Face to Face: Ahmed Alhatti, CEO, Cayan
Plan to lead one of the region's top property companies within 3 years
When you design and build a $272mn (AED1bn) skyscraper like Dubai’s Cayan Tower – the world’s tallest twisted building – you clearly want people to sit up and take notice. That’s certainly what happened when Saudi Arabian developer Cayan Investment & Development’s high-rise residential tower in Dubai Marina began to spiral upwards.
The 75-storey tower was delivered in June last year after a series of delays. Initially it suffered from engineering problems when the site flooded and it was later caught up in the 2008 financial crisis.
But you won’t hear Cayan Group chairman Ahmed Alhatti talking about regrets, even though the project did go over budget. He’s buoyant, in fact, as he speaks about the building while sitting in the boardroom of the company’s Dubai office in Tecom. He’s in town for a quarterly meeting and to check on the progress of potential deals.
“This project had so many challenges. The collapse of the diaphragm wall to start with, then the financial crisis,” says the Saudi national. “Yes, it went above budget but we made something that I never regretted.”
The problem is that when you construct something as eye-catching as the Cayan Tower, initially named the Infinity Tower, everyone expects you to repeat the trick. Alhatti is acutely aware that people are wondering if the company can recapture that magic formula.
“This is the reason why I’m taking my time in the UAE, because everybody’s waiting to see what we will do after the Cayan Tower. We want to do something unique; we can’t do just a normal building anymore,” he says.
There are several sites within the company’s $40.8mn (AED150m) UAE land bank, including plots at Downtown Dubai and Jumeirah Village Triangle, and others it doesn’t own that Alhatti is exploring for future projects. Teaming up with a joint venture partner is also being looked at.
Sentiment among property developers in Dubai is rising following a strong 2013 where rental values and sale prices increased, with average values rising by 22% year-on-year. Dubai winning the rights to host the World Expo 2020 has also boosted confidence.
Alhatti agrees that positivity is returning to the market.
“I think there are lots of options in Dubai. I believe after Dubai winning the Expo 2020 there will be good demand for investors to come back and invest,” he says. “Now, I think there is a good market for serviced apartments.”
Fears still persist that Dubai could be headed for another property bubble if the Government doesn’t introduce further measures, such as tighter controls of off-plan sales, to suppress property price rises. Alhatti, however, has confidence in the Emirate not repeating the mistakes of yesteryear.
Given that he actually launched Cayan Group in Dubai and not in his native Saudi Arabia, you can see why he would remain upbeat.
“I’m a believer of Dubai. When the financial crisis happened we stopped investing in big projects in the Emirate but we didn’t stop any of our current projects even though it would have been understood by the authorities if we had,” he says.
Alhatti describes the period 2009-12 as “not bright” years for Cayan Group, with the financial crisis having taken hold, but insists it turned a profit despite falling short of its targets. “The loss always comes from the project but this can be covered in other areas,” he says. “Overall, considering we don’t have debts, we’ve been doing well.”
He says objectives were met in 2013 off the back of scaling down major investments in Dubai and a strategic decision taken four years ago to pursue opportunities in his home city of Riyadh, where all four of its current Saudi projects are located. But at the same time, Alhatti says that “since a year ago we have started to plan ourselves again to grow the same way in Dubai.”
He adds: “Revenues in 2013 have hit target. That’s why there should be more results to come this year.”
Put simply, Alhatti wants Cayan Group to become one of the region’s top 10 property companies in the next three years. Outside consultants are conducting a thorough review of the firm, with the restructuring of some departments and new hires putting current staff numbers at 70. The review is expected to end this year.
“I’m very comfortable with the restructuring we have done. We’re hiring and will continue to hire. We are in a much better financial position in terms of our projects and we’re open to more relations with the financial institutions.”
A stock market floatation has been studied but Alhatti says the prospect is some way off.
“My priority right now is to see the results of the restructuring; to have a much stronger position in the next two years. By the end of 2015 we will see if we continue as a private company or invite investors or take it to an IPO [initial public offering]. But now is not the time.”
The biggest of Cayan’s Saudi projects in terms of cost and area is a $399mn (SR1.5bn) luxury residential development called Samaya, spread over 1mn m² in the north-west district of Erga. The masterplan is finalised and awaiting permits. “We will not open it for off-plan sales until we get the permits,” says Alhatti.
Cayan is also developing a $319mn (SR1.2bn) hotel with serviced apartments. That it will be managed by a major international operator making its debut in the country is all he would say for now. The design is finalised and awaiting permits.
Its most advanced project is a $26.6mn (SR100mn) residential compound called Layaly, which will be finished in June. More than 50% of the units are sold. The final project is a land development, which Alhatti is also remaining tight-lipped about.
One of his wishes is to develop more affordable housing in Saudi Arabia, as he says there is a big need for it.
“It’s a huge market and there’s still a chance for another 50 people like me,” he says. “That’s the great thing about Saudi Arabia. There’s a huge need for all types of housing including affordable housing, expensive housing, apartments and towers. The market is still growing. That’s why we’re focused on residential development.”
On the point of competition, he says Saudi Arabia can learn a lot from how Dubai cleared the path for foreign realtors and contractors to enter the market.
“The quality and added value they [Dubai] got, the fine products they [Dubai] got; it’s only from opening it up to big players from local and international fields.”
“I would love to invite more international players to the country. I want to see strong developers, stronger companies that deliver the best product and enhance all the services.”
For now, Alhatti is keeping Riyadh as the focus of Cayan’s Saudi work and says projects in other areas will be opportunity-driven.
“We don’t go and just say we want to do a project in that area. Whenever there is any opportunity in terms of new land or a new project idea or a new JV, we evaluate each one on its merits,” he says.
There is one type of project that he will never do, however.
“I will never do any project that involves alcohol,” he says. “That’s why we don’t do hotels in Dubai.”