of real estate. It’s like Ferrari: every two years they have a car with 400 units only. We do the same thing. Every year, we launch a new project with a brand for 200-300 units. With Bugatti, it’s only eight units because it’s very exclusive.


Would you say that sustainability can be reconciled with luxury? What are the key considerations in the master plan of Akoya Oxygen in terms of sustainability?

Starting last year, new development and construction laws from Dubai Municipality are very strict on sustainability. So whether a developer likes it or not, he cannot build without taking into account those criteria. You simply will not get a building permit if you don’t comply. Dubai is pushing strongly to become one of the most sustainable cities in the world. The government is issuing the right laws and regulations towards this end. It’s no longer at the mercy of real estate developers.

In our master plans, and especially Akoya Oxygen, we’ve pushed further on sustainability by designing a master plan promoting less traffic, less pollution; by using only treated water for all the irrigation needs of the project; by adding solar panels for hot water. All of these items are integrated as part of the construction laws and code of Dubai Municipality.


How would you say that Akoya by Damac is a “smart” development? How is it connected to the main transport infrastructure in Dubai?

When we started designing Akoya by Damac, it was our first master plan. Usually when you start doing something for the first time, you can go and learn from other companies’ experiences. We saw, for example, that you have some golf communities in Dubai. It’s a premium community, and people like to live in a golf community: the quality of the air is better, the temperature is a bit lower.

But we found out that very few people who live around the golf course play golf. So we said: what do we do for those families who have invested in those big houses on the golf course but cannot take their kids to play over there? We created inside Akoya by Damac a private park, which is 400,000 square meters, close to what Safa Park is. It’s private to the people and the families living in Akoya by Damac; people from outside cannot come unless they are invited.

I think it’s the first master plan in the region that took care of the families, by giving them this fully fitted private park. You will have trees, grass, an amphitheater, and playgrounds; swimming pools for kids and adults, basketball and volleyball courts, small football and cricket pitches.

We didn’t create a small shoebox-sized community center. We are going to have 30,000 people living in Akoya by Damac. We want them to feel that they are really living in an integrated community. So we developed for them a retail strip called “The Drive” that has close to 30,000 square meters of retail. Two supermarkets, one is a bit specialized and the other is more of a general store; also fashion shops, coffee shops, restaurants, banks, pharmacies. 30,000 square meters is a mall, it’s not just a retail strip. But we are doing it as a strip because people can take their kids and walk in that strip. And part of it is air-conditioned and part of it exposed.

So this is what is so “smart” and attractive about our development at Akoya by Damac. It’s not just that we built a premium golf course, we put villas around it and then we created a small community center. People these days deserve more.

After recovering from the crisis, the UAE ranks as the world’s second best country for residential investment (Source: Savills). However, still mindful of the bursting of the real estate bubble in 2008, regulators, investors and stakeholders are taking a cautious look ahead towards 2020. What has been the response of governmental institutions such as the Dubai Land Dept and RERA in the aftermath of the 2008 crisis to curb speculation and attract long-term private investments?

If you think about it, all you see around you is only 12 years old. Twelve years in the life of a market is nothing, but what Dubai achieved in such a short amount of time cannot be done in other countries, not even in 200 years. This is also true from a regulatory perspective. Investors enjoy full protection because all off-plan laws are regulated by the Real Estate Regulatory Authority (RERA). They are the only ones who can issue permits to launch freehold projects.

Sales and purchases are registered with the government, which doesn’t happen in 95% of the countries globally, because usually in an off-plan sale the contract is between the developer and the buyer. In the UAE, that contract is registered and protected by the government. All your payments on that contract go to an escrow account, regulated by the government. And eventually, the government also checks the quality at handover. Imagine this: the government assigns three independent auditing companies to go and audit every project before the developer is allowed to withdraw the profits of that project from the escrow. The government can issue a letter saying that after the evaluation, some corrections are necessary. Only after the developer complies with the changes can you withdraw your profits from the escrow account.

So we look at it as a package from a protection perspective. It’s one of the best in the world. You can get a title deed in Dubai through an online application and receive it the same day. Moreover, if you are a non-resident and made a purchase above 1 million dirhams, you are eligible to residency and there is an immigration office inside Dubai Land Department where you can easily apply for it. You just take your title deed, go to the second counter and apply for a residency permit, which allows you to reside in this country with your family members.

If you look at this package, it is hard to find anything similar that would compete with it. On top of that, you would be living in one of the best logistics set-ups in the world, with a tax-free environment. Having the local currency pegged to the dollar increases stability and eliminates the risk of massive fluctuations. However, the fact that we are dollar-dominated has been affecting the real estate market, particularly in the past 18 months.

The regulatory framework and the vibrant market are motivating many people to open businesses in Dubai. So many brokers and real estate agents are present here, and the market is liquid. So tomorrow if you have an apartment and you want to sell it, you can do that fairly quickly.

Dubai is a regional hub and therefore the second home segment is growing. Many people have taken vacation homes in Dubai. Many international corporations have established regional offices, which obviously means higher demand for houses. A considerable growth in the number of licenses being granted for companies is consistently recorded. This year, I think growth is close to 20%.

At the same time, the population of Dubai in the last five years grew from 1.6 million to 2.5 million. I’m sure those people need somewhere to live. This is why real estate is growing and the population is continuing to grow.

In addition to this, if you look at the number of tourists, we have continuous 5% to 7% growth in tourism every year, including this year, which people are saying is a slow year. It’s not a slow year in terms of the number of people coming in. We had a small slowdown in the rate because some areas that were demanding tourism in Dubai have problems with their currency, so we had to move the rates a little bit to keep those people coming in.


CBRE reports a 6% price fall in Dubai in the last 2 months while Knight Frank reports an annual drop of 12.2%. Where is the real estate market in Dubai headed?

I love those experts who are saying the market is going down and that there’s a crisis in the market, because they started the year by saying the market is going down because of a supposedly oversupply of properties in the market. Then you look at the estimations of many of those agencies and they were expecting anything between 28,000 to 32,000 units hitting the market in 2015.

We’re a public company; our biggest competitor is also a public company, so we have to issue every year to the market an indication of number of deliveries. We issued in Dubai around 1,500 units. EMAAR issued that they were going to deliver in Dubai less than 1,000 units. So the two companies that make approximately 50% of the market are going to handle only over 10% of the units and those people were forecasting even 8%. So we were wondering: is it going to rain apartments? Will people ship apartments to Dubai? Is it floating apartments? When the third quarter was over, JLL issued a report that in the first nine months, 4,000 units came in to Dubai.

So from the 32,000 estimated by these agencies, only 4,000 were actually delivered. So when those experts speak, I am sorry to say, I don’t listen; and I think that part of these reports is economic terrorism because you are spreading the wrong information in the market. When you are a big company like those companies based in the US or in the UK, people have to listen, and eventually you are drastically affecting the sentiment. You will not affect the pillars of the market, because the pillars of the market are very strong, but a big portion of investment is sentiment and you are negatively affecting it. So we don’t agree with these numbers. These numbers are unfortunately part of the problem that is affecting the market.

At the same time, oil prices in oil producing countries will affect the demand for real estate. Demand for real estate in Dubai is coming from around 80 countries, and many of them benefited from the drop in the oil prices. Two of the big players in the real estate market in Dubai are India and Pakistan. And these two countries are benefiting tremendously from the oil price drop because they are oil importers. Their economy is doing very well. So we expect a hike in real estate transactions from those countries.


Expo 2020 will be a big driver in terms of tourism. How is Damac taking advantage of this opportunity? Can you share more details regarding Damac’s hospitality arm?

Expo 2020 is just a cherry on the cake. It’s not the cake; it’s not even a portion of the cake. This market has very strong pillars to stand on. One of the most important factors of Expo 2020 is that this global event is introducing Dubai to the globe. With or without Expo 2020, tourism is growing at 7% every year. When we reach 2020, we would have reached close to the same number that was planned for tourists at the same time.

What we like about Expo 2020 is that it’ll turn Dubai even more strongly into a global launch pad. Expo 2020 will put Dubai at the same level of Milan or Shanghai. So Dubai is not competing with the Middle East; Dubai is a global city, and this is what Expo 2020 will be all about in my opinion.


Considering the macroeconomic context of the European crisis and the Russian ruble depreciation, what would you say are the main reasons why hedge funds, financial institutions and banks should consider investing in Dubai’s real estate market?

Investors look at two elements: returns and safety of investment. With both you can see the extent of the international regulation that was introduced in Dubai through DIFC and DIFC courts. Today the real estate market is still netting to owners 6-7% free of tax, which would make it one of the highest returns in real estate in the world these days. This figure doesn’t even take into account capital appreciations; we’re doing just rental yield on that property, tax free, which can be fully repatriated.


Dubai is globally branded as luxury destination. It has a very strong brand and one of the most recognizable skylines in the world. Yet, very few people know what actually means to live here in the UAE. What has surprised you the most about living in Dubai?

It’s what you and I take for granted, once we start living here: it’s the security. All of us came from places that had much lower levels of security than Dubai. But once you’ve been here for three months it grows on you. You start taking it for granted. Then suddenly you go back home and say: where do I leave my car? Where do I leave my bag? Where is my phone? Security in this place is one of the biggest drivers for people to come and live here. You don’t even think about it. And this is one of the biggest successes of this country.