Azizi chief believes Dubai demand will absorb coming housing supply

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A view of Dubai from the Burj Khalifa. (Reuters)
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Azizi Developments CEO Farhad Azizi believes there is enough demand to absorb thousands of new homes under construction in the emirate. (Reuters)
Updated 20 July 2019

Azizi chief believes Dubai demand will absorb coming housing supply

  • CEO pinning hopes on Expo 2020, which is expected to be key driver for real estate sector and economy as a whole

DUBAI: The story of Azizi Developments transcends its journey from a plot of land in 2007 to more than 200 projects today.
Since then, the company has delivered 8,200 homes, worth over $12 billion.
In the words of Farhad Azizi, the CEO of Azizi Developments, it is as much about the “opportunity to actively contribute to the development of Dubai” and to grow as part of such an “awe-inspiring” city.
“Much like this Emirate, which we call our home, we have grown very rapidly,” said Farhad, who has been the driving force behind the company's strategy.
In the process, Azizi has had to adapt to market trends and the crests and troughs of the property market. Over a decade spent in banking, construction, oil, gas and hospitality came in handy while steering the Azizi ship.
“We launched our first development in 2008, selling over $1 billion worth of properties,” he said. It was to be the beginning of a remarkable journey that was rudely interrupted by the collapse of property prices.
“In July and August of 2008, our clients approached us, gravely concerned that they were unable to continue their payments,” said Farhad.
Like other real estate developers, Azizi received many requests for projects to be stopped and for deposits to be returned.
Azizi investigated every case individually with the help of the Dubai Land Department and handed back all deposits.
 “Despite all the chaos occurring around us, we are proud to say that we were one of the very few developers to have done this.
“We returned a total of 149 million dirhams ($40.565 million) that was already spent on design, marketing, and land payments, and that was not sourced from an escrow account, as a gesture of goodwill,” he said.
The period of turbulence, however, had some important lessons, and smart operators emerged stronger. “The most important lesson we have learned from the crisis is to prioritize our customers, at all times,” added Farhad.
“Naturally, when purchasing power decreases, customers become more selective and meticulous in their purchase decision-making process. Those with strong products prosper, and those with offerings that do not meet needs adequately suffer.”
Farhad stands by the much-maligned off-plan property market, calling it a matter of trust.
“In today’s world of immediate knowledge transfer, where social media posts and review sites enable customers to inform themselves and shape their image of a business, transparency is the absolute key to building trust.”
Besides, what matters most is a strong return on investment. “Only research-driven companies that leverage the latest technologies will innovate and prosper.”
Like most other companies in this business, Azizi is also pinning hopes on Expo 2020, which is expected to be a key driver for the real estate sector and the economy as a whole.
“As the first-of-its-kind mega-event hosted in the region, welcoming over 25 million visitors, it will boost the economy by over 3.5 percent,” Farhad added.
His optimism is based on the fact that a lot of Azizi projects have accessibility to the Expo 2020 site, which will continue to grow as a vibrant leisure and business destination even after the event.
Farhad also has an interesting theory on millennial buyers. He believes, with 60 percent of the region’s population now below the age of 30, millennial professionals are the most important demographic.
“While our research finds that young professional millennials are often anxious and have a fear of commitment, they are becoming increasingly aware of the benefit of moving from home renting to ownership,” he said.
They are, he believes, realizing that renting only helps pay someone else’s mortgage, when they could turn the expense, or “dead investment” of rental payments, into installments toward a profitable asset.
“For example, while renting costs for 20 years can amount to upwards of 2.16 million dirhams, buying a similar property in the same location would cost just over 1.76 million dirhams, not to forget that the investor then owns a valuable, lucrative asset after the 20-year period, once the mortgage is paid off.”
Farhad also has a special mention for Saudi investors who, according to him, stand out for being investment savvy. “They inform themselves extremely well of the different locations, the planned infrastructure and amenities.”
So what does the future have in store for Azizi Developments? For a start, Farhad is confident that since Dubai has one of the fastest-growing populations in the world, market absorption rates will withstand the supply.
“By the end of 2019, we aim to complete approximately 4,000 units. We have dedicated this year to the swift development and timely completion of our projects.”

Decoder

Off-plan property sales, involving the sale of homes that have yet to be built, has been a major driver of the Dubai residential property market.


Powell: No clear hint on rates but says Fed will aid economy

Updated 23 August 2019

Powell: No clear hint on rates but says Fed will aid economy

  • The outlook for the US economy, Powell said, remains favorable but continues to face risks
  • Trump, who has relentlessly attacked Powell and the Fed over its rate policies, kept up his verbal assaults on Twitter

WASHINGTON: Federal Reserve Chairman Jerome Powell sent no clear signal Friday that the Fed will further cut interest rates this year but said it would “act as appropriate” to sustain the expansion — phrasing that analysts see as suggesting rate cuts.
Powell said President Donald Trump’s trade wars have complicated the Fed’s ability to set interest rates and have contributed to a global economic slowdown.
Speaking to a gathering of central bankers in Jackson Hole, Wyoming, Powell didn’t give financial markets explicit guidance on whether or how many rate cuts might be coming the rest of the year. The Fed cut rates last month for the first time in a decade, and financial markets have baked in the likelihood of more rate cuts this year.
The outlook for the US economy, Powell said, remains favorable but continues to face risks. He pointed to increasing evidence of a global economic slowdown and suggested that uncertainty from Trump’s trade wars has contributed to it.
Reacting to the speech Friday, Trump, who has relentlessly attacked Powell and the Fed over its rate policies, kept up his verbal assaults on Twitter:
“As usual, the Fed did NOTHING!” Trump tweeted. “It is incredible that they can ‘speak’without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work “brilliantly” with both, and the US will do great.”
Trump added:
“My only question is, who is our bigger enemy, Jay Powel (sic) or Chairman Xi?“
Powell’s speech comes against the backdrop of a vulnerable economy, with the financial world seeking clarity on whether last month’s rate decision likely marked the start of a period of easier credit.
The confusion only heightened in the days leading to the Jackson Hole conference, at which Powell gave the keynote address. Minutes of the Fed’s July meeting released Wednesday showed that although officials voted 8-2 to cut their benchmark rate by a quarter-point, there was a wider divergence of opinion on the committee than the two dissenting votes against the rate cut had indicated.
The minutes showed that two Fed officials favored a more aggressive half-point rate cut, while some others adopted the polar opposite view: They felt the Fed shouldn’t cut rates at all.
The minutes depicted the rate cut as a “mid-cycle adjustment,” the phrase Powell had used at his news conference after the rate cut. That wording upset traders who interpreted the remark as suggesting that the Fed might not be preparing for a series of rate cuts to support an economy that’s struggling with a global slowdown and escalating uncertainty from President Donald Trump’s trade war with China.
There was even a difference of opinion among the Fed members who favored a rate cut, the minutes showed, with some concerned most about subpar inflation and others worried more about the threats to economic growth.
Comments Thursday from Fed officials gathering in Jackson Hole reflected the committee’s sharp divisions, including some reluctance to cut rates at least until the economic picture changes.
“I think we should stay here for a while and see how things play out,” said Patrick Harker, the president of the Fed’s Philadelphia regional bank.
Esther George, president of the Fed’s Kansas City regional bank and one of the dissenting votes in July, said, “While I see downside risk, I wasn’t ready to act on that relative to the performance of the economy.”
George said she saw some areas of strength, including very low unemployment and inflation now closer to the Fed’s target level. She said her decision on a possible future rate cut would depend on forthcoming data releases.
Robert Kaplan, president of the Fed’s Dallas branch indicated that he might be prepared to support further rate cuts.
If “we are seeing some weakness in manufacturing and global growth, then it may be good to take some action,” Kaplan said.
George was interviewed on Fox Business Network; Harker and Kaplan spoke on CNBC.
The CME Group, which tracks investor bets on central bank policy, is projecting the likelihood that the Fed will cut rates at least twice more before year’s end.
Adding to the pressures on the Fed, Trump has kept up his attacks on the central bank and on Powell personally, arguing that Fed officials have kept rates too high and should be cutting them aggressively.
Trump has argued that a full percentage-point rate reduction in coming months would be appropriate — a suggestion that most economists consider extravagantly excessive as well as an improper intrusion on the Fed’s political independence.
The president contends that lower rates in other countries have caused the dollar to rise in value and thereby hurt US export sales.
“Our Federal Reserve does not allow us to do what we must do,” Trump tweeted Thursday. “They put us at a disadvantage against our competition.”
Earlier in the week, he had told reporters, “If the Fed would do its job, you would see a burst of growth like you have never seen before.”
Powell has insisted that the White House criticism has had no effect on the Fed’s deliberations over interest rate policy.