Cost and fragmentation are barriers to innovation in property industry, says Damac founder
Hussain Sajwani says technology is easier to incorporate in London where it can command Dh7,600 per sq ft
Lack of technological integration in the property market lies partly with the fragmented nature of the sector, said Damac Properties’ founder and chairman, Hussain Sajwani.
Mr Sajwani, whose property company announced its first loss in almost a decade on Tuesday, said there are “very few large property companies globally” in a panel debate on disruption in real estate at the Milken Institute’s Middle East and Africa summit in Abu Dhabi on Tuesday.
“To give you an example, I’ve been in New York and met a number of developers. Apart from maybe two or three big developers, like Related, some of the biggest names, they do one building every three or four years. So the volume is not there for them to invest heavily in technology,” he said.
The other major factor preventing more widespread adoption is cost, he said. He argued that Damac integrated technology into apartments at its London project, but the selling prices for units there are about £1,600 (Dh7,600) per square foot.
“In Dubai today, we’re selling at about Dh900-Dh1,500 maximum. So cost is a factor in that,” he said.
Although many sectors have been disrupted by technology, with the physical retail sector particularly hard hit, the risk is not the same for property.
"You still have a hard asset, and location and right quality of buildings really protect the buyer and protect the developer if he does a good job," he said.
Mr Sajwani was speaking on the panel alongside Joseph Sitt, the chief executive of real estate developer Thor Equities, who revealed he was part of a bid for Italian fashion house Cavalli, which was on the verge of completing its purchase when Mr Sajwani’s Dico Group swept in at the last minute and outbid them.
“My group was the stalking horse that had spent millions for dollars and actually signed a contract to buy Cavalli when he heard about it four days before and came riding in and outbid us,” Mr Sitt said.
Mr Sajwani explained he was holidaying with his family in Milan in April last year when he went for coffee with Cavalli’s CEO, with whom he had previously done a deal for Cavalli branded residences.
“It was Friday, he said ‘we close on Wednesday’. I was very persistent. I sent my CFO, and the lawyers and bank had told us ‘you have zero chance’,” Mr Sajwani said.
“We took that opportunity. I’ll be honest, we have not done detailed homework on it but it was very entrepreneurial.”
He said the globally-recognised brand, which is 50 years old this year, had been ‘damaged” during a recent spell of ownership that ended in a court-approved restructuring.
“It was bought by a private equity firm and they did not invest money or time," Mr Sajwani said, adding, "so the brand has some difficulties and it was a great opportunity to buy that and turn it around. There’s a lot of work on it but I think we can turnaround”.
Updated: February 12, 2020 10:07 AM