I never wanted to work for anyone else,” says Moafaq Al Gaddah. “I always wanted to be my own man.”
Now one of the Middle East’s richest men, with a fortune estimated to be in excess of $1bn, Al Gaddah has certainly fulfilled that promise to himself. The chairman of the Moafaq Al Gaddah (MAG) Group now oversees an business empire that stretches from property development to industry, and from car parts to hospitality.
But unlike many of the ultra high net worth individuals living in this part of the world, Al Gaddah had to make his own way in life. He had a tough upbringing in a rural part of Syria, moving to Kuwait aged just 15.
“When I arrived in Kuwait, I realised that I wanted to be an entrepreneur,” he says. “I started working in the local souq — and that’s when I found out that I had a gift for selling.”
That knack for sales was to serve the young Syrian well. He started off by working on an unlicensed kiosk, buying clothes wholesale and selling them on to the souq’s customers.
But Al Gaddah also faced a lot of challenges, from Kuwait’s searing summer heat, to stiff competition from other sellers in the market. Last but not least, he also had to keep an eye out for municipality officials, who could have put him in jail for running an unlicensed stall.
“I made some money — in fact I made a lot of money,” he recalls. “I calculated it was three times what a managing director might make in a year.
“How? I had more guts to do things that the other traders wouldn’t do. I took risks. And that is how I was seen in the market — as a young guy who wanted to make something of himself.
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“People liked that, and ended up supporting me against the big players – relatively speaking — in the market.”
By 1978, after two years working in the souq, Al Gaddah had saved up KD1,000 — the equivalent of AED100,000 ($27,000) in today’s money — and started casting around for ways to invest his hard-earned cash. Opportunity came knocking when a cousin visited from Abu Dhabi, suggesting that he should invest in a spare car parts shop in the UAE.
Al Gaddah moved to Abu Dhabi the same year and started up a chain of autoparts stores with a workforce of just three — him, his cousin and the office boy. That sector is still the engine of the MAG Group today; it is one of the largest autoparts distributors between Morocco and the CIS, selling batteries, tyres, lubricants and other accessories all over the MENA region.
“I wanted to do something different from anyone else to penetrate the market,” he says. “At that time, Kuwait was the gateway to the Gulf market, so I brought products from there to resell in Abu Dhabi. And three or four years later, I started reselling products from Europe, Japan and America on the local market.”
Business boomed, and in time, the entrepreneur was even able to start selling products under his own brand. The group quickly diversified into other industries but another big break came in the form of property, when Al Gaddah decided to invest in a patch of land to build a manufacturing plant.
“It was a coincidence,” he says of the decision that changed the future of the group. “I’m a hunter – I know how to spot business opportunities, and I grabbed this one.”
“Right after I had bought the land, someone came and knocked on my door, asking me to sell it for an excellent price. So, I went and bought another piece of land, and the same thing happened — again for a very good price.
“I made a lot of money out of these deals, and this is how the industry appeared on my radar. It was very easy — not like the challenges I associated with the autoparts industry. So, I thought this was where we, as a group, needed to go.”
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Al Gaddah started buying up plots of land all over Dubai, and the results are to be seen throughout the city today, with high-rises in areas as diverse as the Marina, Jumeirah Lakes Towers, Jumeirah Village and Business Bay. But a conservative approach to development helped the MAG Group avoid the worst of the downturn, he says.
“Everyone was going crazy in the early years, but I calculated all my moves. Each of the projects had its own feasibility study and cost centre, and they each had to stand on their own feet. They are not connected with each other and had their own balance sheet,” he adds.
In the last 18 months or so, Dubai’s property market has been resurgent. Last week, the UAE central bank warned that low residential rental yields in Dubai and Abu Dhabi might indicate growing imbalances and overheating in the real estate sector. It was the first official warning about soaring property prices.
House prices in Dubai jumped 27.7 percent from a year ago in January-March, leading the global rankings for a fourth straight quarter, according to consultancy Knight Frank. In some areas, prices are back near pre-crisis levels. In addition, the International Monetary Fund warned last month that Dubai might need stronger tools, such as higher fees or taxes, to rein in real estate speculation.
But Al Gaddah says that the recent boom cannot be compared to the bubble that burst in 2008.
“When the market started emerging, it was very chaotic — there were no boundaries from the government with regard to the developer and the end user,” he explains. “Now the whole thing is totally different. You have a regulated market, the government has put in place a lot of boundaries to put the market on the right track and developers know what the market needs.”
Those ‘boundaries’ include a doubling of the fee Dubai charges on property transactions, as well as a mortgage cap imposed by the central bank. As a result, the emirate hopes, the property market will keep on growing, but at a far more sustainable pace.
The MAG Group is also confident in the future of the Dubai property market and is currently investing a significant amount to back that hunch. Earlier this year, MAG Group Properties announced it would be spending $4bn in the city over the next six years.
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Last year, MAG Group division Invest Group Overseas (IGO) launched the Polo Townhouses in the Meydan masterplanned community, which has 106 homes. Last month it followed that up with the launch of the Polo Residences, a community featuring 29 four-storey apartment buildings. Altogether, both projects are worth an estimated $545m (AED2.1bn) — and both of them are completely sold out.
Elsewhere, MAG is working in a joint venture with Dubai Healthcare City to develop a $218m project by the end of 2016. There’s also a $235m project in City of Arabia, where work is expected to start by the end of this year, as well as other projects in Jebel Ali, Al Quoz, Barsha and Business Bay, as well as in Sharjah and on Abu Dhabi’s Reem Island. Last but not least, there’s also the Barsha Art Centre, a mall dedicated to architects, interior designers, furniture retailers and the like. Work on all of these projects — nine in total will start before the end of 2014.
“I don’t like to delay projects,” Al Gaddah says. “When any project it’s announced, it’s already on the stove, it’s already being cooked. There is a policy within the MAG Group that we tend to enter projects that take no less than three years from announcement to handover.
“When we announce a project, we know that the infrastructure is already in place, and all the approvals that we need are already obtained.”
Further down the line, there are further plots of land — in locations such as Dubai International Financial Centre (DIFC), Dubailand, Healthcare City and Al Quoz — which are also earmarked for development.
Other areas of interest are healthcare more generally — the MAG Group is planning to invest heavily in outpatient clinics over the next three-year period, and in educational facilities.
For hospitality, the Invest Group Overseas division is planning to bring Damascus’ Orient Club concept to Dubai.
When it comes to overseas markets, the group has put its $1.7bn Eighth Gate megaproject in Damascus on hold, and is also building a $500m mixed-use project in the Texan city of Frisco, in the US. But that’s as far as the firm is prepared to go, right now, when it comes to expanding abroad.
“The evaluation has never stopped when it comes to international markets,” Al Gaddah says. “But as of today, the majority of the MAG Group’s thinking is centred on the UAE. But that does not mean that other opportunities may come up; the thinking that’s going on about other parts of the world is unlimited.”