Manazel looks to new business lines and acquisitions to boost growth

Developer begins partnership with British education firm and looks for new deals both at home and abroad

Manazel aims to maintain profits steady, its group chief executive Yaqoob Al Doseri said. Victor Besa / The National Section

Developer Manazel is aiming to diversify its business and is looking at new opportunities to boost growth, its chief executive told The National in an exclusive interview.

The group, which is listed on the Abu Dhabi stock market, currently has a property development arm as well as subsidiaries involved in commercial, retail, facilities management and district cooling, among others. In the real estate segment, the company has projects including the Al Reef mixed use development and the Ghantoot waterfront scheme in Abu Dhabi and Dunes Village in Dubai.

“We are focusing on our existing assets as well as investing in non-existing assets as part of our diversification strategy. We are looking for new opportunities in district cooling, education, retail or real estate and other sectors,” said Yaqoob Al Doseri.

In education, Manazel has signed an agreement with a British Company to manage and operate schools in Al Reef 1 and its new community, Merzab.

“This is part of our diversification,” he said, adding the company is looking for new opportunities either within the UAE or outside the country.

“There is something in the pipeline, which will be announced in proper time.”

The company is also looking at acquisitions to increase its business, he said.

In real estate, the company is in the final stages of starting a new project, Merzab, with 19 buildings. The project is expected to start at the end of the year, he said, without giving a total investment in the project.

In 2018, the company posted revenue of Dh809 million, down from Dh862m in 2017. However, profit went up 5 per cent last year to Dh231m.

In the first half of 2019, the company’s profit increased 3.8 per cent year-on-year to Dh137m but revenue fell 2 per cent to Dh506m.

“Given our strategy on diversification and having recurring revenue, we are targeting only on the bottom line to be stable and steady compared to the last year,” Mr Al Doseri said.

“So once you are outside of the real estate development and you are not pumping more volumes in this, your revenues will be here and there but your bottom line would be maintained.”

Fifty per cent of the company’s total revenue is recurring revenue and the remaining is from projects that are yet to be handed over, he said.

By June 30, the company had debt of around Dh1.47 billion, which is 48 per cent of its net equity. It also has approval from shareholders to raise money through the issuance of $500m of sukuk to pay down debt as well as for the expansion of its business.

“When the right time comes, we will go ahead with sukuk depending on the market sentiment.  For now, we believe banks give us better value and we are fine with the banks."

On the outlook for property market in Abu Dhabi, he said there is demand for housing in the mid-market segment.

“Demand is high and it has a lot of potential for growth. One of our projects, Al Reef is fully sold.”

“If you go to the public domain and see the yields and you will find it in two digits. It (mid-market) is generating high income, at least in Abu Dhabi.”

Abu Dhabi is focusing on boosting the property market with a new real estate law that allows foreigners to own freehold property in designated zones. Previously, ownership of property within these areas was only allowed for UAE and GCC nationals.

In the first six months of this year, Abu Dhabi's real estate sector recorded 10,000 transactions worth Dh31bn, according to a report by the Department of Urban Planning and Municipalities.