By Anil Kumar Vijayan
4 October 2008
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Dynasty Zarooni has emerged as one of the most prominent real estate companies in the UAE, specialising 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 buying 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 buying 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.
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