'We're hoping to go public next year'

Q&A/ Mohamed Ali Alabbar

Mohamed Ali Alabbar, 45, is a man of many parts "" he is the director general of the Department of Economic Development of the Government of Dubai (in effect, the minister for economics), a member of the Dubai Executive Council and also the chairman of Emaar Properties PJSC, one of the largest real estate companies in the world. Even as he spearheads Emaar's high-profile global expansion, Alabbar finds time to play golf.

In fact, Golf World as has named him among the top 10 golfing personalities in the world. Seen as the economic ambassador of Dubai, he is more bullish on India, than on China. In New Delhi to speak at the India Economic Summit, Alabbar took some time off to speak with Siddharth Zarabi. Excerpts:

How do you perceive India?

When you look at the rest of the world, you see that people are eyeing China and India. India is massive and that is a great advantage "" the size, education, the English language is widely spoken, your country is very close to the source of energy [west Asia]. All these are tremendous advantages. Even the demographics of consumers are good "" China is getting older, India is getting younger. Europe and the US are old and would suffer from lack of human resources, while you have an advantage in that regard.

There is a section of opinion in the country which says that investments from west Asia and even countries like China come attached with some risk.

West Asia is flush with cash. Historically, it has looked at the US and Europe for investments. But now for political as well as rate-of-return reasons, it is looking at the East seriously. I expect a lot of investment action from west Asia into India, and a lot of people are coming in through us. However, for that to happen, the Indian government has to market itself aggressively there.

I have never come across any security fears and the welcome has been very good here. I think, the fears are really exaggerated. People use this as an excuse to not come and invest in India. After all, the due diligence [on clearing investments and regulation] is even more in markets like the US and Europe. West Asia must come and explore India and I blame it more for not doing so. I don't want west Asia to even think about China.

Perhaps, I need to bring a large delegation of businessmen from the region to come and visit your country.

In your view, what are the challenges that investors face here?

The Indian government sees the challenges, they have taken steps, but the criticism is that perhaps India is not moving fast enough. After all, between 30-40 million consumers are added every year in the country, but the infrastructure is not doing very well. The mood is right, the direction is good, but infrastructure is very important. Businessmen cannot simply sleep on the streets. This needs to be addressed and I think the government knows this and is willing [to improve things]. The business community wants things now and that has to be done. India has its regulations and some of them are not very conducive [for private and foreign investment] in sectors like education and healthcare. You need to ask why there is no world-class hospital chain in the country as yet.

What are your India plans?

For us, India is an important location perhaps more than many other markets. We have a certain set of advantages "" we are just a few hours from India. We don't come from New York or London. We understand the culture and there are many similarities. As a company we are focused on real estate, retail, hospitality, education and healthcare and the size of our operations is very big. We like to do things on a large scale. These are virgin sectors in India and the country for us is a long-term opportunity. We hope to take our Indian operations public next year "" perhaps offload 10 per cent to the public.

How important is going public for a company like yours? After all, capital would not be an issue for Emaar.

We have gone public in many countries across the world. Going public means ushering in transparency and putting pressure on managements to perform. I like management to be under pressure. The discipline in operations is beyond belief in our organisation "" it is rough and tough and answerable. The point in going public is that it is nice to share growth with the people. In South Africa, we have 10 million shareholders and 5 million in Dubai. By bringing in investors like Citibank and New York Life, the organisation benefits. This is because of the discipline they bring with them.

During one session at the Summit, you appeared a little sceptical about the future of retail in India. Is that correct?

I am positive on the prospects for the retail sector. Opening it up to foreign investment is important "" you cannot close the door.

And how do you feel about the special economic zones (SEZs)? Do they really benefit countries "" the criticism against them is that they are a drain on the exchequer?

SEZs are good. We [Emaar MGF] have approvals for 10 SEZs in the country already. SEZs have benefited countries. Dubai, for instance, started the first one 20 years ago and that has led to fantastic growth. The zones are a one-stop solution and in doing that you are really opening up the door. Cities start behaving better and more efficiently as a result [of competition from such zones].

Do you think that the Indian real estate market is overheated?

In every real estate market, there are peaks. The Indian market is in a very healthy state at the moment. There is a supply-demand gap for housing units and demand is what is leading to the growth. While there will be some peaks, they will be eventually balanced out.