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North Africa

Suspect security sector

by Executive Staff September 20, 2008
written by Executive Staff

In 2003, a string of deadly suicide bombings in Casablanca sent a shock wave through the relatively stable kingdom of Morocco, which maintains close ties to Europe, Israel and America, and which is working to make tourism a keystone of the economy. The attacks on Jewish and European targets killed 32 and injured more than  100 people, and were followed by a series of suicide bombings in April of 2007, this time targeting the US consulate in Casablanca and two other American institutions. In the wake of these attacks, businesses from a broad variety of sectors have been turning to private security firms for protection and peace of mind. But are local security agencies really making businesses safer?

Over the past decade, the private security industry has enjoyed rapid growth, both in conflict regions and globally. Private security firms are increasingly being called upon to take part in military conflicts. Some developed countries deploy private security firms in conflict zones, as the US has in Iraq, and private security firms have also been accused of carrying out coups d’etat, as in Sierra Leone. According to the Institute for Security Studies, “Private security companies have diversified their activities to include military advice and training, arms procurement, intelligence gathering, logistical and medical support and in limited instances, combat and operational support.” Although international and domestic laws regarding mercenaries do apply to private security companies, their non-state actor status acts as a kind of loophole. Private security contractor Blackwater drew global criticism last year in the wake of an incident in Iraq that left 17 civilians dead.

Demand for protection

Security companies that operate in non-conflict zones offer a variety of services, including bodyguards, funds transport and surveillance. In Morocco, whereas before 2003 security guards were only present at banks and multinational companies, they have since become an essential fixture of hotels, clinics, hospitals, nightclubs, boutiques, restaurants and housing complexes in various regions of this developing North African country. As demand for security services waxes in the Moroccan market, many clients and company executives are troubled by shortfalls in the sector.

“When you talk about security in Morocco, you’re really talking about gardiennage,” says one French security expert, who abandoned his plan to open a private security firm in Casablanca after encountering numerous setbacks. “Gardiennage is what you do when you watch over a parked car. Security is completely different, because it brings you into a notion of safekeeping of goods and persons. Security is, above all, prevention: guards are supposed to diffuse dangerous situations.”

All security guards are expected to have a minimum level of basic training, covering first-aid, the proper use of a fire extinguisher, as well as how to alert authorities or call for help in a crisis situation. At a higher level, certain guards may be proficient in martial arts or crisis resolution techniques.

In Morocco, the private security sector has become something of a crisis itself. Security experts paint an alarming picture of guards who do not know how to use a fire extinguisher, have no means of communication to contact authorities, have metal detectors but no batteries, and often do not know how to read. And while lack of training and professional demeanor is a source of dissatisfaction among most clients, some are on the lookout for guards with too much training. Banks in particular are wary of entrusting their safekeeping to individuals with outstanding training in surveillance, self-defense, and security systems.

Few professionals

Security guards in Morocco are not armed and until recently there was no regulatory framework for companies providing security services. Authorities estimate the current number of agencies in the country at about 500. Only about ten of these are considered to operate according to professional standards. Higher-end private security in the country currently consists of a handful of top-notch international companies, such as Groupe 4, Securicor, Brink’s, RMO, and Jamain Baco. These top tier companies receive contracts to provide security to large markets such as airports, electricity centers, gas companies, hotel chains, and embassies.

The increasing visibility of the sector since 2003 has created tension between competing security agencies. Due to the lack of regulation, just about anyone can go into the security business in Morocco. Companies who invest in training and a high level of professionalism find themselves in competition with smaller enterprises that cut costs by eliminating training and radios, and by paying salaries well below the minimum wage. A smaller firm might offer three uniformed guards and a dog for the same price as a single trained guard from a respected company. Since many businesses perceive security more as an appearance than an activity, these small firms draw clients away from serious agencies, and keep market prices very low.

The average price of a mid-level security guard on the Moroccan market ranges around $440-$500. The minimum wage is $290, and when you add the cost of the standard three-month training, uniform, social security and radios, the profit margin is negligible. Furthermore, most guards work 12-hour shifts, often with no shelter and nowhere to sit down and rest for a moment. With minimal pay and little to do, guards are notorious for harassing women and asking for bribes.

The problem amounts to a vicious circle: until clients are willing to pay higher prices for properly-trained guards, companies cannot afford to invest in the training and decent working conditions needed to bring security services up to speed. Small companies that hire illiterate guards for a fraction of the minimum wage keep market prices too low for trained guards to be commercially competitive.

As the sector acquires new visibility and social importance however, movements are stirring on the side of government and civil society to impose higher standards on the industry. After the 2003 bombings, representatives of the major security companies banded together to form the Moroccan Security Companies Association (AMEG). Karim Chaqroun, president of the association, said at the time, “The Casablanca attacks were a turning point for the activity of private security in Morocco. They gave rise to a crisis of conscience concerning the need to organize the sector.”

In December 2007 the only law regulating the industry, a 1941 dahir that prohibited anyone other than “the forces of order” from carrying arms, was finally updated. The new Law 27-06 will permit guards to carry “arms” for the first time, although the category will be restricted to teargas, batons and other light weapons of this sort for the time being. The state seems to view this move as a means for keeping a watchful eye on the private security sector. Most security guards are undeclared by their employers to save costs. Under the new law, each guard must register with the state, which will enable the screening out of convicted criminals. The law also foresees a state-mandated training level.

But many in the security sector are concerned that this new law is a move to reign in the industry. They also point out its failure to offer concrete proposals for achieving a higher level of organization throughout the sector. The Professional Association of Moroccan Security Companies (APASM) held a colloquium on the topic in Marrakech in July 2008. They congratulated the Minister of the Interior and other government agencies for taking an interest in organizing the sector, but urged that private sector security representatives be present in the formulation of laws for applying the new text. Rachid El Mounacif, founding member of APASM, told local press at the time of the law’s passing that his organization had not been consulted, and that he was not even aware that such a law was being considered. The association asked that the government pay special attention to certain problems, particularly eradicating the 12-hour shift, ensuring that all salaries reach the minimum wage level, providing insurance for guards and creating training institutions.

The state is, of course, right in intervening and in building bridges with this growing group of private security forces, even if they are, for the time being, more like parking attendants than police officers. But the government might want look beyond its own interest and lend its support to civil society organizations working to improve the quality of services. The government could, for instance, invite a delegation from representative organizations, like APASM or AMEG, to collaborate on the application of the new law. 

September 20, 2008 0 comments
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GCC

The Bayt.com connection

by Executive Staff September 20, 2008
written by Executive Staff

The online recruitment agency Bayt.com has a large geographical footprint with eleven offices throughout Middle East and North Africa (MENA). In its eight-year history, the agency has grown from the Emirates to the Levant to Morocco. Bayt.com has grown by other measures as well. Its staff had a year-on-year growth of 100% in 2007 and the company saw $10 million in revenue. This year it expects revenue to double.

“We have a larger number of job seekers than any other medium, whether on or off-line. We have over 2.25 million registered candidates, so we have a large database in addition to the large geographical area that we cover,” said Dany Farha, chief operations officer of Bayt.com.

This financial and geographic growth has prompted the company to open its newest office in Beirut. Bayt.com has 78,000 registered job seekers in Lebanon alone. As a result, they would like to be “physically present to serve the customer base,” said Farha. The service provided ranges from customer acquisition to personal visits aimed at helping subscribers set up their new account and navigate the website. Farha added that this was a very important point since the service adds new functionality to the website “essentially every quarter.”

Beyond its physical presence, Bayt.com stays competitive by focusing on its local knowledge. As opposed to non-local recruiters, job listings on Bayt.com are predominantly from Middle Eastern employers like ABC, Bank Audi, Fatel and Emirates Airlines. Other online agencies usually have jobs posted by international recruiters operating from India or the United Kingdom and not from Middle Eastern employers. That poses difficulties with candidates who want to get hired by a local company in their vicinity.

Another distinguishing feature for the website is its use of technology. Cutting edge design makes it possible to search using 24 criteria. For example, it is possible to search by job title, which is unique because most online recruitment sites only allow a search by key words. Further, an employer can search by job function, industry, company and university, to name but a few.

Playing into social networking, Bayt.com recently introduced a technological feature that allows individuals to recommend others. “A job seeker can have a former professor or dean from his college or a former boss write a recommendation. This recommendation is then imported to the resume. And if that recommendation is good, then an employer and go and see who else has been recommended by that same person,” said Farha. Bayt.com recently added this feature and has found that people with recommendations are being hired more often than those without, so the new addition is proving popular.

Farha added that Bayt.com’s talent pool “is larger than other recruitment agencies in the region by a factor of 10. The employers who subscribe to Bayt.com are based in the region. And we have cutting-edge technology to help the talent and opportunity to mix and match. Finally, we have 300 staff on the ground.” He argued that regional presence of Bayt.com gives it a leg up on the competition as most other recruiting agencies in the region are telecommuting from India. Bayt.com currently has offices in Dubai, Abu Dhabi, Kuwait, Qatar, Amman, Jeddah, Riyadh, Al-Khobar, Casablanca, Beirut and Manama.

Nationalization of labor markets

Many governments in the region, especially in the Gulf, are nationalizing or localizing their labor markets. This can be challenging for online recruitment agencies. One of the ways Bayt.com is dealing with the nationalization issue is by looking at local talent via going to university sponsored career fairs across the region, especially in countries where these issues are pressing like Saudi Arabia, Jordan and the UAE. This allows the company to have a strong selection of nationals for each country’s recruiters. Furthermore, it works closely with governments to assist them in powering their job sites. For example, Bayt.com powers the Abu Dhabi government job site and does the marketing as well. The website also makes it possible to search for job candidates by nationality. If an employer needs a Saudi national, he can come to Bayt.com and find that specific employee. And it is likely that he will find more than one candidate to fit the bill. Farha concluded by saying, “As we have the largest registered number of job seekers in one place there is no other repository of candidates bigger than ours, including government systems and newspapers.”

While other online recruiters do exist in the region, it appears that they will have to do a lot of work to catch up.

September 20, 2008 0 comments
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GCC

The need to diversify

by Executive Staff September 20, 2008
written by Executive Staff

Economic diversity across a wide range of profitable sectors is the key to a strong sustainable economy and a higher standard of living; it creates jobs, encourages the development of new knowledge and technology and helps to ensure a stable political climate. Diversification can also reduce a nation’s economic volatility and increase its real activity performances.

The hydrocarbon-rich GCC countries face sizeable challenges in diversifying their oil and gas-dependent economies. After enjoying the past few decades of unprecedented growth and wealth, now is the time for these countries to begin transforming their economies.

In the face of exhausting resources, GCC countries are looking to the robust, diversified economies of Hong Kong, Singapore, New Zealand, Norway, and South Korea. They are seeking the efficiency and sustainability that cannot be achieved by maintaining a single commodity-based economy.

A recent Booz&Co. study regarding sustainable development in the GCC elucidated three key findings linking diversification and economic stability. The analysis revealed that: (1) GDP should be distributed across several sectors; (2) concentration is not inevitable in hydrocarbon-rich economies; and (3) labor distribution should support growth.

How do these results match up to the Gulf’s economic reality? (1) The GCC’s record high inflow of capital cannot be considered inherently sustainable because of the dependency on the hydrocarbon sector’s (rather than a wide variety of sectors) fortunes in the marketplace; (2) in order to avoid a natural tendency toward economic concentration, nations rich in any single commodity must be particularly attentive to the issue of diversification, and (3) the oil and gas sector, producing 47% of GCC countries’ GDP, provides work for only 1% of the employed population.

Evidently, there are large gaps for GCC countries to fill in order to diversify their economies. However, they have seen the writing on the wall: where will we all be post- oil? They are on their way to finding out.

September 20, 2008 0 comments
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GCC

Growth spurt

by Executive Staff September 20, 2008
written by Executive Staff

Although Abu Dhabi has been slow to join the regional real estate boom, the emirate has already launched several huge projects. As part of government efforts to fill the gap in the supply for residential units within the UAE capital, Abu Dhabi is expected to spend in excess of $200 billion over the next five years on infrastructure projects, and welcome over 140,000 housing units by 2013.

A population surge, a series of legislative reforms in 2005 governing property ownership and the phenomenal growth witnessed within neighboring Dubai have constituted the main drivers for real estate investment in the emirate. Furthermore, there is newfound emphasis on developing Abu Dhabi’s tourism, industrial and real estate sectors to diversify the economy towards private sector oriented growth, and away from hydrocarbon revenue dependence.

Leading Dubai real estate company Bonyan International Investment Group (Holding) L.L.C. has begun to seriously consider the neighboring emirate as a prospect in the context of its regional expansion plans. “Abu Dhabi is currently in the middle of a massive economic development that is expected to spill over to the next 15 years. We have identified the emirate as a highly potent market that can accommodate various large-scale developments through its modern and liberal growth policies,” said Engineer Abdullah Atatreh, Chairman of Bonyan International Investment Group (Holding) L.L.C.

The developer plans to supply in-demand built space units, saying, “As government efforts to create an appropriate legal framework to protect investors continues to boost both shareholder and client confidence in the market, we are seriously looking at giving the capital city a major place in our expansion plans.”

September 20, 2008 0 comments
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GCC

Dubai tries to tame power and water use

by Executive Staff September 20, 2008
written by Executive Staff

Electricity and water consumption, primarily in the residential sector, have been raising a major concern lately in Dubai.

As part of its ongoing efforts to trim down this “open” consumption, Dubai Electricity and Water Authority (DEWA) is conducting a conservation program targeting the residential sector, which constitutes 80% of water and 70% of electricity consumer base, as per 2007 figures.

The highlight of the program is the Best Consumer Award, which compares current consumer consumption to the previous year’s consumption.

The award is part of a larger program which includes practical tips for all consumers in government, commercial, industrial and residential sectors to help achieve controlled consumption of these two vital resources.

In light of the ongoing increase of consumption, it is evident that it is now mandatory to find effective ways to restrain the abuse of these fundamental sources.

Amal Koshak, manager of investors services at DEWA’S customer relations department said, “With the continuous increase of electricity and water consumption in all sectors, especially the residential sector that constitutes 80% of water subscribers and 70% of electricity subscribers in Dubai in 2007, there is an urgent need to highlight the ideal ways to rationalizing consumption. The Best Consumer Award is designed to motivate consumers to reduce consumption and enhance the rationalization of natural resources.”

September 20, 2008 0 comments
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GCC

Dubai tries to tame power and water use

by Executive Staff September 20, 2008
written by Executive Staff

Electricity and water consumption, primarily in the residential sector, have been raising a major concern lately in Dubai.

As part of its ongoing efforts to trim down this “open” consumption, Dubai Electricity and Water Authority (DEWA) is conducting a conservation program targeting the residential sector, which constitutes 80% of water and 70% of electricity consumer base, as per 2007 figures.

The highlight of the program is the Best Consumer Award, which compares current consumer consumption to the previous year’s consumption.

The award is part of a larger program which includes practical tips for all consumers in government, commercial, industrial and residential sectors to help achieve controlled consumption of these two vital resources.

In light of the ongoing increase of consumption, it is evident that it is now mandatory to find effective ways to restrain the abuse of these fundamental sources.

Amal Koshak, manager of investors services at DEWA’S customer relations department said, “With the continuous increase of electricity and water consumption in all sectors, especially the residential sector that constitutes 80% of water subscribers and 70% of electricity subscribers in Dubai in 2007, there is an urgent need to highlight the ideal ways to rationalizing consumption. The Best Consumer Award is designed to motivate consumers to reduce consumption and enhance the rationalization of natural resources.”

September 20, 2008 0 comments
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GCC

Charging for renewables

by Executive Staff September 20, 2008
written by Executive Staff

The UAE stands out as one of the world’s highest per capita emitters of carbon dioxide and other greenhouse gases. Producing the food and fiber it consumes, absorbing the waste from the energy it uses, and providing space for its growing infrastructure all impose high demands on nature. Energy demands remain especially high to satisfy a luxurious life of air-conditioning, chilled swimming pools, and Dubai’s famous indoor ski slope.

In contrast, the country’s biological capacity, the amount of biologically productive space that is available for human use, is low. The UAE lacks the facility to support the domestic consumption with its own supply of nature.

Alternative energy has attracted increasing interest over the past few years as major industrial leaders have called for more aggressive action to be taken against the phenomenon of global warming. Governments are beginning to focus greater attention on renewable energy.

The UAE is the most serious among Gulf oil-producing countries whose hunger for electrical power has spawned efforts to find other sources of energy. Based on future development plans, the UAE’s electricity demand is projected to require $10 billion for the next ten years; the current installed capacity of energy will need to double by 2015, and triple by 2020, an indicator of how energy-intensive the UAE lifestyle is, and how necessary it is for the country to take action.

GCC countries are currently developing more than 114 energy-generating projects, collectively worth between $160-220 million. The UAE, in particular, is an oil-producing state that is taking the energy and climate issue seriously, pioneering the development and implementation of clean-energy technology.

It is predicted that in a decade, the UAE is likely to have expertise in solar energy, photovoltaics, energy storage, carbon sequestration, and hydrogen fuel. Most importantly, the UAE hopes to prepare itself for a world that is not as reliant on fossil fuels as it is today. The nation’s expertise, they say, is not in oil, but in energy.

September 20, 2008 0 comments
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Levant

Dodging the bullet

by Executive Staff September 20, 2008
written by Executive Staff

Politicians pontificate and observers oscillate between repeating the views of the last person and the next to share a confidence. It’s still the money men that mostly matter and determine the tide in the (business) affairs of men, which taken at the flood, leads on to victory.

Ten days before the Turkish Constitutional Court determined that the ruling Justice and Development Party (AKP) had not been so naughty that it warranted disgrace and disbandment, most of the large international investment banks had come to the conclusion that the Istanbul market was a good place to be.

On July 30, the court ordered the AKP to be docked half its state funding for the year as a “serious warning” about its perceived “anti-secular activities.” The talk of crisis and chaos subsided, the unlikely prospect of yet another military takeover passed into oblivion, the markets moved upward and the currency strengthened.

Courting logic

The country and the court followed the Bush Sr logic. President George the Elder resisted entreaties from the military in 1991 to invade Baghdad. “What will you do when you get there?” asked the father. A dozen years later, the son, President George the Junior, gave the reply: Ask me when I get there. Thus it was with the prospect of dispatching to the ether a Turkish party that was supported by 47% of the electorate. What follows in a country where the opposition parties that form the alleged alternative expend most of their energies in making themselves unelectable? The Constitutional Court perhaps did not fancy finding out and the money men seem to have perceived this.

One source inside the Istanbul Stock Exchange (ISE) painted the scene. The ISE index moved in parallel to most emerging markets until mid-March when the AKP shindig initially looked as though it may get nasty. Market performance diverged so much from the norm that the average price to earnings ratio reached a 20-year low. Yet, as the market source added, companies were still reporting good results and the economy was growing — 6.6% in the first quarter of 2008. Then the classic giveaway quote: “A week or 10 days before we saw the ending of the deliberations of the closure case, most of the large international investment banks came up with very positive reports,” the source said, before adding that the decisive factor was the sure knowledge that the period of uncertainty was coming to an end. Whichever way the decision had gone, the market fundamentals were in place for a recovery.

Whether that was the entirety of their thinking, only the money men know. “This was a market-friendly decision,” said Veyis Fertekligil, chief economist of Turkland Bank. “If the ruling party had been closed, there would have been a strong knock-on effect for the stock market, government bonds and the exchange rate.”

In the wake of the announcement, there was immediate evidence of a strong effect for the good. The following day, yields on lira bonds dropped some 66 basis points to 18.92% — the largest fall since November 2006. Smart money had been ploughed into bonds somewhat earlier at a rate as high as 22% and when the Turkish lira was trading to the dollar in the mid-1.20s. Meanwhile, the ISE National 100 index, which has dropped almost 40% this year due in part to political worries, added 2.1%. The lira, which had also been falling, gained to 1.162 against the dollar, despite the greenback’s recent strong rally. By August 1, the lira had made its largest weekly gain against the dollar for two years, up 4.3% to 1.1543.

Investors surveyed in the local and international press indicated that their confidence in Turkey’s future had been renewed. “It’s a milestone decision,” Vassilis Karatzas of Levant Partners Greece SA told the international press. “In the next year or two, this decision will provide political stability in Turkey, which is important for markets.”

Standard & Poor’s Ratings Services changed its outlook for Turkey from negative to stable, reflecting “diminished near-term political uncertainties”. The message was that investment will continue to flow into the country and growth will continue.

“Turkey is leaving a tense situation and we very much hope that the decision by the court will contribute to restoring political stability,” said a spokeswoman for EU foreign policy chief Javier Solana. EU Enlargement Commissioner Olli Rehn indicated that Turkey’s on-off process of accession to the Union had received a fillip — though it would perhaps be more accurate to observe that the country’s hopes have not received a titanic setback.

Investor confidence

Much of Turkey’s recent growth has been driven by inflows of foreign direct investment (FDI), registering around $19 billion last year — down from $20 billion in 2006 but still equal to the FDI Turkey attracted in the 23 years between 1980 and 2003. There was evidence that investors started to withdraw their cash in the early days of political tension surrounding the court case rose.

However, relief at Turkey’s evasion of political calamity should be tempered with the knowledge that the country still faces some tough times. Inflation hit a four-year high of 12.1% in July, a troubling figure even given the fact that prices have been driven up by external factors. So far, the Central Bank of the Republic of Turkey (TCMB) has moved decisively to increase interest rates, reinforcing its reputation for tight monetary policy. However, this has also undermined the bank’s aim of normalizing rates (i.e. bringing them down to single figures) and has hit businesses. Therefore attention is turning to the government’s fiscal policy. Given its development and poverty-fighting brief, the AKP is reluctant to tighten spending but a degree of retrenchment may be needed if inflation is to be brought down.

The government also has reason to be concerned about growing external imbalances. The current account deficit grew by more than 40% in the first half of 2008 compared to the same period of last year, according to the TCMB. June’s deficit was a striking 78.2% above that of the same month last year, and the government expects the current account to be $50 billion in the red this year, up from $38 billion in 2007. The IMF warned in August that the situation posed a serious risk to the country.

Both these problems could be eased by tighter fiscal policy and reforms designed to boost the economy’s competitiveness, which should help moderate prices and boost export performance. A leaner and more productive economy should also continue to draw in FDI. Competitiveness and a strong business climate are more important than ever at a time when capital conditions have tightened.

Not that the AKP can breathe wholly free from political concerns. At the time of writing, headlines had already started to turn back to a cloudier outlook. The chief prosecutor who launched the closure case is said to be readying a second, this time specifically targeting Prime Minister Recep Tayyip Erdogan. Meanwhile, amid concerns about the sustainability of emerging markets’ recent growth, and a continuing rise in the dollar, the lira softened again to 1.1835 against the greenback by August 15. This was partially down to profit-taking. Money men are not employed to be sentimental.

The government had previously stated that it would step up its reform and privatization drive in 2008, after international organizations and investors had started to worry that enthusiasm for liberalization had waned in 2006 and 2007. It has been somewhat blown off track by squabbles over lifting the headscarf ban in public universities and the subsequent court case, but the cause is certainly not yet lost.

Banking Islamic in Istanbul

Ironically Istanbul will host a major forum on Islamic finance next month, the International Islamic Finance Forum. Happily for the AKP, Islamic banks in Turkey are a blooming rose by another name — participation banks. The four of them, Albaraka Turk, Bank Asya, Kuveyt Turk and Turkiye Finans, administer assets worth around $21.5 billion, which represent 5% of the Turkish banking system. The target is to double that in the next decade.

Albaraka Turk has Bahrain’s Albaraka Banking Group as the major shareholder and Saudi Arabia’s National Commercial Bank bought a 60% stake in Turkiye Finans earlier this year for just over $1 billion. Kuwait Finance House has a majority stake in Kuveyt Turk and wants to increase the number of branches from 100 to 113 by the end of 2008.

One interesting item for participants in the forum is a study on the impact of politics on the underdevelopment of Islamic finance in Turkey.

September 20, 2008 0 comments
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Levant

Oussama Kabbani – Q&A

by Executive Staff September 20, 2008
written by Executive Staff

With a masters of architecture in urban design from Harvard, Oussama Kabbani is the chairman of the board and general manager of Millennium Development, a wholly-owned subsidiary of Saraya Holdings. Talking with Executive in a one-on-one interview, the GM discusses Millennium’s operations in the MENA region and beyond.

E How would you describe Millennium’s ownership structure?

Millennium Development International (MDI) is a Cayman Island company, owned by Saraya Holdings. The head office is in Beirut, while the only second operational branch is in Dubai at the moment. MDI is in the process of setting up two new branch offices, one in Malaysia and one in Saudi Arabia.

We were acquired by Saraya Holdings last year, and thus our management structure changed a bit. We now benefit from being affiliated with a larger player in the region, which gives us a continuous work stream and room to expand and grow in the market, so we can capitalize on our core competencies. It’s a great combination.

E What does Millennium actually do for Saraya Holdings?

Millennium’s expertise is in development management services, which means we undertake work on behalf of developers and investors in real estate — from securing the opportunity to exiting it. In other words, we do everything that a professional developer does, but the investment is not from MDI. To that end, we set up the development strategy, hire all the consultants needed for the job, guide them and ensure their delivery on time and within budget. Such tasks require skills in business development, urban planning, architecture, finance, legal, marketing and sales, as well as construction management. MDI offers all these management skills to its clients.

For Saraya, typically we collaborate with their professional development team on the first phase of their projects, based on Saraya’s objectives and destination strategy. Sometimes they commission us as a subsidiary to create the business development phase — to evaluate new sites identified as new destinations through delivering a financially viable and feasible master plan. Once the board of Saraya approves the master plan, Saraya Development Group assumes the responsibility from that point onward through design development, marketing, sales, construction and operations. So this is what Saraya Holdings requests from us and we offer similar services to other clients in the marketplace.

E What projects does Millennium currently have underway, with Saraya and other companies in the region?

Our expertise is primarily in large-scale urban developments. I insist on the term ‘large-scale’ and ‘mixed-use developments’ because indeed this is really our core competency, and we are extremely competitive in the know-how of such projects. For example, we are currently working as development managers for a new city in South Johor in Malaysia, which is positioned to be a new international destination in Southeast Asia. It will include a world class financial district, leisure clusters, commercial clusters, golf communities, business parks, residential and health facilities. The profile of our clients on this job, a consortium of high powered investors and developers — such as Mubadala, Saraya Holdings, Kazanah and others — demonstrates the level of professional competency that we have secured in the marketplace.

We are also involved in the development management of a new city for one million people on the Caspian seashores of Kazakhstan, in Aktau. We have already finished the master planning and the development strategy of such a massive project, and the client is currently raising the funds to launch the construction.

We are also working on projects in Saudi Arabia, primarily in Mecca where we are currently engaged in two projects — Jabal Omar and Jabal Khandama. We are also offering owner representation services for the construction of an industrial site for the Jeddah Cable Factory in Rabegh. Also, we have a project that we will be launched soon in Oman as development managers for a small town. Meanwhile, in Beirut we are engaged in the construction of a luxurious residential compound in the Solidere district, and manage the development of an exciting downtown mixed-use project for the landmark company, designed by the famed architect Jean Nouvel.

Also, there are many other projects that are in the making. As a business strategy, we accept to be engaged every year in three to four big projects; some of them keep us busy for three to five years. Thanks to the reputation and delivery skills we have developed over the years, we’re quite busy all over the region.

E You said you insist on large-scale, mixed-use developments. Do you think that mixed-use development projects have become a trend in development in the region? Nowadays it seems like this ‘city-making approach’ within cities is becoming a popular tendency. Would you say it is the time for such a trend in the MENA region?

This region is witnessing an unprecedented growth period. The first cycle of growth was in the 1960s — with the first oil boom. The investment during that period primarily targeted infrastructure and public buildings: meaning hospitals, scho- ols, etc. 40 years later, the current oil boom arrived to a region that is relatively highly experienced and ready to grow, so the added value both physically and socially is quite apparent. That’s why it’s very normal to see large-scale mixed-use projects, because the area has the knowhow and it was ready to absorb such projects.

I would say that the reconstruction of downtown Beirut using the Solidere model was a big success in the 1990s and a good eye opener to the need for planned mixed-use projects. It was perhaps the first large-scale project of its nature in the region. With the success of Solidere — and yes, I’m contributing a lot to that — people realized that if you do large-scale mixed-use projects, you control the quality of the environment that you are in.

Obviously, when there is a lot of money, lots of land, a lot of demand, with the right leadership and vision, all of these things together result in what you are seeing today.

E What is the strategy that you are implementing for your latest projects? As such a small company, how do you deal with competition?

There aren’t many companies that offer our services in the marketplace today. Usually, large-scale developers have their own teams, so they don’t need such services except when they need to deliver in a relatively short period of time — which we can do due to our size and competency. We’re quite fortunate today because the market is growing and even experienced developers can’t cope with the growth, so they outsource their work to companies like ours.

Our outfit is also ideal for all the start-up development companies that want to be in business without immediately having their teams. Not only that, but there are a lot of real estate funds that are looking for development managers like us. That’s a big marriage between funds and us. Not too many people in the marketplace offer what we do, because developers work for themselves and don’t offer their services to competitors. So far, we managed to have a huge portfolio of work. And what distinguishes us from the competition is the quality of work that we produce, the efficiency, and the know-how.

E What are the current issues and concerns that Millennium faces?

Having our headquarters in Beirut was a concern throughout the last couple of years due to security issues. We are a local company with a regional outreach, so whenever the stability is compromised, our outreach is burdened. We are hoping that this is behind us now. The second challenge we face, like many in the same industry, is staffing and attracting the high-caliber professionals that are needed to sustain our growth and business model. Also, we are trying to diversify our business offerings in case the markets change. In that respect, we’re currently embarking on some investments for the account of the company, to build an asset base for the future.

E Does Millennium take part in any Corporate Social Responsibility (CSR) initiatives?

Not really, because we are not developers, we are consultants. Developers typically get involved in CSR. We consider ourselves still relatively small in terms of our operational size. But we are quite keen about staff development — which is part of CSR. We offer promising career growth in international markets. We’re looking towards professional training, and towards academic growth of our staff — meaning people going back to higher education and then returning to work with us. To that end, our corporate responsibility has been towards our staff more than anything else.

However, our mother company Saraya Holdings has multiple CSR initiatives that concentrate on the pillars of education, culture, environment and sustainability, in each country they reach; they study what the community needs and act accordingly.

E How do you see your position within the region?

Millennium and Saraya are definitely part of a legacy of city-builders that started with the late Prime Minister [Rafiq Hariri]. We feel very proud that we are professionally continuing that legacy, because his vision was one that is bigger than the country, and now we are taking such a vision globally. Taking a destroyed city and rebuilding it helped us learn about city-making and real estate development the hard way. Lebanon is exporting that expertise.

Our success is a very important testimony to the success of what Beirut, under the vision of the Hariri, was able to achieve and is now being exported to faraway places like Kazakhstan and also hopefully to places like Iraq.

September 20, 2008 0 comments
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Levant

Luxury’s new empire

by Executive Staff September 20, 2008
written by Executive Staff

Emerging on the scene in 2005, Saraya Holdings has undeniably raised the bar of development companies throughout the Middle East. Recently crowned the “Fastest Growing Company” in the region by Arabian Property Magazine, Saraya has reason to be proud. As a relatively new real estate development and asset management company, Saraya boldly invests in travel and tourism. Saad Hariri — owner of Saraya Holdings — says the aim of Saraya is that it “seeks to support the economic growth of the countries it invests in by developing projects that maximize shareholders’ value and contribute to the sustainable development of local communities.” Saraya strategically partners with both the private and public sectors in order to fully utilize and contribute to the local communities where it invests.

Owned by Saad Hariri and run by CEO Ali Kolaghassi, Saraya holds numerous subsidiaries under its umbrella divided into Saraya Destinations, Saraya Services, Millennium Development International (MDI), and Saraya Development Group (SDG). The latter is responsible for real estate development and asset managing for Saraya projects, while also acting as the property advisor to the MENA Fund — created by Saraya Holdings. The MENA Fund seeks to invest in underdeveloped locations in order to offer high growth potential with low competition, and where demand of MENA real estate and tourism are on the rise. MDI is the development management arm of Saraya, catering to her every need on its mixed-use projects around the region. The mammoth developer envisions itself as an international leader in luxurious accommodation, travel, tourism, and overall elite living.

Won’t you be my neighbor?

In December 2007 Saraya Holdings announced that it was relocating its headquarters to Jordan’s new downtown, Abdali. Saraya acquired a 3,600 square meter land parcel in Abdali, which will include its headquarters, a five-star luxury business hotel and hotel apartments, a limited number of serviced residences and an underground parking, costing Saraya a cool $113 million. Saraya’s new headquarters is expected for completion by early 2011.

Saraya destinations

Boasting six opulent destinations — Saraya Aqaba (Jordan), Saraya Dead Sea (Jordan), Saraya Ras Al Khaimah (UAE), Saraya Bandar Jissah (Oman), stretching as far as Kazakhstan with Saraya Aktau, and all the way to Russia with Saraya Sochi — the company thinks big. Each project possesses a unique character of its own, providing a variety of facilities making up large mixed-use developments.

As the first project launched by Saraya Holdings, Saraya Aqaba is valued at approximately $1 billion. The project — founded by Saraya Holdings, Social Security Corporation, Aqaba Development Corporation, and Arab Bank — was introduced in 2005 at the World Economic Forum in the Dead Sea and is expected to be complete by the end of 2009. Located on the Red Sea, Saraya Aqaba will combine the ancient and historically rich city of Aqaba with exclusive residences (villas, apartments, town houses, lofts, and beach club duplexes), shopping facilities (traditional souks), entertainment, a water park, offices, restaurants, a wharf promenade and waterfront, six first-class hotels (three by Jumeirah and the other three by Starwood Hotels & Resorts Worldwide), and cultural activities. All of this will be centered in plush gardens and glistening waterways, built around a man-made lagoon — which will add 1.5 km of exquisite beachfront to the Gulf of Aqaba. The master plan development — totaling 617,000 square meters — will, without a doubt, create a culturally lavish ‘city within a city’, glorifying Jordanian culture and its natural wonders. 

Being Saraya’s second project in Jordan, Saraya Dead Sea is a top destination for pure serenity. Saraya imports its luxurious exclusivity to yet another ancient site, the Dead Sea. Located at 400 meters below sea level, the project is on “the lowest point on earth,” but, swanks Saraya, “[brings] the highest standard of luxury.” Only 65 km from Jordan’s capital, the project offers numerous deluxe facilities such as an 18-hole signature golf course with a clubhouse, boutique and world-class hotels, residential units, a sumptuous health spa, recreational amenities, a botanical garden, as well as a temple reminiscent of Stonehenge. Outside of Jordan, Saraya has three other developments underway.

Saraya in the UAE

Saraya Ras Al Khaimah (RAK) is Saraya’s first project in the UAE, which will turn an unappreciated scenic location into a vibrant hub of various investment opportunities in one of the fastest growing economies in the world, for locals and foreigners alike. For its first Emirates project, Saraya partnered with the Investment and Development Office of the RAK government, Arab Bank, and Saraya Real Estate MENA Fund. Based off the northern tip of the UAE on the Gulf and nestled in between the Hajjar Mountains, Ras Al Khaimah is affluent in natural landscape, history, and culture. The project will stretch over 5.5 km of four naturally interconnected islands and a main village — which is connected to Al-Marsa (the main island) by a naturally lush boulevard and the Dubai Airport (via the Emirates Road). The RAK project is estimated to be 1.4 million square meters — ordaining 65% to residential (villas, lagoon view townhouses, terraced apartments) and commercial areas (such as first-class hotels, exotic bungalows, luxurious spas and retreats, a yacht club, a Wild Wadi water park, serviced residential units with private gardens, etc.) and 35% to beaches, landscaped areas, and open-air activities. Saraya prides itself that its aim is “to build a modern representation of RAK’s seafaring heritage over contemporary technology. The themed development will create an environment where history and modern life will co-exist in a manner that will offer an integrated experience between the past and the present.”

Extending this dream further in the region, Saraya announced its ambitious project in Oman. Located a mere 25 km southeast of Muscat, Saraya Bandar Jissah destination follows Saraya’s trend of targeting inherent beauty. In a valley surrounded by Oman’s magnificent mountains and natural splendor, Saraya Bandar Jissah is situated on prime beachfront. The project will be built on 2.4 million square meters of land, featuring luxuriant villas, duplexes, a premium spa, two first-class hotels, souvenir shops, a heritage village (constructed around an archeological site), as well as a recreational and commercial center with restaurants, supermarkets, a social club, and sports facilities. Saraya partnered with OMRAN — an Omani government-owned company endorsing tourism projects and freehold property destinations — in order to promote the sultanate as an incomparable leading Middle Eastern destination.

Saraya further extends its vision beyond the Middle East, reaching into Eastern Europe. In Russia, Saraya Sochi is positioned on a green hill overlooking the Black Sea. Here Saraya partnered with Sistema Hals — one of the most diverse real estate companies in Russia and the Commonwealth of Independent States. The development is envisaged to cover an area of 6.3 hectares, making up approximately 95,000 square meters of built-up area. This unique project is another Saraya mixed-use resort, comprising a five-star hotel, residential units, entertainment, and retail facilities. Saraya intends to completely renovate the beach, to include a summer restaurant, commercial kiosks, sports areas, as well as plush relaxation and leisure amenities. The project seeks to preserve the lush forested areas of Sochi’s shoreline.

Kazak developments

As Saraya’s most recent addition to its expanding portfolio, Saraya Aktau in Kazakhstan is certainly ready to become the core of vivacity in the city. Aktau is said to be the center of emerging oil, gas and tourism industries in all of Kazakhstan; clearly, Saraya chose wisely. Saraya partnered with Kazemir Aktau Development Ltd (Kazemir Aktau) — a leading master developer and landowner in Kazakhstan — by signing a MoU to develop the opulent mixed-use enterprise. Kazemir Aktau appointed MDI as the chief development strategist and manager of the site. The project will stretch over a 400,000 square meters site, possessing a beachfront of 650 meters overlooking the spectacular Caspian Sea. Comprising a five-star hotel resort, serviced villas, a world-renowned spa and branded villas, the project is sure to accelerate the predicted economic boom of Kazakhstan. Saraya Aktau is expected to be operational by 2011.

All are currently works in progress, but Saraya does not sell itself short — with the creation of Saraya Services, the developer aims to complement its travel hot spots with customized services, to complete the Saraya experience.

Offering escape on a silver platter

Providing a bouquet of intricately tailored services, Saraya is definitely one of a kind. Aiming to complete the ‘Saraya experience’ of pure luxury and exclusivity, Saraya Skies, Saraya Roads, Saraya Seas, Saraya Holidays, and Saraya Realty were born.

Saraya Realty (SR), established in fall of 2007, acts as the exclusive property sales, leasing and re-sales arm for all of Saraya destinations. Saraya Realty offers one-of-a-kind personalized property selection services, including interior designing and furniture selection. SR partners with globally renowned real estate agents like Better Homes (UAE, KSA and UK) and ASTECO (Jordan), across their internationally expanding network. Currently, SR has showrooms in Aqaba, Amman, Dubai, Riyadh, London, and is soon coming to Muscat. SR states that it “aspires to deliver customer and shareholder value and to earn the loyalty of Saraya destinations’ owners through achieving [the] highest levels of customer satisfaction.”

Continuing their unparalleled legacy of superior travel and tourism, Saraya created Saraya Roads and Saraya Seas. Offering luxurious road transport services to all of its customers, Saraya Roads provides limousines and car rentals to ensure the individuality of customized services for its clients. Saraya Seas will capitalize on the latest maritime service trends to stay in line with the latest water-tourism frenzy. The first class services include yacht club membership, high-end marinas for palatial mega-yachts and more.

Delivering an “unmatched flying experience,” Saraya Skies is definitely the cherry on top for elite customers. Those wanting — and with the means — to travel in an exceptional way now have the option of flying to and from anywhere in the world with this elite air-carrier. Saraya Skies is made up of a fleet of private jets (three P180 Avanti II aircraft, and three G450 business jets) to cater to customers’ every last whim and desire. The aviation arm of Saraya began operations as of June 2008, and is sure to go above and beyond customers’ expectations of superior travel.

Encompassing all of their services is Saraya Holidays — Saraya’s own travel agency for corporate and leisure travel — that provides MICE (Meetings, Incentives, Conferences, and Events) services, FIT (Free Individual Travel) services, destination club packages, or customized packages to choose from.

Saraya’s solid commitment to turn locations into luxurious destinations whilst simultaneously providing every possible service is working out quite well. At this rate, Saraya is truly redefining the notion of a luxury travel, tourism, and everyday living.

In brief, Saraya’s unique fusion of travel, tourism and real estate is truly reshaping the notion of elitism and luxurious living. Saraya is, without a doubt, integrating the best of all worlds to ensure highest standards of utmost perfection to its clientele around the world.

September 20, 2008 0 comments
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Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

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