‘Now is the time to tighten belts,’ says Alabbar

Published December 5th, 2006 - 11:43 GMT

Businesses in the Arab world should exercise fiscal prudence now in response to record market liquidity, Emaar Properties Chairman Mohamed Ali Alabbar told senior business leaders and government executives at the ongoing Arab Strategy Forum in Dubai today.

Addressing the ‘Arab World Goes Global’ plenary session on Day 2 of the three-day Forum at the Madinat Jumeirah, Alabbar suggested Arab companies should engage in ‘smart acquisitions’ to move away from the complacency that has settled into the region’s markets with regards to decisions on investments in global markets.

“There is an immense amount of liquidity in the Arab market now, and it is affecting the way we operate,” Alabbar said. “We tend to spend easily and extravagantly rather than thinking through the process of making every dirham count and thinking in the long-term. We have to spend our money wisely. If not, when the cycle goes down, as it will, the consequences will be painful. We should do all we can to prepare for it now. When the going is good, we need to tighten our belts.”

The problem with the Arab world’s global aspirations is not one of money but mindset, he added. “We need to look at what we are investing in, and why,” Alabbar said. “In today’s world, the best investment is knowledge, not bricks and mortar. Knowledge will leapfrog us into the brand new world, and enable us to scale up quickly.”

Alabbar said Arab businesses looking to spread their wings internationally should go early into emerging markets, with strong local partners, and be prepared for entirely different realities.

He encouraged Arab entrepreneurs and corporations alike to look East, specifically to India; to work within their core competencies, and unite to form an economic bloc.

“Traditionally, the Arab world has been unable to work as a political and economic bloc, but in the business sector, we must,” Alabbar said. “We have a common destiny.”

Alabbar also lauded the efforts of those governments who were working to support their business communities’ global ambitions.

“The Dubai government in particular is a role model in this regard, taking its image and capacity, and the image and capacity of all its stakeholders, throughout the world,” he said.

The 4th Arab Strategy Forum, which ends tomorrow, has brought together more than 600 global and Arab leaders from business, government and civil society to discuss key issues affecting the Arab world.

About Emaar Properties PJSC:
Emaar Properties, the Dubai-based Public Joint Stock Company and one of the world's largest real estate companies, is listed on the Dubai Financial Market and is part of the Dow Jones Arabia Titans Index. The company recently announced that its net profits for the three quarters ended September 30, 2006 reached AED 4.658 billion (US$1.268 billion) – a significant gain of 26 per cent over the same period in 2005 - reflecting the remarkable growth the company has gained since its inception in 1997.

With more than 14,500 homes handed over to customers, Emaar has several major real estate projects under various stages of development in Dubai. An ISO9001:2000 quality certified company, Emaar is marching ahead with the construction of its AED 73 billion (US$20 billion) Downtown Burj Dubai mixed-use development that encompasses Burj Dubai, the world’s tallest tower when completed in 2008.

The company has joint ventures and projects across the region covering Saudi Arabia, India, Egypt, Turkey, Morocco, Bahrain, Syria, Jordan, Pakistan, Lebanon and Tunisia. In Saudi Arabia, Emaar is developing the US$26.6 billion (SR 100 billion) King Abdullah Economic City, the single largest private sector project in the Kingdom.

Emaar also entered the US market by acquiring John Laing Homes, the second largest privately held homebuilder in the US for AED 3.856 billion (US$1.050 billion). Emaar joined hands with The Turner Corporation, a leading international building services provider, to form a new entity, Turner International Middle East Ltd (Turner International ME) to jointly tap regional growth opportunities.

In a move that scaled up its core competency in product sales across the international arena, particularly the Western hemisphere, Emaar acquired Hamptons International, the UK-based subsidiary of premier property developer Wheelock Properties (Singapore) Ltd in a deal worth AED 562.45 million (US$153.05 million).

Last year the property developer announced plans to aggressively expand the retail sector with investments of over AED 15 billion (US$4 billion) to develop approximately 150 malls in the larger emerging markets of the Middle East, North Africa (MENA) and the Indian subcontinent. In addition, Emaar has teamed up with Giorgio Armani S.p.A to build and manage 10 Armani hotels and resorts across the world; an Armani hotel will feature in Emaar's flagship Burj Dubai tower.

Emaar’s education initiative will involve the establishment of international schools in the MENA region and India, which will offer premium quality education and an integrated curriculum for students ranging from kindergarten to tertiary levels. Emaar's healthcare diversification will see the company invest around AED 18.35 billion (US$5 billion) over the next decade in the MENA and South Asia markets with the construction of hospitals, clinics and medical centres and the investment in the provision of world-class healthcare services.

Emaar has diversified into related business lines to further build value for its shareholders, which includes the Government of Dubai. Emaar owns and manages EMRILL, a joint venture with the UK-based Carillion which provides innovative property and facilities management services. Emaar also holds 30 per cent equity in Dubai Bank, focused on retail and commercial banking and is the majority shareholder in Amlak Finance, UAE's leading Islamic home financing company. For more information, visit www.emaar.com.


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