Khaleej Times
By Anil Kumar Vijayan
4 October 2008
Dynasty Zarooni has emerged as one
of the most prominent real estate companies in the UAE, spe******ing in the
investment and disposition of commercial, residential and leisure properties in
Dubai and Abu Dhabi to global investors across 20 countries.
If one were to sum up Dynasty
Zarooni’s spectacular success as a young, multi-faceted real estate
conglomerate in a few words, it would be something like “Good reputation built
on good reputation.
” During the short span of its
existence, the company has clearly stayed away from the grey areas of UAE’s
real estate sector and invested only in projects by highly reputed companies.
This prudent approach has paid off and today the company has a tangible net
worth of Dh1.35 billion in addition to satisfied investors and customers.
Dynasty Zarooni has emerged as one
of the most prominent real estate companies in the UAE, specializing in the
investment and disposition of commercial, residential and leisure properties in
Dubai and Abu Dhabi to global investors across 20 countries. The company was
created in 2007 through the merger of two businesses — one headed by its
President, Hilal Al Zarooni, and the other by its Chairman, Kabir Mulchandani.
Both Hilal and Mulchandani are seasoned entrepreneurs, having been at the helm
of very successful businesses.
Hilal has a background in real
estate and retailing of luxury goods. He established the successful retail
chain “Le Paris Diamonds” and also managed and delivered prestigious
developments at Jumeirah Lakes Towers such as One Lake Plaza, HDS Towers and
HDS Business Centre. Mulchandani, on the other hand, has a background in
manufacturing and distribution of consumer electronics across India.
He set up Dynasty Enterprises Inc.,
which has been achieving extremely impressive results, since inception in 2005.
Dynasty Zarooni thus combines the synergies of these two organisations. The
group has made investments and disposed of assets worth Dh21 billion across a
kaleidoscope of residential, commercial, retail and leisure developments in Dubai
and Abu Dhabi. Some of the key projects in which the company has done
investment and disposition include: Mazaya Business Avenue, Hotel K, Panoramic
Heights and Queue Point.
Quality Not Quantity
The company has focused on
identifying and investing in key projects being developed by developers of high
repute, and those which offer attractive investment opportunities for the
customers of Dynasty Zarooni Inc. Company officials say they emphasise on
quality rather than quantity. By working with developers of high financial and
reputational standing, Dynasty Zarooni ensures delivery of quality real estate
for its investors.
These projects have enabled its
customers to generate excellent returns and accumulate wealth through sound
investments. Through the company’s successful marketing strategy, customers or
investors have earned profits of over Dh6 billion, on an aggregate. The
company’s commitment to exemplary performance is evident from the efficiency,
transparency, proactivity and professional ethics that have been the hallmark
of its dealings with all stakeholders, be it customers,
shareholders, employees or vendors.
Long-Term Rental Income Stream
When the real estate development
boom started building momentum, the company realised the need to build a long
sustainable revenue model for investments in high quality real estate assets,
capable of generating a longterm rental income stream.
Dynasty Zarooni Business Center,
located in Dubai Investment Park, was the first project undertaken by it. The
project, which is slated for completion later this month, has been developed
without any debt. According to company officials, this asset has appreciated
more than 600 per cent and is currently valued at Dh250 million.
The company is exploring new project
opportunities in residential, commercial and retail real estate space that can
be build on this business model.
Real Estate Broking
A new entity Dynasty Al Zarooni Real
Estate LLC has been set up to tap opportunities in real estate broking and as a
forward integration to the group’s real estate investment and disposition
businesses. This company aims to carry out real estate broking by leveraging
the growth in the real estate industry.
It capitalises on the strong
customer base of Dynasty Zarooni Inc. and provides it with a platform for
selling investments purchased through Dynasty Zarooni Inc. This innovative move
gave the company immediate access to brokerage revenue from assets on which it
had already generated profits, thereby increasing its margin after passing on
the risk.
Within nine months, the brokerage
business began delivering sales of Dh1 billion on a monthly basis. Thus
the company managed to create a successful business model by ably capitalising
on the strong positioning of the Dynasty Zarooni brand.
Vice-President, Sales and Marketing,
Aloki Batra says: “By the end of this year the company plans to open six new
locations in the UAE: Abu Dhabi, Sheikh Zayed Road, One Lake Plaza, Saba Tower,
Burjuman and Deira to build greater customer reach and a strong distribution
model.
The company’s corporate headquarters
will be relocated to a 30,000-square feet space in One Lake Plaza before the
end of the year. The company also plans to expand its distribution reach
globally by launching operations in Moscow and London by the end of this year.
Currently we have over 5,000 customers.”
Financial Brokerage
The strong growth of the real estate
market has given rise to a need for financial products for the real estate
market, therefore the group is in the process of setting up a financial
brokerage services company to provide complete end-to-end products to suit its
real estate sector customers.
The new company will enter into
strategic alliances with leading mortgage and insurance companies to offer
mortgage and insurance solutions to its customers. The business is expected to
generate a consistent fee income for the entire group.
The company has already entered into
agreements with Amlak and is currently finalising its negotiations with Barclays.
“The customer will not have to even move out of his house and our staff will do
all the running around for a nominal fee,” explains Senior Vice- President,
Structured Products Division, Neeraj Sehgal.
Car Park Assets
Dynasty Zarooni’s Premier Car Parks
Inc. capitalises on the opportunity created by a scarcity of car parking
infrastructure in both Dubai and Abu Dhabi in light of the growing population
and increase in automobile sales (growing 16 per cent annually).
By investing in quality car park
infrastructure and building a strong asset base of car parking bays in prime
locations. These assets also provide the company with a hedge against any
downturn in the economic condition. The company currently owns 2,570 car
parking bays, which are currently under construction and will be operational in
early 2010.
“Most of these are in key towers in
commercial districts, where the shortage of parking spaces is acute,” says
Chief Financial Officer Rajesh Gupta.
Meticulous Planning
As part of its successful business
strategy, Dynasty Zarooni does a detailed due diligence by identifying key real
estate projects for its investment and disposition business. Projects developed
by developers of high repute, listed companies, government and quasi government
companies are selected.
Because it has a strong global
distribution channel, the company is able to make extremely large investments
by ***ing properties from developers. This allows it to acquire properties at
competitive prices and solicit favourable payment terms.
The company has also been able to
negotiate investor-friendly sales and purchase agreements (SPAs) binding
developers into irrevocable and unconditional delivery obligations, which
normally do not form part of the “Vanilla” SPAs that are available in the
market.
“Such SPAs are totally one-sided and
allows the developer to wash his hands of any commitment and therefore does not
protect the investors. Most investors do not read the SPAs,” says Gupta.
“Through our carefully negotiated SPAs,
we are able to pass on better prices, payment terms and legal positions to our
customers – something they would never achieve ***ing on their own,” adds
Gupta. On most occasions the company creates payment structures with developers which are linked to construction of projects and allows for
70 per cent to 80 per cent to be paid by customers to developers upon
completion of the project.
This locks in the developer and
imposes upon them the financial motivation to deliver the projects earlier than
scheduled deliveries. All these benefits are passed on to the customers,
thereby creating a sustainable demand for the products offered by the company.
One of the key aspects of this
business approach is that the best assets are retained by the group as part of
its investment portfolio for generating stable income through rental and
capital appreciation. Additionally, the brokerage business generates a high fee
income within minimal cost, thereby building strong profitability for the
group.
The large advertising budgets can be
amortised over the investment and disposition business as well as the brokerage
business of the company, thereby allowing for continuous and sustainable brand
development.
Over the last 12 months the company
has embarked on an innovative marketing plan to create a strong brand profile.
The marketing campaign focuses on print, outdoor and television advertisements
at the national level.
Long-Term Investment Property
Portfolio
Dynasty Zarooni also acquires
property portfolios in residential, commercial, retail and car park spaces with
the objective of holding these prime assets for a long period of time and
generating long-term sustainable income through renting out of these properties
and building capital appreciation.
This portfolio acts like a hedge
against volatility in the real estate sector. The group has created a portfolio
worth Dh525 million using this business model.
Strategic Partnerships
Apart from developing its own
projects, Dynasty Zarooni Inc has entered into strategic partnerships with
leading real estate developers, who have a proven track record in the delivery
of their projects, such as Al Fajer Properties LLC, Business Bay LLC, Dubai
Properties, Green Emirates Properties, Hydra Properties LLC, Al Mazaya Real
Estate FZ-LLC and many more.
The company has invested and
disposed of key projects from these developers and also successfully marketed
those projects to investors and retail customers. The total investment
portfolio of the company is Dh21 billion across residential, commercial and
leisure properties.
The company has established a strong
customer base across the globe, who have bought the projects marketed by the
company. It is currently embarking on creating a unique 6 million
sq.ft waterfront development valued
at over Dh24 billion.
Organisation's
Culture
Both Al Zarooni and Mulchandani are
deeply involved in the daily and strategic decisions of the company.
The Dynasty Zarooni management team
consists of professionals who have rich experience across industries such as
real estate, manufacturing, franchise management, investment banking,
consulting, financial services & retail banking and capital markets.
The management has instilled an
entrepreneurial culture in the team by encouraging creative and proactive
thinking amongst team members. It evokes and encourages new and innovative
ideas in doing business.
This kind of work environment has
created a high level of employee satisfaction and it is no surprise that since
inception of the business, there has been no employee turnover in the company.
Chief Executive Officer Nikesh
Vishram says: “Our top management believes that employees should also prosper
as the company prospers and this has done wonders for employee morale.
Everyone, right from our President, works hard without watching the clock.”
The overall operations of the
business are conducted as per laid out business policies and procedures.
There is a strong compliance and
control culture in the team to ensure there is no regulatory, financial and
franchise risk to the business. Two internal auditors independently review all
aspects of business operations and conduct a pre-audit of every business
transaction irrespective of the size of the transaction. This ensures total
transparency of all financial operations. Apart from this the company
has appointed KPMG as their
financial auditors.
Expansion
The Dynasty Zarooni Group has
ambitious plans to expand their business in the UAE and global markets to
leverage growth opportunities in the real estate sector. During 2008-2010, the
group will be expanding its business towards a distribution operational model
by setting up a strong Dynasty Zarooni branded distribution network for its
real estate broking business. It plans to open 20 new distribution locations in
the UAE. The group has also started negotiations for strategic alliances to
develop and distribute real estate related financial products to consumers
during 2009, which will encompass residential and commercial real estate financial
products. As part of its global expansion initiative, the group plans to open
brokerage division offices in London, Moscow, St Petersburg, New York, New
Delhi and Hong Kong. These offices will target customers interested in
investing the UAE Real Estate market and also develop products suitable for the
local markets. This will also provide the group with a global presence,
enabling it to tap opportunities in those markets and become a global real
estate player.
Khaleej Times
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