The best address in Abu Dhabi
The story of Mangrove Place is one of persistence, vision and steering a new business through some decidedly troubled economic waters. Ausama A. Zubaidi, CEO of Luxury Real Estate Development LLCÔÇöone of the leading private developers in Abu DhabiÔÇöoutlines to John OÔÇÖHanlon how the project will be one of Abu DhabiÔÇÖs finest.
We tend to forget that it was not until the 1960s that oil was first exported from Abu Dhabi. Not surprisingly, the EmiratesÔÇÖ construction sector was dominated by oil and gas projects for many years as the major international petrochemical companies extended their facilities in partnership with local governments. Though some prestigious projects existed before the turn of the millennium, it was not really until then that the UAE started to look beyond the finite oil boom and decided to create long-term industries.
The early years of this decade saw Abu Dhabi in particular supporting a series of luxury hotels and residential projects. Abu Dhabi has an interesting coastline, with inlets and a series of undeveloped islands to the north-east of the city, which started to be developed from around 2004 onwards, when ALDAR Properties was formed, followed by TDIC and other master developers such as Tamouh, Sorouh and Al Reem. Interest focused on the islands of Saadiyat, Suwwah and Al Reem and as a former senior projects manager at ALDAR, Ausama A. Zubaidi was in charge of implementing significant parts of the AED54 billion ($14.7 billion) Al Raha Beach development, in the borders of the city of Abu Dhabi.
An architect holding a masters degree and a construction specialist trained in the UK and the US, Zubaidi has lived and worked in Abu Dhabi for the past 15 years and has a clear vision of what this market needs. ÔÇ£I have sat at all the corners of the table, viewing all partiesÔÇÖ perspectives, but I think the role of the property developer is the most satisfying,ÔÇØ he says.
In 2006, he launched Luxury Real Estate Development LLC (LRED), with the intention of developing a well designed, competitively priced, beautifully located real estate industry within Abu Dhabi. The company purchased two prime plots on Al Reem Island and set about establishing residential buildings within what is known as Shams Abu Dhabi, developed by master developer Sorouh Real Estate.
The first project was Mangrove Place, a mid-rise waterfront development with staggered terraces and balconies offering uninterrupted canal and sea views. Mangrove Place offers a range of one, two and three bedroom apartments and a limited selection of townhouses and penthouses, as well as a number of retail units.
The $100 million building, financed by the National Bank of Abu Dhabi, was originally due for completion in the first quarter of 2010; in the event, it is not going to be ready for occupation until the second quarter of 2011, though it should be stressed that far from being a failure on the part of LRED, the fact that it will be completed in this timeframe is a tribute to the development team.
When Dubai came close to bankruptcy at the end of 2009, the neighbouring Gulf economies were affected, and the economic climate forced some changes in LREDÔÇÖs original plans. ÔÇ£Our intention when we started the company was to do multiple investments between Abu Dhabi and Ajman, since in 2006 Abu Dhabi was the hottest real estate market worldwide, whether for sale or rent, residential or retail,ÔÇØ says Zubaidi.
A number of factors contributed to a dip in investor confidence. ÔÇ£Though some 70 per cent of Mangrove Place had been sold already, buyers became more cautious,ÔÇØ he says, and the company was forced to sell its other major development project on Al Reem, the Waterside Place, to reignite cashflow and secure the continuation of Mangrove PlaceÔÇÖs development.
In addition, four other smaller projects in Ajman were mothballed. ÔÇ£The banks started to look askance at real estate and the residential construction market came under pressure.ÔÇØ This has been a tricky time for LRED, but Zubaidi is willing to predict that by the time Ramadan comes to an end towards the end of 2010, the worst will be over. Confidence will return and Mangrove Place, which has already risen to the sixth of its 29 storeys, will be well on its way to structural completion and halfway through the finishing stages.
The economy was the main reason for restructuring LRED and focusing on Mangrove Place, but it did not affect the schedule. The 14-month delay was caused by events in the Far East as the original contractor, the large South Korean Hyodong Construction Company (in a joint venture with a local firm), fell victim to the demise of AIG in the US and went bankrupt. Despite shuttling between Abu Dhabi and Korea during 2008 trying to help Hyodong out of its misery, Zubaidi was forced to retrieve the situation. He eventually placed the main construction contract with Gulf Technical Construction Company (GTCC), a fully-owned subsidiary of Drake & Scull International, one of the most experienced and longest established electro-mechanical contractors in the region, which is currently listed with the DIFC as a publicly listed joint shares company.
LRED has done an excellent job of keeping its buyers happy and extending flexibility into their contractual obligations to mitigate delays. ÔÇ£I changed the payment system to a construction progress schedule basis, which means that if any part of the project is late, they do not have to worry about due payment.ÔÇØ For those buyers who have defaulted in good faith, he has limited penalties to the default period only.
Mangrove Place will be worth the wait. It offers value for money, which is a rare commodity in the region. For a start, while somehow spacious, the flats are not oversized and are consequently competitively priced. ÔÇ£Who really needs a single bedroom flat of 125 square metres?ÔÇØ Zubaidi asks. Typically, in the UAE, such flats sell at around AED1.3 million or more. ÔÇ£It may be what people have come to aspire to, but it is not internationally competitive. We ended up designing such units between 70 and 80 square metres, which enabled us to sell one-bedroom flats for well under one million dirhams.ÔÇØ Some are even less than AED700,000 ($190,000), which is much more realistic and affordable. Moreover, since many purchasers buy to let, at current rents the return on investment is around 12 per cent, compared with the average of barely seven to eight per cent with other developers in the same market.
But nowhere has quality been compromised. ÔÇ£The design gives every single buyer a terrace and a balcony, which was never the case in the UAE before. I insisted on materials from Western Europe and the US; whereas other developers source from the cheaper places. For example, we have the most sophisticated Thyssen lifts from Germany, and even the wiring accessories are in the process of being procured from FranceÔÇÖs LegrandÔÇöthe most stylish you can get. They have never been used in a residential building here! It is like staying in the Hilton for the price of a four-star hotel.ÔÇØ
Mangrove Place is also more sensitive to local conditions than other places. It has the latest temperature-controlled swimming pool tied to the building management system, a gym and a Jacuzzi, in addition to 24-hour manned security and gated parking areas. One thing it does not have is a cradle window cleaning systemÔÇöand for good reason. The combination of humidity and dust in Abu Dhabi settles on glass surfaces so that after two months, you cannot see out of them. ÔÇ£Our windows swivel open so you can clean them yourself.ÔÇØ More importantly, Zubaidi points out, contract window cleaning is a constant problem in Abu Dhabi, which has strict privacy laws. It is haram for a lady to be looked at by a window cleaner who may suddenly appear outside her tenth floor windowÔÇöbut then, overseas developers never seem to appreciate that.
