Anticipates Resource Constraints Amid Dubai’s Real Estate Grow
Imran Farooq, CEO, Samana Developers
PC: Zawya
Initial Investment to Secure Resource
Dubai-based Samana Developers said it had established a new contracting company to help manage the emirate’s growing expectations for resource constraints in its fast-growing real estate sector. The firm’s chief executive, Imran Farooq, said an initial investment of 150 million UAE dirhams ($41 million) was made to ensure smooth delivery. The move is part of the developer’s wider strategy to vertically integrate its operations and gain control of key resources with mounting pressure on contractors and supply chains.
He added that for many of Dubai’s mainstream developers, growth has surged by over 250 percent compared with last year, with those concerns being over how these projects would be delivered.
Samana’s Rising Market Position
Samana Developers ranks seventh today for total units sold in Dubai by the DLD. This was ranked as one of the top 10 off-plan sellers in the city last year according to Property Monitor. Farooq cited general concerns across the industry with a general shortage in contractors, machinery, and adequate accommodation for the workforce as demand surged.
Farooq explained that it was also a constraint of resources-the scarcity of contractors, machines not adequate, and labour camps not suitable for the growing workforce, respectively. He added that these problems would soon become major impediments to developers’ move towards 2025 or 2026.
Strategic Response to Resource Challenges
In response to the above challenges Samana Developers proactively is investing in securing its future projects. This it is doing through its backward integration strategy by investing in-house capabilities such as the formation of a new contracting company. The latter will give the developer greater control over its resources and therefore better ensure timely delivery of its projects, according to Farooq.
The CEO proposed a three-pronged approach for the new contracting business. First, a new company is being constructed from the bottom up with all the necessary engineering and operational requirements already underway. Second, Samana is already in the final stages of negotiations with two contractors to form a joint venture (JV) which will work exclusively on its projects. Lastly, the company is adopting a white-label approach wherein key supplies such as concrete and steel are being secured for exclusive use in its projects.
Future Prospects and Joint Ventures
However, Farooq is rather positive about Samana’s prospects with fluctuation in the market because it is adequately funded, and a huge amount is lying in escrow. He said that they have survived the pandemic and they are focused on handling contractors. This is a resource-scarce situation wherein all the big developers are vying for contractors. So, it’s all locked in, strategies and resources, as far as the project delivery goes.
The new contracting company and JV are supposed to provide a dedicated supplier for Samana’s core operations. In an interview, Farooq said that projects would be contracted to the JV based on its available capacity and resources and not allow the development pipeline to stay unrestrained.
Ongoing Projects and Future Investment
Currently, Samana Developers boasts 42 real estate projects across various development stages. Among the latter of its newest projects are Ocean Pearl 1 and Ocean Pearl 2 based on Dubai Islands. Plans to invest 12.5 billion UAE dirhams ($3.4 billion) in new residential projects spread across Dubai were recently announced by Samana, which foresees 18 construction contracts to be awarded by the end of the year.
This strategic positioning to set up an internal contracting company will help Samana Developers to contain the resource limitations and continue its strong market leading position in the real estate market of Dubai, which is growing rapidly.
