MAG Development plans Dubai IPO as it eyes overseas expansion

Company planning expansion into Africa and Asia, says chief executive

MAG Development, the real estate arm of the MAG Group Holding to be listed in Dubai, according to chief executive of MAG Group, Sar Haffar. Pawan Singh / The National

MAG Development, the real estate arm of investment holding firm MAG Group, is planning to raise funds through an initial public offering as it eyes overseas expansion to boost growth, the company's chief executive said.

Dubai-based MAG Development is currently involved in a number of projects in Dubai and Sharjah including the Dh4 billion MAG City scheme, launched last year in the Meydan District of Dubai.

"We are transforming the business into a corporate structure, and we are working on [an] IPO-readiness plan that should be implemented within a year or two, depending on how quickly we develop that," MAG Group chief executive Sar Haffar told The National in an interview.

He did not divulge how much the company is looking to raise via its public offering or the size of the stake it will sell.

“The idea is to be ready to have all the process in place before we go public. We are working in coordination with some kind of advisers on this. The company would be listed in Dubai.”

The company, which has a number of projects under development in the UAE, is eyeing overseas expansion in Asia and Africa. It is planning to launch three international projects this year.

Mr Haffar did not name the countries where it is planning to start projects.

“There is a plan to expand and we are focusing on certain markets and it will be mixed-use development. We will announce something in due time," he said, without identifying the markets. "Every project is going to be in the size of MAG City, which we broke ground [on] recently.”

The MAG City development at Meydan will be built in five phases, with the first and second phases expected to be ready by 2023. The first phase will have five buildings containing 912 units and 150 townhouses, whereas phase two will consist of four buildings of 600 units and 92 townhouses. All phases of the project are expected to be complete by 2026.

“The purpose in phasing out is to cope with the demand we have and growth and it would be coherent,” he said adding 85 per cent of Phase 1 project has been sold to expatriates as well as locals.

The project has been funded by the company's own income, as well as through sale proceeds.

Despite recent declines in house prices and rents in Dubai, Mr Haffar said the property market has reached a "mature level" of development and was generally on an upward momentum.

“Like any other international city in the world, like Kuala Lumpur, Singapore or Hong Kong, they soar high at the beginning reaching maturity and then they coast to a plateau at a certain level. Right now in MAG projects, end users are buying, not just speculators and investors, which is a good sign.”

Many of the emirate's larger developers have also dropped expansion plans and limited new projects to a minimum in line with market requirements, he said.

“So, whatever you are going to launch is going to be very well thought [out] based on demand. We are not just building for the sake of building,” he said.

Expo 2020 will have a positive impact on the real estate, he added.

“It will stimulate the market ... boosting further investments into real estate. We will see international investors will find Dubai as a very suitable market for investment.”

The real estate market has endured five years of declining prices following a drop in oil prices that began in 2014, as well as ongoing concern about an oversupply of properties.

Dubai sales prices were 7 per cent lower year-on-year, for apartments and 9 per cent lower for villas in the third quarter of 2019, according to a recent report from consultancy, JLL.

However, according to Property Finder data, the amount of transactions that took place in the Dubai real estate market last year increased by 20 per cent year-on-year to 41,988. This was the highest rate of sales for 11 years.