tv Leaders with Lacqua Bloomberg May 6, 2018 3:30am-4:01am EDT
♪ francine: what do the world's tallest buildings in the middle east all have in common? they are all owned by billionaire mohamed alabbar. his investments like the burj khalifa and the dubai mall have become iconic landmarks and he has diversified in hospitality, retail, and e-commerce. he was named the most influential man in dubai and consistently ranks amongst the top five most powerful arab business leaders. but it is not all business all the time. he is also a sportsman. he is an active member of
emirates horseracing community. today, we meet mohamed alabbar, the founder and chairman of emaar properties. thank you so much for joining us. you have really built a conglomerate. you have built a company that has multiple interests, multiple units, multiple portfolios. did you diversify because you saw opportunity, or because you had to? mohamed: well, i think all of us, we look at opportunities where we don't have to do anything. looking at the middle east and looking at the industries that i went in with my team, we saw amazing opportunities in the middle east in these sectors. i am glad that even though we get difficult years, still these businesses are operating well. so differently it is based on opportunities and the sectors' long-term growth potential. francine: where do you see the most growth coming from? which portfolio, which part will
do better than others? mohamed: the food is operating well and is in the region as a whole, especially with the food delivery business. that's another story. i would say our real estate business is still flying really strong. last year we grew about 28% in the region as a whole. our e-commerce business is something that is very, very interesting. we have got an amazing team looking at it, that is also growing quite fast. even with this growth, one has to be realistic as well. you look at this growth and you look at what's going on in this growth, look at what is going on in the middle east, government policies, the world economy, what changes might take place. so we have to be alert at all times. francine: what does that mean? do you expect a lot of the growth in the middle east -- we will look at e-commerce and talk a little bit more about that. do you expect it to go threefold, fivefold in the next three years? mohamed: our real estate business should continue to grow at about 20% a year.
that is shareholder expectation. it is hard work to achieve that number. keeping cost, the control margins and controlling the political and macroeconomic issues in hand. food business, i think we should be around 10% a year in the region. and keep in mind, we are talking about the middle east where there is need for most industries to grow just just because that i think the middle east still has room to grow. and the other thing is that you look at the population in the middle east as well and the whole demographics is in our favor. francine: because they are young and therefore these are -- the use will spend a lot more in youth will spend a lot more in five to 10 years. how will the economy shift? mohamed: i think the economy will shift positively, because i believe middle eastern governments are really working harder than any time in the past. you see positive changes taking
place in saudi arabia, i think that is the same thing within the uae. i would look at egypt. i am quite interested in egypt as well and all the changes taking place in egypt. with all the other issues we have in the middle east, i don't think it is going to get any worse than this. i think we are looking forward to a more positive trend in policy and in politics and economic growth. francine: in terms of growth country by country, which is a country that will outperform the others in the middle east? mohamed: you know, the majority of our focus is saudi arabia, uae, egypt. and, and i would say egypt is growing faster now. saudi arabia i am quite optimistic with the changes you see taking place within the coming 24 months. i think you will see quite a good trend, and the middle -- the uae as well. you have the other arab countries who are, some slow, some moving forward.
the majority of our businesses are in these countries. francine: i mean, you are holding a big investment on e-commerce for saudi arabia. will there be more for example more property in saudi arabia? mohamed: the public investment funds there with us in our e-commerce business but they are also with us in our food business. now are we going to do more together? i think there is a possibility. there is a lot of work that they are doing inside saudi arabia and outside in the region. i would expect maybe we should look at that and looking together saudi arabia will look very interesting in the coming years. francine: how much can it grow, property in saudi arabia, over the next five years? mohamed: it is at it's infant stage. if you talk about pure infrastructure, if you talk about retail, industrial, hospitality, residential, you just have to make sure you are in the right category of retail.
there is plenty of room to go that way. francine: when you look at how you spend your time for each of the units and also each of the countries, how do you keep on top of it all? mohamed: well, i try. [laughter] i still say it takes a majority of my time. francine: is that 50%? mohamed: i would say it takes about 40% of my time and the rest is a split. you know what takes a lot of my time as well? the food takes the least of my time because the team that sits on top of the business is really a world-class team. they have been in the industry. they know the industry well. it is a vibrant team, a new organization. i need to give it more time. while my real estate business, i have an a team. but you know i am emotional about real estate. francine: this was like the foundation of it all. do you still see it as your baby? mohamed: i think my name is really linked to the real estate more than anything else while all these other businesses have been with them for about two
years. so it is a new brand of products that is associated with me. francine: when you look at the various ipo's and the various units, do you ever feel like it is of value are mainly high risk? mohamed: mainly to unlock value we have investors who have put in their money with us and is time to get rewarded. at the same time it, i really like putting manager -- management under pressure because i know ipo's or quarterly results. i know you are out there in the public eyes under pressure to perform. but mainly, value creation is the business we are in. francine: value creation because shareholders understand you do more and it almost focuses mind of managers more? mohamed: that is one. but many of our units are under the mother umbrella. i think value wise they are not fairly valued. as we put them on the side and put them in separate entities, you create better value that way and you cash out a little bit. francine: are you looking at
ipoing any other units or portfolios? mohamed: we have india, our hospitality business. we have turkey, another business in saudi arabia. so the reality is you can take all of these businesses public at the right time. i think within the coming three years, we will probably have india going public. we will probably have hospitality as well going, going separately the public root. -- route. francine: how much bigger will you be? i hope to speak to you before but if i speak to you in five years, how much will your holdings be worth? mohamed: i think we should be double in value. we should have grown 20% to 25% on an annual basis. and i hope that my management and my boards really put that as a focus. and to be honest, i think we are capable of doing that. we just have to focus and have to make sure we have the right people to do it. and we do this day and night. and that is really how we do
business in our region. francine: that is acquisitions or that is organic growth? mohamed: i would say organic growth. if you talk about acquisition, which we haven't done much of, i am expecting we do more acquisition in the coming two years. francine: mohamed alabbar, thank you so much. coming up next, going from bricks and mortar to retail, we talk about mohamed alabbar's big push into e-commerce and how his company could become the amazon of the middle east. ♪
♪ francine: mohamed alabbar is not only a titan of property, he is also betting on e-commerce. his start up launched its operation in the uae last year. the site is described as an arabic first e-commerce platform, and is looking to take over 15% of the growing market. one of the biggest investors in noon is saudi arabia's
public investment fund, which put out $500 million. but alabbar is not just competing against amazon, he is also a major player in the luxury site. he will offer a premium retail service to the middle east. fashion. so mohamed alabbar, do you ever feel like there is a conflict that you actually own dubai malls, but at the same time you are trying to sell on e-commerce platforms? mohamed: the issue is irrelevant. i don't think it is a conflict or not, but whether you are relevant to the space. so are we really relevant to the retail scene? the economy is becoming so digital. if you are not thinking about it, if you are not acting to do something about it, there is risk of your business you know being in huge danger in the coming 24 months. francine: and so how do you stay relevant? mohamed: i think staying relevant, first of all i have to talk to my kids all the time.
and i learn from them. i have a little girl that sells jewelry to women in korea and in -- out of dubai on her instagram. what type of world is this? therefore, i think all of our business from real estate, retail, to hospitality, i think the digital scene is changing all that. when you talk about e-commerce, it is just moving your business to the digital scene. and the whole economy is moving that way, from health care, to education, to retail. therefore, i think we just want to be relevant. i don't think there is any conflict because at the end of the day there ought to be a collaboration or connection between the real world and physical world. can we really try to find a solution and work together? and stay relevant in our business? francine: how much of your sales will actually be done on your e-commerce platform in five or 10 years? and in general for the middle
east, are you set behind in selling e-commerce? is the potential bigger here in europe or the u.s.? mohamed: remember, when i, when i look at the middle east right now, e-commerce is between 1.5% to 2%. francine: tiny. mohamed: tiny compared to the rest of the world. there is room for all of us to grow. where will this be? i think it will grow much faster than the rest of the world. and it will get into the 10% to 15% quite fast. because of the demographics of the region. so we owe it to our society, we we owe it to our 300 million arabs that they are ought to be a native that they ought to be a
native organization that looks after the sector and participates and learns and serve. francine: what will noon become? are you nervous you are going head to head with the most successful retailer of all times, amazon? mohamed: well, noon of course, it will be an ecosystem. am i nervous? of course i am nervous. i am nervous from everybody. in my real estate business i am nervous. in my metropolitan business because competition is severe. and markets are open, anybody can come in. the big players are going to come in. some of them came already, more are going to come to the region. but i am from that part of the world. i think it is our duty to participate in the scene. and remember, we as arab businessmen, we are a bit tribal, which means that i am from this society, i have a duty to dedicate to business and be aggressive, achieve numbers and achieve success. that is a duty that i feel responsible for. competition is good for the consumer in the region, rather than one player coming in and controlling the life of our customers. i think it is fair to have competition and let the customer win at the end of the day. francine: ok, but how do you decide, how will you go against amazon? do you have to convince
retailers to sell on your platform instead of amazon's platforms or is it a price war? how do you see the fault line? mohamed: we are working with the local retailers and we are their partners. now how other international players do it, they do it through sourcing overseas, or working in some other matters. that is their business. but we differ, our partners are the local retailers. maybe our margins will be a little smaller, but that is ok. we would rather win on the long-term rather than alienate local retailers. now will there be a price war? well the past two months there is a price war. customers are winning. everybody is 20% off, 15% to 10% cheaper on some of the product, so i am happy that people in my region, they don't have to buy a meal for the kids that is 10% more expensive when there was one operator or one monopoly controlling human life. i think this is good for all of us. of course there will be competition, but the amazing thing is the world is open.
so much new technologies are being provided to everyone that want to go into this scene. but are you planning long-term? do you have good people with you? are you serious about it, are you willing to offer service? -- provide quality service? francine: is it the service or is it the product? how does the middle east shop? what is selling at the moment, and what will sell in five, 10 years? mohamed: when you look at the e-commerce scene, it is not much different from what is going on in the world. people want delivery, fast delivery. people want quality. francine: will they pay for delivery? mohamed: for the time being we are subsidizing delivery. because as i said, people are just learning the art of e-commerce and that is what is global companies are doing. they give it to you free first, then later on take a little bit of margin, maybe controll -- control market. people want it all, quality, want the value, want consistent, want delivery time that is fast, and want the product that they want with changes from one month to another.
therefore you have to provide that and get ready to provide the new thing that might be happening next month. francine: how important is market share, and how important is market share right at the beginning so people get used to your platform and not amazon? mohamed: market share is very important. in the beginning you have to get aggressive, and probably provide the best service ever. you will be cutting prices. as usual because we see it. it is a live competition. there is nothing wrong with that. but the good thing is the market is big enough. two players can come in. but imagine if you do business in u.k., and there is one operator. how fair is that? francine: isn't there only amazon here? mohamed: i think there are many other players in the u.k. as well. i prefer more than one player in the market. in the middle east, there will be more than one, we will be one of the major players in the market. francine: up next we talked the -- talk of the leadership skills it takes to create both the largest and tallest building in
♪ francine: emaar properties has grown more than threefold and expanded in the middle east and north africa, despite political instability in the region. so what kind of leadership does it take to shepherd a global company through turbulent times? mohamed alabbar, chairman and founder of emaar properties, is here. what kind of leader are you?
throughout the program, we were talking about encouraging your regional leaders and also your portfolio managers to be aggressive. do they always need to be on their toes? mohamed: well i think number one, they have to be relevant. changes take place in the world. are you relevant? the other thing i like is we all have to believe in the reset. this upgrade, are we operating -- upgrading every one month? because there is so much happening. do we really act? we have to be, we have to be relevant, we have to act, we have to have discipline, we have to believe in the best people, and we have to take care of our society. these are the elements i depend on to manage my business. francine: ok, but what does it mean being relevant? in more traditional times you could ask a customer what they want and think i am relevant. now the change of pace is so fast. mohamed: relevant is, are you watching social media, what is going on with your customer? and what is going on with your
business? there is no way to search in 30 days. how, how alert are you? how alert are you about how your customer feels, what's going on in the industry, what is going on with politics? what is going on with economy, youtube's management, how fast can you go? are you awake? francine: what do you need to be awake for more? is it for your clients or is it politics, or is it how your business interest are going? mohamed: my people number one, society number two, what is happening in politics, what might happen to interest rates. you almost have to have all the construction risk in my business. what is going on in technology, what is going on in digital. you always have to be alert of all this. number one, people. you have to make sure that you share with them this environment and are they fit in this environment? francine: so what does that mean? what do you see your role? are you putting the fire under
your managers' feet to keep them going, or do you micromanage? mohamed: i don't think i micromanage, but there are situations where i do have to go and micromanage. we should be able to go down if we want to. and remember, i mean, i came from my mom's kitchen. i used to work in my mom's kitchen when we were all 15 kids living in one room. so i know how to do that. so i can pull back and be the chairman of the organization. but if there is need to move in, i can, i can comfortably move in. reasonably, good qualified people with me. but i really think that i am the target creator. i am the guy who does the monthly performance reviews, the guy who will push the limits. i want people to work hard. because i think we as human beings, our productivity is low. francine: you spend a lot of time in property, that was the first company.
but what excites you the most in all the others that you are doing, so hospitality, retail, e-commerce? mohamed: e-commerce excites me a lot because when i look at how the digital world is changing our, our lives, i come back to my real estate business, and say maybe this office is null and void. maybe this is not required anymore. if you look at the digital guys and you see how fast they work, or the process they use, or the age of people in these offices. i really believe that the younger generation are running the world, and they run it extremely well. so much learning in the digital side of the e-commerce. but i think my investment in bp, which is a private equity firm that specializes in digital technology in the middle east with almost 80 ventures, that is amazing learning about what is going on in the middle east and
the industries to come. francine: do you focus a lot on diversity for your companies? is it important? mohamed: yes, that is important. it is happening naturally. we don't even have to do it anymore. francine: do you have metrics? mohamed: yes, we have metrics. we have kpi's for that. it is happening automatically and i like that. francine: do you think it will increase with time? are you going to see more female workers? mohamed: the female workers are really taking charge. if you look at the people who run my organization, most of our organizations, i would say our most of our organizations, our food boys half -- have to have more of that. look at our government. the highest percentage of senior people in government anywhere in the world. francine: mohamed alabbar, thank you so much for joining us. he is of course the chairman and founder of emaar properties. mohamed: thank you so much. francine: thank you. ♪
+ coming up, the stories that shaped the week in business around the world. the feds hold rates steady. ♪ nejra: coming up on "bloomberg best," the stories that shaped the week in business around the world. the fed holds rates steady as rate creep towards its target. >> i think the statement is loud and clear -- mission accomplished. nejra: while april's job report provides more data to chew on for june.