Big Project ME sits down for a quick chat with PNC Menon, the founder and chairman of Sobha Group, to discuss his plans for the luxury real estate developer
This September, Sobha Group, a high-end real estate developer, announced the launch of Hartland Gardenia Villas, the latest addition of luxury villas to the Sobha Hartland development, at a press conference at the development.
Styled as an elite resort-style luxury project, Sobha Hartland is a 743,224sqm freehold community in Mohammed bin Rashid Al Maktoum City. The Gardenia Villas will comprise 404sqm properties that contain four bedrooms spread across two levels, with Dubai Canal views. Both investors and end users will have the option of having outdoor space, which comprises a garden and a terrace.
Consisting of 22 units, Hartland Gardenia is scheduled to be completed by August 2019, and will have a range of amenities including two international schools, nurseries, healthcare facilities, swimming pools, gyms and sports facilities, along with parks and playgrounds.
Following the launch of the project, Big Project ME got the opportunity to speak with PNC Menon, founder and chairman of Sobha Group, about Dubai’s real estate market, his plans for the developer in the coming years, and the impact a changing economic landscape will have on developers and the real estate market.
What are your views on the current state of the Dubai real estate market, and what are your plans for Sobha Group, looking at how the market is shaping up?
The market has picked up and we’re in a positive cycle. We’ve done okay, and the second half of the year is coming along nicely. The first two months of the second half have been good for us, and I think we’ll do well over the remaining four months.
We expect to be a very serious player in this market. If we are able to give consistent quality of product at a fair price, then we’ll have no reason to fear. Wherever I’ve done business, I’ve been successful. Dubai is not going to be an exception to this rule.
Real estate is going to be a very serious economic fundamental for the economy of Dubai. There are various fundamentals for Dubai – the government is giving a lot of emphasis to tourism, financial management, education and healthcare. Without real estate, you cannot do any of that. When you look at the number of tourists in the country, there are about 10 million tourists yearly, and it’s progressively growing. That’s one of the very strong verticals for the country.
Every country has to plan, and this country has planned four or five fundamental requirements for it to succeed. The rulers of Dubai have a very clear vision, and there are only two people I’ve seen in my life, Sheikh Mohammed bin Rashid Al Maktoum and Lee Kuan Yew, who have been able to give that kind of guidance and delivery [to their people].
I’ve not seen a third leader who’s been able to give the kind of guidance and delivery. It’s not just the vision that’s important, it’s also the delivery as well.
Looking at the future, what are your plans for Sobha Group? Are diversification plans on the horizon?
We do have diversification plans in place as well. I came from the furniture industry originally, doing interiors and the like. We’re planning on setting up a huge furniture factory; the land has already been taken and the designs are being made ready. Hopefully, by the end of the year or at the latest by the middle of 2019, we should have a beautiful factory ready to make furniture for this part of the world.
We’re a completely backwards integrated real estate business, so I feel that we should only look into whatever technology comes with that. Within the industry, we always look for technology and innovation, and look to adopt what is most relevant. We keep researching the latest technologies when it comes to construction itself and what we can offer additionally to customers.
When it comes to automation, we work with system providers – home automation is almost part of all our buildings, and we’re able to go to the next level if the customer requires it. There is always a quest within the company to improve.
[Referring to a project in the works in Oman] The project in Oman is not going to be very different to our offerings in Dubai. It’s going to be an integrated development. We’ll have houses, apartments, shopping and so on. But at the moment, we have no clarity on it. In principle it’s there already, but between the cup and the lip, there is a gap. I expect that by the end of the year, we’ll definitely know whether we’re going to be there or not.
We also have a project in Umm Al Quwain. The design is more or less ready and we should be able to launch for sale by the first or second quarter of 2018.
What other market opportunities are you eyeing for Sobha Group?
Affordable housing – individual units that are less than a million dirhams – is already there in Dubai today. Any market has the bottom of the pyramid, and we would also like to play a role in it. The question there will be about the cost. The cost will be very important, because the price should not be more than AED 1,000 per square foot. That’s the benchmark for this market. We expect, with our capabilities and knowledge, to definitely be able to be in that segment. The only challenge is size. I don’t want to take up a small project and just do it. I’m just waiting for the right opportunity.
Finally, what are your thoughts on the introduction of VAT? Do you think it will have an impact on the real estate market and the way developers build projects?
The government also needs money, it needs to diversify its income. For me, VAT is a very good move. It’s necessary, as it gives the government a lot of money to spend. How can the government provide facilities for the people living here, unless they have a certain monetary value? This 5% VAT is going to ensure that. It’ll be useful for the people who live here, and I welcome it.
The initial reaction to anything new being introduced is going to be challenging. If you increase the petrol prices, for two or three days you’ll see people who don’t want to drive! But after that, you’ll see people getting used to it. A 5% tax is nothing at all. We don’t pay income tax here, so some kind of taxation is needed, especially for Dubai, for us to get the best benefits of the country. I think taxation is very critical towards maintaining the quality of the country.