Al Masah Capital sees growth in key economic sectors will continue this year while property prices are expected to stabilise at more reasonable level, its top official says.
The UAE-based diversified business conglomerate, which has significant stakes in the healthcare, education and real estate sectors, rules out any property bubble and said regulators are more vigilant and active to protect the market.
“Real estate price movement in Dubai is directly related to the shift in capital flow post Arab Spring and the resurgence of risk appetite within the UAE, India, Pakistan and GCC investors. This combination has allowed prices to move aggressively, but we are seeing that this is restricted to quality developments and it is not a free for all like we saw in 2008,” Shailesh Dash, founder and chief executive of Al Masah Capital, told Khaleej Times during an interview.
Dash, who established the group three years back in 2010, said property sector staged strong recovery on the back of existing wealth because banks are still conservative in their lending.
“Wealthy investors with sizable cash positions and higher risk tolerances and sophisticated institutions used to cyclical movements are the ones driving this stage of the recovery. We will not see a bubble like 2008 because regulators and investors alike have learnt their lessons, banks and financial institutions will be more prudent in their lending and quality over a longer term time horizon rather than short term speculation will be the prevalent trend going forward.”
“Also, with the regulators staying ahead of the game and being more proactive this will limit the ability for another bubble to grow. It is important to keep in perspective the Dubai price rises in relation to the crash and the extreme low levels it had gone to. What we are seeing may actually be a stabilisation of the price levels at a more reasonable range.”
Real Estate arm, hospitality foray
Dash said Masah Capital is going to set up a real estate fund and its details will be announced shortly. “We have identified a specific opportunity in commercial property segment, so our new real estate fund that we are planning on launching in the beginning of 2014 will target this particular area,” he said.
“We have already shortlisted two to three commercial properties that will yield above eight per cent,” he said, adding that fund is also going to explore hospitality sector with the soft opening of its first venture in Dubai this month.
Al Masah Capita has swiftly established a reputation for bold strategy and substantial returns. The fund’s progressive approach helped attracting more than $400 million within 24 months of its operations and today it is considered one of the bests in alternative investments.
“The total funds we have raised in the last three years are nearly Dh1.8 billion,” Dash said.
About the fund’s performance in 2013, he said it was a good year for the company and full year results will exceed the targets.
“We are building on our success in 2013. Up till March last, which is our financial yearend, we showed 104 per cent growth in total revenue, 193 per cent growth in net profit and 44 per cent growth in return on equity. Going into March of this year, we are on track to exceed these benchmarks,” he said.
With regard to 2014 outlook, he said: “In nearly all sectors and asset classes, 2014 will be the confirmation of the growth cycle we are currently experiencing across the world and especially the Mena region. Last year showed that risk appetite was back on and we believe 2014 will add to that sentiment as long as we do not have any black swan events.”
Education and healthcare
About Dh900 million investments in healthcare and education sectors, Dash said the fund is expected to complete the project this year as both segments are growing aggressively.
“We are on track to complete these investments by the end of 2014. Up till now, we have invested and committed approximately Dh500 million in investments already. Both platforms are growing aggressively and with the speed of the growth, we are exploring to expand our investment horizon to include Southeast Asia as well thereby adding more countries and enhance the strategy.”
“Couple of options is available that we are actively pursuing as we look to consolidate our exponential growth. Our investors are getting 20 to 25 per cent return every year including the eight to nine per cent cash dividend we are paying.”
Elaborating, he said Al Najah Education has grown fast to include today four assets in Dubai and “we are in the process of acquiring two more assets in Abu Dhabi now as well”.
Apart from expanding the platform in the UAE, he said the fund is also exploring different avenues of partnership in Kuwait and Oman. Al Najah will encompass the whole spectrum of nursery and school education (K-12) and in the next three years should have presence in at least four of the six GCC countries as well as many of the Southeast Asian countries, he said.
Dash said Healthcare Mena Limited has been one of the best performers in “our portfolio having already given 17 per cent cash dividend in the last two years and having seen its value appreciate by more than 40 per cent”.
“In only two years, we have built a portfolio of 17 assets in the healthcare sector in Abu Dhabi, Dubai, Sharjah and Kuwait. This year we would be serving almost a one million patients which means almost 15 per cent of the population of these cities.
“We have started to work on the various quality certifications of these healthcare units and the branding which should be finished by the end of this year. We are also in the process of expanding the healthcare practice into Southeast Asia and other GCC countries.”
To a question on fund’s new joint venture, he said: “We have secured a licence from Monetary Authority of Singapore to operate as a fund manager in the country.”
“We greatly believe in the potential of Southeast Asia and we feel strongly the valuation opportunity is very attractive currently in many of these countries. We are very confident that within next one or two years, the Singapore office will be a key contributor to the fund’s bottom line,” Dash concluded.
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