Al Awadhi bullish on hospitality sector
Al Awadhi Investments was launched two years ago with a modest capital and with individual and non-co-ordinated efforts. In a short time the company has managed to plant itself firmly in several investment sectors such as real estate, hospitality, high-technology industries and finance. It benefited from the economic growth opportunities not only in Dubai, where it was established, but also in Fujairah, Ajman and Sharjah.
Sharif Al Awadhi, the board director, spoke to Emirates Business about the company's priorities and ambitions.
Excerpts:
What prompted you to establish Al Awadhi Investment company?
We now feel that we were somewhat late in establishing the company, but better late than never. We saw the volume of business in the UAE in general and wanted to take part in the economic growth of our country and to benefit from the opportunities. Therefore, we launched Al Awadhi Investment with a capital of Dh300 million.
What are your most important projects?
At the moment we are focusing on the real estate market. We are building the largest office tower in Fujairah. The volume of investment is around Dh150m and about 70 per cent of the construction is already over. The tower has 23 storeys with about 200 offices. It is for rent and not freehold.
How has the response been so far?
We have not marketed the tower yet and we will wait until it is completed. As you know, prices continue to increase. Therefore, we would prefer to wait to see the price level once the tower is completed, which we hope would be by the end of the year.
Do you have other real estate projects?
We have two residential buildings in Fujairah, which have about 250 apartments. They are built at a cost of Dh250m. We also invest in freehold property in Dubai and buy completed residential and commercial buildings from developers to sell in and outside the UAE. Our investments abroad amount to Dh150million.
Is the amount enough to buy towers in Dubai?
As an investor or developer, you do not have to pay the whole amount. Even developers do not do this. This is how the business wheel moves. With this Dh150m we can enter into projects whose volume is 10 times this amount or more.
So you are going with the current trend that prefers to invest in real estate – an investment that can face difficulties but never dies?
If you mean that investment in real estate is easiest, it might be true to a large extent. But for us it is not a matter of difficult or easy investment; we consider all opportunities. A proof of this is that we are entering the hospitality sector in Fujairah with force. We have completed studies on the development of a five-star hotel on Fujairah beach.
It will be the largest of our investments with a value of up to Dh350m in today's prices. Maybe the final volume of investment will amount to some Dh450m.
Can you give us more details about the project?
We are talking to a European company specialised in hotel management and we want to make our hotel Shariah complaint and one of the best tourist destinations in Fujairah.
What about other real estate projects?
We have almost completed the procedures to set up a real estate development company operating in Dubai and Ajman, where freehold ownership is available. We have allocated Dh150m as capital and expect to start soon. We have plans for a number of projects, but I cannot disclose details.
But are you not late in entering the real estate sector?
—We are not, and the real estate market in the UAE is still at its beginning stage, whether in Dubai, Fujairah or Ajman. The volume of real estate projects in Dubai so far only represents the tip of the iceberg. As for Ajman, it is still early to talk about the start of the real estate leap there; we are currently in the pre-start phase.
But don't you think that it is not the time to enter the real estate development market amid crises experienced by the sector, especially with regard to the shortage of building materials and their high prices?
As a matter of fact, this is a big concern for us. It is the biggest challenge for the market in the UAE. And there should be more decisive measures to control prices on the one hand and making available basic building materials such as steel and cement on the other. But this does not mean we have to wait until the crisis is resolved.
How do you assess freehold prices in Dubai?
The rise in realty prices have coincided with the increase in prices of everything in general. Also, operation and production costs have gone up, along with fuel and raw materials prices. However, the prices in Dubai are still very reasonable and the increases are natural. What is worrying for us is not the price of real estate but the drop in consumers' purchasing power in the UAE.
Do you have anything in Sharjah?
We are studying the development of a mixed-use project in Al Mamzar exclusively for freehold ownership in line with the emirate's laws that allow ownership by GCC and Arab nationals. We are waiting for the issue of a clearer law on this.
What about your industrial contributions?
We are studying a high technology industrial project for the production of petrochemicals. It is an important project, which needs minimum labour and most of its production will be for export. The site will be in Fujairah, since it is the only emirate that is fully on the Arabian Sea with beaches extending more than 70 kilometres.
However, we have not yet decided the amount of money to be invested.
What about financial consultancy?
We have invested some $10m for speculation in on the foreign currency market, but it is not a financial investment as such. Through this investment we are trying to explore what will be new horizons of investment for us in the financial sector. And as you know investment in currencies involves some risk and needs a lot of study, research and awareness of the world around you. But we have made good progress.
What other expansions do you have in the pipeline?
Our ambitions are limitless and we will go anywhere if we find a good investment opportunity. More than that, our next step will be outside the UAE. We welcome partnerships. Furthermore, we will offer shares of the company for general subscription to increase our capital. This will increase our potential to use more opportunities.
Which investment sectors are more appealing at present?
We have a lot of ideas about investments in other sectors, such as retail trade. And this will be in Fujairah, which needs such projects.
PROFILE: Sharif Al Awadhi, Board Director, Al Awadhi Investments
Al Awadhi worked for a major UAE oil company before starting out on his own with some small investment projects. His projects yielded enough profits to earn him a reputation in the UAE business world. He then started to speculate in shares with his two brothers and then moved to Dubai real estate market and from there to Fujairah and Ajman before the three brothers launched Al Awadhi Investments in 2006. Al Awadhi graduated from the Institute of Development in Abu Dhabi in 1997.