Property

Dubai Properties in management shake-up

After a planned merger with Emaar was cancelled, the company has replaced several executives, including its chief financial officer.

Angela Giuffrida

December 27, 2009

Dubai Properties Group, owned by the Ruler of Dubai's holding company, has replaced several executives, including its chief financial officer. The action comes after the cancellation this month of a planned merger with Emaar Properties, the UAE's largest developer, which Emaar deemed was no longer commercially viable. Dubai Properties is one of the largest owners of development land in the country, with projects that include the Jumeirah Beach Residence development of high-rise towers, and the vast Dubailand leisure project that was intended to combine theme parks with luxury housing developments. The management reshuffle represents the latest step in the group's consolidation process after Tatweer, Sama Dubai and Dubai Properties, all subsidiaries of Dubai Holding, were merged in August. David Anderson, the former chief financial officer at Tatweer, will be the group's chief financial officer, while Amjid Javaid Sheikh, formerly head of compliance at Tatweer, takes on the role of senior manager for compliance and risk management. Fareda Abdullah, who previously worked for Arab Bank and United Arab Emirates University, has been named chief operating officer and Jayne O'Brien, who was previously at Tatweer, has been appointed chief marketing officer. In other moves, Arif Mubarak, formerly vice-president at Bawadi, a project planned for Dubailand, will assume the role of chief real estate officer and Dominic Pilkington, who was previously with the law firm Galadari and Associates, has been appointed the executive director of legal. Mohammed Al Habbai is now chief executive of Dubailand. He was formerly the senior vice president at that venture. Billy Daly will remain the chief executive officer of Dubai Asset Management, while Saeed Bushalat continues as the chief executive officer of Salwan, the property management service company of Dubai Properties Group. "I am confident our team of dedicated professionals will together lead this company through to its next phase of growth," said Khalid al Malik, the group chief executive of Dubai Properties Group. The shake-up at Dubai Holding follows consolidations and management reshuffles this year at Dubai's two other government-owned conglomerates, Dubai World and Investment Corporation of Dubai (ICD). Dubai World, which is currently in talks with creditors over a proposed debt restructuring, in October announced it was cutting about 12,000 jobs as part of a plan to save US$800 million (Dh2.93 billion) over three years. A month later, Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, removed several prominent businessmen from the ICD board. The changes at Dubai World, ICD and now Dubai Holding come as the emirate wrestles with a debt load estimated at $85bn. The reshuffles and consolidations have been cast as efforts to pare redundant operations and increase efficiencies to better take on challenges presented by the financial crisis. "There has been movement across the board at a high level in Dubai," said Joseph Morris, the Middle East director of Strutt and Parker, a property consultancy. "Going forward, it's about the creation of a new image for the emirate. People have to regain confidence in Dubai, and that's the most important thing for 2010."

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”