Face to Face: Moafaq Al Gaddah
The MAG Group chairman says Dubai is witnessing a ‘wave of optimism’
As the year enters its second quarter, Dubai-based conglomerate Moafaq Ahmed Al Gaddah (MAG) Group is one of the firms that has come to symbolise the renewed business optimism currently sweeping the region.
MAG Group has been busy making a host of project announcements this year. People sat up and took notice when in February it revealed that its property arm, MAG Group Properties, would be investing up to AED15bn ($4bn) in Dubai by 2020 – the year when the Emirate plays host to the World Expo.
At the time, MAG Group chairman Moafaq Ahmed Al Gaddah said the Expo had galvanised investment sentiment and there was now a “wave of overwhelming business optimism”.
Sat in his office at the company’s headquarters in Dubai International Financial Centre (DIFC), Al Gaddah is a man who is very much excited about the current opportunities in the real estate market. He’s bright, engaging and animated as he explains that the biggest demand is currently in the residential and hospitality sectors.
“Today, the property development companies are filling the gaps that the market needs but after 2015 it’s going to develop new phases and new areas,” he says. “We will reach the phase that we will need to develop full residential projects, full compounds that actually have all the services and all the facilities for the public.”
For now, Al Gaddah says the UAE will remain MAG’s only active market in the GCC. In Dubai, one of its biggest deals is a joint venture with Dubai Healthcare City to develop a $217.8mn (AED800mn), 1mn ft2 project within the city by the end of 2016.
Even though the announcement was made earlier this year, Al Gaddah says the agreement won’t actually be signed until the end of May. The development, which is still in its concept stage, is expected to include two hospitals covering a total of 260,000ft2, an 80,000ft2 clinic, a residential complex of four buildings with combined gross floor area of 430,000ft2, a hotel apartment with a gross floor area of 80,000 ft2 and 100,000ft2 of retail space. It will also include a mosque and an automated car park.
Work on MAG Group’s $190.5mn (AED700mn) shopping mall specialising in interior design and decorative products in Dubai’s Al Barsha area is moving apace, says Al Gaddah. He tells CW that the tender for the construction of the ‘Art Centre’ is likely to be floated next month and the venue should open next year.
“We’ve now finalised the layouts and permits. In the next month, we will start constructing.”
He says it will be the biggest specialist mall in the area, consisting of three floors and a basement and include a leasable area of 350,000ft2. MAG has already received interest from potential occupants, he adds, and will be leasing units later this year.
Elsewhere in Dubai, its $544mn (AED2bn) Polo Residences project in Meydan, consisting of 106 townhouses and 29 low-rise apartment buildings, is now completely sold out. A main contractor has been selected and will be announced shortly. “It’s currently going through the legal and contractual process,” says Al Gaddah.
Construction work on the apartments will start by June but work on the townhouses has already begun and will be completed at the beginning of 2016. The project architect is Arch Corp.
Al Gaddah says it is very much part of his strategy to select projects based on market demand rather than location.
“My role is to provide each Emirate with specific needs. Each Emirate is very different compared to any other geographical location. And even in Dubai, you will see that the projects in each location are completely different. “It all comes down to the demand in each area.”
In Dubai’s Burj Khalifa area MAG is developing a $136mn (AED500mn) residential tower called MAGreen. As the name suggests, it will be built with sustainability at its core.
Al Gaddah says the building is aimed at a high-end clientele and he himself will be selecting the residents. The hope is that it will be completed at the end of 2016.
“Green buildings are part of our strategy for 2014,” he says. “We won’t launch it until we have finalised all the creative ideas for the building. So after that, we will build a model in the location so that everyone can see what we are going to provide in terms of services and facilities.”
Other projects that MAG Group is currently developing in Dubai include a $27mn (AED100mn) logistics plant in Jebel Ali and a $54.4mn (AED200mn) residential tower – MAG 226 – in Jumeirah Village.
However, like other developers, it wasn’t immune to the financial crisis in 2008. Some of its Dubai projects were stalled indefinitely, including one on the Palm Jebel Ali. In December, master developer Nakheel was reported as saying the project will be built – but not in the short term.
Al Gaddah insists that he will not sell his plot on the development and is committed to seeing the project through to completion.
“There is lots of land owned by MAG Group which has been frozen because of the crisis.
“But you have to remember that in the middle of the crisis we still delivered residential towers in JLT (Jumeirah Lakes Towers) and Dubai Marina. If land is ready to be developed then MAG Group is ready to develop.
“The most important thing is that we are in contact with the developers. Some of them have suggested we cancel our contracts but we have refused.
“In every business there is always an additional fund that is reserved for these projects. Of course it affects the company’s growth if the percentage of this project is high, but it will not affect the whole group.”
In addition, MAG’s $235mn (AED865mn) project in the City of Arabia development, located within Dubailand, has recently moved to the approvals stage.
This is no insignificant step given that the $5bn development was originally launched in 2005 and supposed to be completed in 2010, but again was one of those blighted by the financial crisis.
Al Gaddah says MAG Group is investigating buying land for other projects worth up to $2.7mn (AED10bn) in Dubailand, Jebel Ali and Abu Dhabi.
With regards to the Dubailand project, he says: “It’s huge land. Bigger projects that we can’t do alone we may team with other developers. Now we are studying this type of thing.”
As for Abu Dhabi, the company is in the final stages of delivering a B-grade residential tower, and options are being explored about its long-term ownership.
“Before four months it’s going to be completed. There was an idea to lease the whole building and then sell it, but this is just one of the options.”
In Sharjah, MAG Group is working through the approvals stage for a $190.5mn (AED700mn) residential project located on a prominent strip parallel to Sheikh Mohammad Bin Zayed Road.
Outside of the GCC, MAG Group has acquired some 80 acres of land at Frisco in Dallas, Texas, in order to develop a mixed-use commercial and residential project, which is currently in the design phase.
And as if to emphasise the ties MAG has developed in the area, Al Gaddah notes that he had personally hosted the mayor of Frisco in February.
“We have undertaken studies on the US market and one of the fastest growing cities there for the residential market is Dallas. It has lots of yearly residential growth.
“We saw a gap in the market and went for it. The project is going to be a compound with full services and facilities. We will lease it.”