Face to face: Benoy Kurien, Al Hamra Group
Benoy Kurien explains why Al Hamra Group’s measured, long-term approach to real estate development, sales, and community management has served to strengthen its resilience in the face of wider market pressures
Upon arriving in Dubai to speak with Construction Week, Benoy Kurien, general manager of Al Hamra Group (AHG), makes light of how rare it is for him to venture outside of his domestic market of Ras Al Khaimah (RAK). “I’m not allowed to leave,” he jokes.
Jovial though his tone may be, during the course of the interview, it becomes increasingly apparent that his opening gambit contains at least a kernel of truth. RAK is not just a place of business for Kurien; it’s also his home.
Indeed, Kurien and his colleagues have been instrumental in shaping the emirate’s Al Hamra Village. In little over a decade, the master-planned community has grown from a sleepy coastal settlement with a single hotel – primarily serving business guests of RAK Ceramics – to become a popular regional destination for residents, visitors, and tourists alike. In addition to its 3,000 residential units, the community now boasts several five-star resorts, a mall, a marina and yacht club, and a championship golf course.
“Al Hamra was inspired by what was happening in pre-2008 Dubai,” Kurien begins. “Following AHG’s establishment in 2004, we decided to develop eight apartment buildings, and some duplexes and townhouses. These projects were delivered in 2006, which is when we started to build The Royal Breeze Residences. The golf course and the marina were also completed during this initial phase of development, and everything else was built in phases thereafter.”
This patient approach to growth has contributed to a familial atmosphere within the Al Hamra Village. While still popular among investors and holiday-home buyers due to its competitive prices, Kurien says the locality has developed a genuine sense of community during the past decade.
“Initially, people bought units as holiday homes; they would come and live in RAK at the weekend,” he explains. “But they have since discovered that Al Hamra Village is an extremely nice place to live on a permanent basis, especially for those with families. Consequently, many of our customers have opted to make RAK their primary home.
“It’s a friendly environment compared to the developments you typically find in big cities,” Kurien continues, noting that the area is just an hour’s drive from neighbouring Dubai. “It’s a tight-knit community; everybody knows one another. When you add in the financial benefits of owning and living in Al Hamra, it just makes sense. People are willing to commute an hour to work if it means returning home to that kind of environment.”
Turning his attention to the sales strategy of Al Hamra Real Estate Development (AHRED), AHG’s property development arm, Kurien says the firm typically looks to sell the majority of its inventory before moving on to the next project. “At the [most basic level] AHRED is a developer,” he explains. “Our primary goals are to build, sell, and move on to the next residential development. We do retain a certain proportion of our inventory for the rental market, but this wouldn’t usually exceed 15%.
“We conduct off-plan sales, but we also hold on to a considerable number of units to sell once a project has been constructed. We take care of the initial risk with off-plan sales, and our upside comes later. Finished products are extremely appealing to end users,” he adds.
Yet to suggest that AHG and its subsidiaries focus solely on real estate development would be to do a disservice to the group’s long-term engagement with – and investment in – its projects. For example, Kurien’s team is in the process of refurbishing all of the beaches within Al Hamra Village. The initiative, which is being conducted by Netherlands-headquartered contractor, Van Oord, will cost approximately $10m (AED36.7m) to complete.
“We have already relayed the residents’ beaches on Falcon Island and around Al Hamra Village,” reveals Kurien. “We’re now renovating the resorts’ beaches. The overall project is due to complete before the end of the year.
“Once finished, all of the community’s beaches will be sandy and white. If you look on Google Maps, you’ll be able to see the difference between Al Hamra Village’s beaches and those [elsewhere in RAK].”
In addition to its beach renovation programme, AHG is conducting a series of other “value-adding’ projects, such as the phased refurbishment and expansion of Manar Mall, and the upgradation of Al Hamra Village’s road intersection.
Commenting on the former, which is being conducted by UAE-based Sun Engineering and Contracting, Kurien says: “We are entering the final stages of our refurbishment and expansion of Manar Mall, which is RAK’s oldest shopping centre. We embarked on an ambitious plan to renovate the existing mall and double its retail area, [while retaining its] single-level layout.”
Work on the $100m (AED367.3m) project commenced in 2015, and should see the mall – which is located a short drive northeast of Al Hamra Village – through the next 10 to 15 years of operations.
“Phase 1, which comprises the main construction works, is due to complete in December 2017,” Kurien explains, noting that fit-out works for individual outlets will take place in phases thereafter.
In reference to the roadworks, Kurien continues: “We’re upgrading the intersection where Al Hamra Village’s hotels meet the golf course. These road improvement works are scheduled to complete this year.”
Such projects, which are primarily designed to add value to AHG’s existing portfolio, form the backbone of the group’s overarching strategy to continuously maintain and strengthen its brand.
“Because of the stakeholders we tend to attract, AHG thrives on word of mouth,” says Kurien. “For us, reputation is everything, so we make a conscious effort to achieve excellence, both in terms of our products and level of service we provide.”
AHG is also in the process of rebranding and renovating the former Banyan Tree Hotel, which will become a five-star Ritz-Carlton resort.
“This project comprises 32 chalets, which are all located on a private beach,” says Kurien. “Each chalet will come with its own pool; it’s going to be a completely different experience. We’re currently transforming all of the units, the clubhouse, and the common areas. The renovation is costing approximately $10m (AED36.7m), and is due to complete in December 2017.”
While there is a clear rationale behind every development that AHG undertakes, flexibility remains the watchword of the company. According to Kurien, the group’s trajectory has always been dictated by the requirements of the market, rather than a rigid corporate strategy.
“To give you an example, we launched Falcon Island in 2013,” he continues. “At that time, the market was moving towards high-end, luxury properties. The project had been designed, and we’d already broken ground when there was a shift in the market towards lower-end, value-driven properties.
“Consequently, we had to put our plans for Falcon Island in abeyance, and come up with another product that suited the market. That’s when we launched Bayti Homes, which have since proved extremely popular. And if the market shifts back towards high-end, luxury properties tomorrow, [Falcon Island] is ready. The land is still there, the designs are complete, and everything is mobilised. We can break ground immediately.”
While Falcon Island may be on the backburner for the time being, AHG is now looking to capitalise on its previous success, not to mention continued market appetite for value-driven units, by pushing ahead with Phase 2 of its Bayti Homes development. Although still subject to change, Kurien expects the upcoming phase to comprise 135 to 140 two-bedroom townhouses, with sizes ranging from 93m2 (1,000ft2) to 121m2 (1,300ft2).
“Bayti Homes’ Phase 2 is under design,” reveals Kurien. “At the end of 2016, we conducted a comprehensive programme of market research. We found a significant group of prospective customers – primarily millennials with families – who want to own their own homes. The properties don’t have to be big; we’re talking about units that cost less than $272,000 (AED1m).”
A flexible strategy has not only enabled AHG to match its inventory with market demand, but has also allowed the group to guard its projects – and clients – against artificial inflation. Whereas developers that launch thousands of units simultaneously are “forced to sell to speculators because they need to shift their inventories”, Kurien says the long-term success of AHG’s projects always takes precedence over short-term gains.
“We take a long-term, realistic view of everything we do,” he explains. “Instead of launching thousands of units at once, we’d rather build a few hundred. We’ll then sell those properties, let everything settle down, and reassess the market.”
Although this low-risk approach might not be to everyone’s taste, AHG has no intention of changing course. After all, this strategy has resulted in consistent gains for its stakeholders, not to mention a business that has remained resilient in the face of broader market pressures.
“In the wake of the 2008/09 financial crisis, RAK was probably the least impacted emirate,” explains Kurien. “And other than a few customers who had difficulty paying for their purchases, our group was not majorly affected by the downturn.”
Kurien concludes: “To a large extent, this is the fruit of our diversification. AHG’s balance sheet is not dependent on selling off-plan properties, because we also have [assets within the fields of] hospitality, leisure, and retail. For this reason, when there is downward pressure on the wider market, we are not forced to take drastic measures.”