Why is Emaar Chairman Mohamed Alabbar Bored of Dubai Real Estate?

By Activist Shareholder

It is great to see Emaar’ supremo Mohamed Alabbar looking for a challenge. Dubai and certainly the emirate’s real estate sector needs dynamic personalities like him to help pull it through its current crisis.

As alifarabia.com observed in a recent report (Is Dubai Back?), we believe the emirate has gotten over the ‘hump’ of its problems amid better domestic business conditions and stands to be a beneficiary of business diverted its way on account of turmoil in the rest of the region.

To his credit, Mr. Alabbar was one of the last few men standing as Dubai went through a painful restructuring which saw many high-profile heads roll. But Emaar and Mr. Alabbar pulled through and launched the world’s tallest tower in the world, an 828-metre colossus that is the Burj Khalifa.

But the emirate still has a long way to go, with real estate - the sector Mr. Alabbar operates in - continuing to be a drag on the economy.

So it was puzzling to see that instead of the challenge of pulling Dubai and Emaar back to its heydays of 2005, the chairman seemed a bit bored in a recent media interview.

“The Burj was over,” he told arabianbusiness.com. “I was thinking where to go, what to do next? Yes we got there, but we’re human beings, so when we get there we say ‘So what are we going to do after this? Are you going to crawl back in a little hole?’ I can tell you this; that’s not me.”

So, running the region’s largest real estate company which posted a 45% drop in its latest quarter does not constitute a challenge?

So we came up with a few things that Mr. Alabbar may fancy:

1. Help create a robust and transparent real estate law at least for the emirate, if not at a federal level

2. Find innovative incentives to bring back investors back into the market, instead of waiting for market forces to balance themselves in another two years

3. Lend his expertise to find creative solutions for rival/sister company Nakheel

4. Jump-start King Abdullah Economic City, a project that seems longer and longer to realise its full potential. “We expect negative earnings to drill through to 2014 until significant contributions from the seaport start to kick in the top line,” wrote Global Investment House in a research note.

5. How about resolving the myriad issues with Emaar’s other foreign projects in Egypt, India and Syria?

BEEN THERE, DOING THAT
Hang on. Emaar is already doing some of that.

On May 7, a day after Mr. Alabbar’s interview with the Financial Times and Arabianbusiness.com, an Emaar press release stated:

Emaar Properties has established a core management team comprising senior managers and McKinsey & Company, to develop and roll-out a five-year corporate strategic action plan for long-term value creation.

Mr. Alabbar explained that the core management team will focus on four key areas: strengthening the resilience of the organisation in the wake of recent social, political and economic changes in its regional and global markets; establishing a sustainable business model for the future; identifying and capitalising on the growth opportunities; and creating a robust organizational and corporate governance framework that resonates with new market realities.

So, arguably that should keep Mr. Al Abbar very, very busy.

Instead, Mr. Alabbar has dreams of creating an Arabian Rio Tinto and mining for resources in Africa for a personal venture.

“I might invest (in Zimbabwe) under the current conditions, I might. You can wait till everything is fine and then be behind the queue. I don’t want to do that.”

Gulf executives have this impressive ability of being able to juggle multiple things, some of which may conflict with their schedules and work.

Mr. Alabbar is widely seen as a public official figure who rose through the ranks and worked his way through Dubai Economic Department (a government department), Dubai World Trade Centre (another government department), Dubai Aluminium (100% owned by the Dubai Government) before moving to Emaar (31.22% owned by government-owned Investment Corporation of Dubai) as its chairman. He continues to play a key role in other government departments, including the powerful Dubai Executive Council.

It is important to note that Emaar is one of the most widely held company in the region, with thousands of shareholders who, technically, Emaar management is answerable to.

“Emaar is my love. It is part of my DNA. I’m here, I give 80 percent of my time to the company but I have another new team that runs this [mining] business and I give them 20 percent of my time and I support them,” he told Arabianbusiness.com.

So, Mr. Alabbar remains committed to Emaar. Just not a 100%.

Opinions expressed in this article are those of Activist Shareholder and may not necessarily reflect the views of alifarabia.com.