Abu Dhabi’s Al Masaood Developments' 2019 outlook bullish on new projects

Azure Al Reem is one of the first schemes under the capital's new freehold property ownership laws

Azure Al Reem by Al Masaood. The company is upbeat on prospects. Courtesy: Al Masaood Developments
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Al Masaood Developments, the real estate arm of the 50-year-old Abu Dhabi family business Al Masaood Group, is bullish on its performance this year after a restructure and in the wake of the emirate's enactment of freehold ownership rules.

"We expect to see substantial double-digit year-on-year growth as we continue to extract value from our assets and benefit from new property ownership laws that give people that added security [in their investment]," Ziad Abou Nasr, manager of Al Masaood Developments, told The National on Wednesday.

In April, Abu Dhabi government made changes to real estate laws to allow foreigners to own freehold property in designated investment zones for the first time. Previously, freehold ownership was only permitted for UAE and GCC nationals, while foreign investors were granted leasehold arrangements over a maximum 99-year period. The move is intended to increase foreign direct investment in Abu Dhabi and boost the economy.

Al Masaood's Dh500 million Azure Al Reem scheme at Reem Island, which launched two weeks ago, is one of its first real estate projects in the capital applicable to the new rules. Mr Abou Nasr said he hopes the 339 apartments for sale with deposits of Dh50,000 or Dh70,000 and flexible instalment options over 15 years will appeal to foreign investors. More than half of the inquiries (57 per cent) have been from Emiratis.

UAE real estate market sales and rental rates have dropped over the past four years, as lower oil prices constrained consumer purchasing power and demand. Falling property values have squeezed profit margins of developers and forced them to adopt new business models and introduce incentives to lure buyers.

Dubai's Arabtec Holding and Damac Properties are examples of companies that have implemented cost saving and consolidation plans to lift earnings, while others have expanded by rolling out affordable housing offerings.

Al Masaood has restructured to position itself for future growth. The move was prompted by the standing down of the late founding group chairman in 2016, which necessitated the implementation of a group succession strategy.

By early 2017, a new management team had been appointed tasked with reviving the group's business model. For the real estate division that meant finding ways to maximise value and cut costs across its mixed-use portfolio.

By the end of 2018, Al Masaood had pushed its annual revenue growth up to "strong single digits", Mr Abou Nasr said. "We bucked the trend of falling earnings across the rest of the market by creating a lot of efficiency savings in terms of property management."

Al Masaood plans to increase its holdings by 34 per cent this year, with Azure Al Reem and three other projects in the UAE. These include apartment blocks at Dubai developer Meraas' City Walk scheme, scheduled for handover in 2020. In Abu Dhabi, there is a residential project that will be launched for sale later this year and a community mixed-use scheme,  for which few details are available.

The residential segment makes up 30 per cent of the company's UAE portfolio while warehouses and industrial account for 31 per cent, retail represents 18 per cent, offices 15 per cent and hotels 6 per cent.

The company is also holding talks with overseas investors to expand beyond the region but no deals are imminent, Mr Abou Nasr said. Al Masaood had holdings in the UK and Scotland, but exited the Scottish project in Aberdeen three years ago.