Dubai conglomerate Al Habtoor Group is set to expand its operations in Europe by acquiring commercial property. The family-owned business, which has diverse interests in sectors such as property, hospitality, automotive, insurance, education, and publishing, anticipates a revenue growth of 15 to 20 percent across its various businesses in 2023.
In an interview , Mohammed Al Habtoor, the Vice Chairman and CEO of the company, revealed that they are targeting countries in close proximity to Hungary for their property acquisition plans. This includes Slovakia, the Czech Republic, and Romania. Presently, the Al Habtoor Group already possesses an office complex and two hotels in Budapest, the capital of Hungary. Moreover, they have hotels situated in Austria, the UK, Lebanon, and the US.
Mr Al Habtoor did not disclose how much the company plans to spend in buying property but he said they were “looking for the right thing which has a good yield”.
The company aims to fund the new deals through its own resources and has no plans to borrow from banks or raise cash through bonds or sukuk.
The prices are “good now … there is an opportunity”, he said.
Europe is grappling with economic challenges as inflation rises and the European Central Bank adopts a more restrictive monetary policy. The International Monetary Fund predicts that the euro area, comprising 20 European Union countries that utilize the euro as their primary currency, will experience modest growth of 0.8 percent in 2023, following a 3.5 percent expansion in 2022. Despite the economic headwinds, Al Habtoor Group has set ambitious targets of doubling or even tripling its portfolio within the next five years.
“With our investment in Europe, here or in the region, we have the appetite and capability to expand more.”
“All the sectors, even in the schools, we are looking to expand in different areas, to go to different countries,” Mr Al Habtoor said.
The company has expressed its intention to grow its presence in the UAE and is preparing to introduce a new real estate venture in Dubai before the year concludes.
This announcement follows the successful inauguration of a residential tower worth AED 3.7B in Al Habtoor City, located on Sheikh Zayed Road, earlier this year.
It has been “very busy” on the sales side at the new property, which it says is one of the largest residential towers in the world with more than 1,700 units.
“The general demand in Dubai for real estate is huge. There is still an appetite but [it] depends on the location, as well as the amenities you provide and the surroundings,” Mr Al Habtoor said.
In April, the Dubai Media Office reported that the property sector in Dubai witnessed significant growth, with a total transaction value of AED 157B in the first quarter of 2023, representing an 80 percent annual increase. During the same period, the number of real estate transactions also rose by 49 percent, reaching a total of 38,715.
Global property consultancy Knight Frank revealed that high-net-worth individuals (HNWIs) from various parts of the world have plans to invest approximately $2.5B in Dubai’s property market this year.
The UAE’s property sector has been supported by government initiatives, including the introduction of residency permits for retirees and remote workers, the expansion of the 10-year golden visa program, and the positive economic impact of Expo 2020 Dubai and higher oil prices. These factors have contributed to the sector’s stability over the past two years.
Dubai’s attractiveness to new buyers remains strong due to the relatively lower cost of purchasing property compared to major cities like New York or London. Additionally, the emirate offers a desirable lifestyle for both families and individuals.
“The property sector is undervalued,” Mr Al Habtoor said.
According to the company’s representative, Dubai is not only known for its safety but also offers an attractive business environment and supportive policies that facilitate the growth and expansion of businesses.
The government regulations are transparent and straightforward, instilling trust and avoiding any unexpected surprises in the future.
Many banks and financial institutions have established offices in Dubai to serve the Middle East and North Africa (MENA) region, as well as the Indian subcontinent.
Dubai retained its position as a global hub for foreign direct investment (FDI) in 2022, topping the list as the world’s top destination for greenfield FDI projects for the second consecutive year.
Despite global economic challenges, Dubai achieved an impressive annual growth of 89.5 percent in FDI projects announced in the previous year, as reported by the Dubai Media Office in May, citing data from the 2022 Financial Times fDi Markets report.
The company expects a revenue growth of 15 to 20 percent across its various businesses in 2023, excluding sales from Al Habtoor Tower. The hospitality and automotive divisions contribute the majority share of revenue, accounting for 65 percent, followed by real estate, education, and insurance.
Established in 1970, the company owns seven hotels in Dubai and serves as the distributor for renowned global vehicle brands such as Mitsubishi, Chery, and JAC Motors. Additionally, they operate two schools in Dubai.
Regarding the company’s plans for an initial public offering (IPO), the representative mentioned that they may have an announcement to make by the summer of the following year.
