Face to face: Ahmad Al Marri, Union Properties
Ahmad Al Marri, general manager of Union Properties tells how the company has seen positive responses to its projects, despite an unflattering performance so far this year
In terms of market performance, it has not been a good year for Union Properties in 2015. The Dubai-listed developer reported a 96% slump in its second-quarter net profits to $5.3m (AED19.4m) from $143m (AED527.3m) in the same period of 2014.
The firm’s revenues from property management and home sales shrank in 2015, and its earnings from 2014 were swelled by property revaluations.
One must expect Ahmad Khalaf Al Marri to get bogged down by the pressure of performing better. Instead, the general manager for the company tells Construction Week that such ups and downs are “nothing to worry about”, in a maturing real estate market.
“2015 was an investment year for us to start new projects. When we deliver projects, we collect our revenues, so it’s very difficult to compare year-on-year,” Al Marri says.
“Profits will definitely [appear low], since it has not been a revenue-collecting year for us. This year, we started quite a lot of projects, which affected our profit margins. But we are a strong foundation and [financially] we are good,” he adds.
Like many developers, Union Properties was hit hard by the global financial crisis of 2008-2009. The developer has spent the last seven years tackling the after-effects of its huge debt burden, which forced it to sell many of its key assets and stakes to its shareholders.
But slowly and steadily, with the upheaval of the Dubai real estate market, the company has worked to restore its position, through projects, such as the Green Community in Dubai Investments Park (DIP), Oia Residences and The Ribbon in Dubai Motor City.
One might think that the current slowdown in the Dubai property market would have made Union Properties take a backseat with its projects.
But from what it appears, the firm has no such plans and has cemented its plans to embark on new developments.
“Our buyers believe in our projects. As soon as they read or come to know about our projects, they flock to our offices to know more,” Al Marri claims.
On those lines, the developer mentioned that it has started construction on the Green Community Phase III at Dubai Investments Park (DIP) in July 2015.
The expansion will add to the 1,555 residential units that were developed during the first two phases of the Green Community – 719 in phase one and 836 in phase two.
“We have already begun our work on phase three of the Green Community, and expect it to finish by mid-2017,” Al Marri says.
Another flagship project by Union Properties, The Ribbon, within Motor City, is a $19m (AED70m) luxury retail development. Motor City, spread over 353ha, comprises the Dubai Autodrome, Business Park Motor City, Uptown Motor City, and Green Community Motor City developments, to name a few.
Overlooking the Kartdrome, the $19m (AED70m) The Ribbon project has been designed to offer residents of – and visitors to – Motor City a high end location to eat, shop, and socialise. Three buildings comprise The Ribbon.
Buildings one and two of The Ribbon will include a selection of high end food and beverage (F&B) outlets, while the third will house a supermarket.
“The Ribbon, in Motor City, has been delivered to tenants for fit-out and will be operational by December 2015,” Al Marri says.
Design work is complete for the Vertex Tower, a five-tower development in Motor City. Tenders for phase one of the project will be floated in the second half of 2016.
Construction tenders have also opened for Oia Residence, a low-rise project including apartments and townhouses, in Green Community Motor City.
Reuters reported in September 2015 that Union Properties is in talks with a local bank to borrow up to about $123m (AED450m) to fund the building cost of Oia. “Sales of the Oia units will begin in the second quarter of 2016,” Al Marri mentions.
Union Properties entered a deal with Naif Alrajhi Investment Co in October this year to take on large real estate projects in Saudi Arabia.
A memorandum of understanding (MoU) was reached with the Saudi partner to set up an operating company to handle future projects, with Riyadh being the key operational market.
In July 2015, Union Properties announced its plans to develop three projects worth $544.5m (AED2bn) over a period of five to six years, according to a company filing on Dubai Financial Market (DFM).
With the exception of establishing itself in Saudi Arabia, the company does not have any current elaborate plans for expansion outside the GCC.
The developer, for now, seems content with consolidating its master developments in the UAE.
Al Marri claims: “Buyers and investors have become very cautious, [and] they are more interested in doing a feasibility study before investing in any project. Hence, we want to focus on our current portfolio and deliver [those projects] on time.”
“We are one of the oldest developers in the UAE, with over 15,000 employees in the group, which includes our subsidiaries as well. Our name has always been associated with successful projects,” he proudly concludes.
Union Properties officially launched the sales for its flagship development, Green Community Phase III in Dubai Investments Park (DIP) in October 2015.
Khalid Bin Kalban, chairman of Union Properties, said: “The project sales launch represents the company’s efforts to meet the increased demand for quality units from end users, and buyers, as well, as the investor’s requirements for a well-established neighbourhood.”
He added: “Having to expand projects is a sign of confidence in the real estate market and for the housing market in particular. Green Community has a higher value on short and long-term investments; the community is eco-friendly, includes parks and green walkways. It is self-sufficient, with retail, leisure, pools, health and fitness, medical, educational and commercial facilities.”
The third phase will feature spacious units comprising townhouses. And it will also include health and leisure facilities such as a gym, outdoor swimming pools, jacuzzis, tennis courts, a squash court, and an event hall for year-round social activities.
The company is introducing flexible purchase plans to allow buyers and investors to pay 50% till the handover date, and remaining 50% to be paid on flexible plan up to eight years.
The project spreads over 13.7ha, and comprises 210 luxury three-bedroom townhouses, with a construction value of $185m (AED680m), Union Properties said.