Dubai's Azizi Developments eyes Dh1bn Abu Dhabi project in 2020
The company is encouraged by new amendments in property laws and looks to further expand its presence in the UAE's capital
Azizi, a Dubai-based property developer, plans to expand into the UAE's largest emirate with a Dh1bn project next year, as the Abu Dhabi government enacts new laws that allow foreigners to own freehold property in designated zones, its chief executive said.
“We are interested in developing a project and [to] acquire some plots in Abu Dhabi,” Farhad Azizi, chief executive of the firm told The National on Thursday. Azizi plans to “launch one [project] in 2020 but this [amendment in the] rule will encourage us to do more in the market and build a bigger portfolio of business in Abu Dhabi."
The company, which has traditionally invested in its home market of Afghanistan and Dubai, aims to buy plots of land in Abu Dhabi and will decide at a later stage whether to proceed with a townhouses or low-rise apartment building project in the emirate next year. The project's value would not be less than Dh1bn, he said.
On Wednesday Abu Dhabi's government amended a real estate rule to allow foreigners to own freehold property in designated zones, which will prove to be equally beneficial for developers and investors, according to analysts and developers surveyed by The National. Foreign investors, before the change in regulations were granted leasehold arrangements with a maximum 99-year time period. Until the changes, freehold ownership of property was only allowed for the UAE and GCC nationals.
“As a developer [we] have been very busy in Dubai but wanted to expand to Abu Dhabi, with the emirate being such a huge market,” Mr Azizi noted. “With such rules coming in play, it makes it easier. It will encourage property developers like us.”
UAE real estate prices have declined in the past two years due to a slowdown in the global economy, lower oil prices and muted demand, as more property projects come online. However, steps like allowing freehold titles, government spending, a Dh50bn three-year stimulus package and easing of visa restrictions are a boon to Abu Dhabi's property market.
Beyond Abu Dhabi, Azizi plans to expand in international markets such as Frankfurt, London and Paris and build an “iconic” project in main European destinations to raise its international profile as a developer. The company is not interested in mass housing projects and is currently scouting markets for the right opportunity, he said.
The developer currently has a portfolio worth Dh45bn of projects under development and has less than Dh500m in bank loans on its balance sheet. The company is already engaged in talks with its UAE-based relationship banks for more short term bridge financing options as it continues to build projects. Mr Azizi didn't name the lenders or how much the company plans to raise in debt.
Azizi may opt for longer term construction finance from foreign banks when it expands its footprint beyond the UAE borders, mainly due to favourable interest rates in European markets.
The developer company was recently restructured, reducing its sales force by about 60 per cent, after a period of rapid expansion over the past decade in Dubai. The restructuring was driven by the need to control costs and generate efficiencies, Mr Azizi said.
"We are not running a grocery business in the city," he said, explaining the company decision to close sales office.
Updated: April 18, 2019 05:38 PM