DAMAC Owner, Hussain Sajwani is Dubai’s Real Estate Mogul
According to the Forbes 2018 rankings of net worth, Hussain Sajwani is currently worth $3.7 billion. But the CEO and owner of Damac Properties hasn’t always had such an easy ride, as Sajwani has come from humble beginnings to rise to prominence, only to see his empire fall and be built back up even stronger than before.
Hussain Sajwani sees much of his current success as tied to the lessons he learned when with his father, Ali Sajwani, who owned a shop selling everything from watches to pens. Hussain remembers his father even traveling to China, a rare thing for Arab businessman at the time.
His father displayed shrewd business tactics, as Sajwani recalls in one particular instance. “A customer would buy a ten dirham pack of vests and when he left my father would immediately raise the price to eleven dirhams. I’d ask him why and he’d reply: ‘That customer never buys from me, and the fact he bought a large quantity without questioning the price means there is a shortage in the market.’ My father knew his customer base and he would change direction very quickly in the goods he’d import. This is one of my key successes; I can adapt to the market very quickly.”
After a stint in America studying industrial engineering and economics at the University of Washington, Hussain Sajwani returned to Dubai in 1982 with the American entrepreneurial fever, wanting to pursue his own ventures as soon as possible. Although Sajwani began his working career at Abu Dhabi Gas Industries, it wasn’t long before he started his own business, Global Logistics Services, which would go on to become one of the area’s largest catering businesses.
The beginnings of a real estate empire
In 1996, Sajwani began what would be the start of a real estate empire with a series of five-star hotels in Deira. He recalls the vision of these properties and the early days of his business as very straightforward. “Build, lease, sell. Next, next, next,” remembers Sajwani.
In the early 2000s, two moves by the government in Dubai would change its real estate industry: expats were now allowed 99-year leases, and foreigners were given the opportunity to purchase property on freehold ownership. Sajwani would go on to create Damac Properties during the same time these new regulations went into effect.
Because Sajwani had previous successful businesses, which included an insurance company in Bahrain and a ceramics factory in Oman, he had plenty of capital to invest in new properties. So, Damac began purchasing properties all over Dubai in the early 2000s, and in 2005 would expand outward to Egypt, Jordan, Saudi Arabia, and Lebanon. Sajwani even recalls his stock market investments being very profitable at the time, so much so that, “I made a lot of money there, which I injected back into land.”
This reinvestment of capital allowed Damac to succeed considerably without ever having to go in debt or borrow from lenders. Sajwani remembers utilizing the real estate laws in Dubai to his advantage at the time. “Before the escrow ruling was introduced in 2007 [which required developers to hold off-plan payments in a specially managed account], you’d buy a piece of land and pay for it in four-year payments. Then you’d launch the project, collect that cash and use it to construct. So, once you’d paid your other costs, your equity was still only 30 percent of the land price.”
Crash and rebuild
However, the good times wouldn’t last, and the real estate crash in Dubai was on its way, a crisis that Sajwani claims he saw coming. “I knew we had a bad situation coming. We took action very quickly, letting a lot of people go, cutting our overheads, consolidating lands and projects. And we were hit very badly by the press, because we were the first ones to do that.”
The aftermath wasn’t pretty. Home prices fell 50% in less than one year and the Damac owner remembers it taking about seven months just to pull themselves out of the bad situation. What may have saved the company in the end was reserves of AED1bn in escrow which the company was able to use to build during the market downturn. On properties that were left unfinished, Damac offered its customers a finished property in another area, which seemed to work out well for everyone, and according to Sajwani, “95% of people accepted that deal.”
It wouldn’t be long before Damac would regain its footing in the real estate industry, and in 2013 the company was listed on the London Stock Exchange, raising $379 million and becoming the first real estate company in the Middle East to do so. Unlike many other companies which struggle with the regulations and transparency of going public, Sajwani felt this was easy because of how tight he ran his business. “I’d always been very strict on compliance and auditing from day one.”
As the company continued to grow, Hussain Sajwani began striking partnerships with brand names around the world, including Paramount, Akoya, Cavalli, and Bugatti. Additionally, because of the new financing from its IPO, Damac was able to expand its reach even further in the Middle East and beyond, with projects in Qatar, Saudi Arabia, Jordan, Lebanon, and even the UK.
In 2017 Damac turned a $762 million profit, a staggering number, yet one that was down 25% from the prior year. However, after all that he has seen, this doesn’t phase Sajwani. “The property market is a cycle. You get three to five years of growth and then a reverse for a similar period. Prices have fallen by seven to ten percent in the last 24 months, but have now stabilised. Our sales in 2017 were higher by three or four percent over 2016, though admittedly our margins were under pressure.”
Always thinking bigger
Now that his empire is restored, Hussain Sajwani dreams big. Really big. The owner of Damac has plans in the works for a $6.5 billion, 55-million square foot, 10,000 unit project, which will be known as Akoya Oxygen. He also notes how much potential there still is in Dubai for building new properties. “Dubai has 500,000 units in the freehold space and the city is growing at an average of four or five percent per year in population terms – the head of Dewa told me that. So if you assume four percent growth then you need 20,000 units on top of the current stock. And we’re delivering, as a city, between 10,000 and 12,000 units per year.”
Even with all of his success, Hussain Sajwani still isn’t satisfied, and the owner of Damac Properties is always looking for ways to grow his company. The one-time son of a shop owner now wants to see his properties all around the world. “My dream is to have Damac towers in gateway cities around the world. We have one in the UK [Aykon London One] and I’d like to see another half a dozen in other major hubs including Asia and America.” Knowing the drive and saavy of Sajwani, it may not be long before his dream becomes a reality.
Read the full article by Arabian Business: http://www.arabianbusiness.com/property/393676-did-i-foresee-what-would-happen-no-but-i-saw-an-opportunity