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“Project financing has never been an issue for us”

April 2016

Rizwan Sajan, Founder & Chairman, Danube Group, says if a project is offered at right price, at right payment terms and at right location, there’ll always be buyers in the market

Please take us through the current and upcoming projects of Danube Properties and your business model. Danube Properties’ first project was ‘Dreamz’ that was launched in June 2014, comprising of 171 townhouses. Subsequently, last year, we launched ‘Glitz Residence’ 1, 2 and 3; all located in Dubai Studio City and have almost 850 apartments. The latest project which we just launched in January this year is ‘Ritz Residence’, located in Al Furjan and offering 454 units. Hopefully, in April we’ll be launching another new project in the same Al Furjan area and almost on the similar design and patterns of Ritz project.

Since beginning, Danube Properties’ focus has always been to cater to buyers looking for affordable property, especially those who’re currently paying rent, and thus enable them to own their apartment by offering them more value for their money. We’ve received tremendous responses for all of our projects so far simply because we offer more value to our customers through two of our unparalleled offering. The first is the flexible payment terms. As per this plan, buyers of our property can pay only 25% upfront within 60 days of booking and the balance 75% can be paid in 75 equated monthly instalments of only 1% per month. The second way through which we create value is by offering not just furnished apartments but expandable living rooms as well that can be converted into a bedroom. While sofa and wall cabinet make a wonderful addition to our living rooms, buyers can easily unfold the expandable sofa and pull down the wall cabinet to use it as a bed.

What’s encouraging you to launch projects in current times when everybody is talking about slowdown? We believe that if a project is offered at right price, at right payment terms and at right location, there’ll always be buyers in the market.

Many potential investors have a view that buying off-plan property has risks associated. What‘s your take? It all depends on which off-plan development the buyers are investing in. If investment is made in a right off-plan project, it could turn out to be better than buying ready-for-possession properties.

Do you believe the rent-to-own schemes are catching up with developers and buyers alike? Buying a house in Dubai is often a better idea than renting one, especially for the expats who are going to stay in Dubai for a long time. However, in case after spending 5-6 years or more, if buyers have to go back to their home country for any reason whatsoever, they can get relief from the fact that there’s always an exit clause in the property agreement whereby they can sell that apartment to another buyer at the prevailing market rate.

What is the biggest challenge facing the UAE’s and the region’s real estate market? What sort of hurdles you are experiencing in the current market situation? For most developers, the biggest challenge in current market conditions is to sell their inventory. In so far as we’re concerned, we haven’t had to face the selling pressure and liquidate our properties. We’ve successfully overcome the market challenges simply because of the brand equity that we have built up over the last two decades. Our buyers, investors, and stakeholders trust in Danube brand and that’s the reason why they invest in our projects. Several developers have dabbled in affordable property segment, but unfortunately many of them could not be as successful as we are.

Many players in the region’s real estate sector are struggling to maintain a positive cash flow in the current scenario. How are you optimizing the cash flow management? For us, arranging project financing has never been an issue because of our strong balance sheet. We’ve been working on good terms with banks in the region for a long time and that has established a strong relationship of mutual trust. We have never had issues in repaying loan back to banks, even during the tough market conditions of 2008-09. This coupled with the fact that our forte in building materials further gives us a 10-15% cost advantage, that’s transferred to our customers. This also gives an edge over other developers operating in this market since most of them have to source building materials from us.

How do you plan to fund your projects going forward? Will you be looking to raise funds through own equity, or you’ll be exploring external funding such as bank loans? At present we don’t require external funding as our financials are very strong. We’ve enough cash flow to plough back the profits in the development of new projects. Our approach is to go slow and finish one project at a time. It’s only when we finish selling off a particular project that we go for another one. This is unlike other developers who’re launching multiple projects at one go, which makes it difficult for them to execute and handover all projects within the deadline.

With the crude oil prices slightly jumping back to $40 levels and equity markets in the recovery mode, do you have plans to go for public listing/IPO? Ours is a small family business and we don’t have plans to go public. In the future we may go for it, but not at present. In fact, we’ve never felt that we should go to a stock exchange to raise capital.

Danube Group recorded an annual turnover of AED 2.3 billion in 2014, with a 15% increase year-on-year. How has been the performance in 2015? In 2015, our turnover was AED 5.13 billion and this year we expect to grow at another 15-20%.

If you could share one factor behind Danube Group’s success so far, what would that be? I’ve a strong conviction that working with complete sincerity always pays off. One shouldn’t try something extraordinary unless one is really a genius. Lot of entrepreneurs planning to launch own company give all-out effort to grow too fast or do something which is against the market trend. That’s the reason why many of them fail. I believe that an entrepreneur must strive to do business thinking of not how much money he is going to make if he is successful, but instead how much money he would be losing if he fails.

How do you describe your leadership style and what advice do you give to future CEOs? I usually remain calm and cool even under pressure. I also believe in delegating the right tasks to the right people. Most importantly, I trust my employees and expect them to carry out their responsibilities effectively. For future entrepreneurs, I would advise them to be sure of the market they are venturing into. If one wishes to do business, never ever start off without first going into the detail of that business. It’s very easy to start a business but equally difficult to sustain it. So go gradually, go slowly and there’s a way out.

Of all the gadgets you own, which one you prefer the most? What’s your favorite pastime? My favourite gadget that I still like to use is my Blackberry because of the speed and ease of typing on the keyboard. Socializing is one of my favourite pastimes. I like to go out to parties and meet friends and on weekends, I don’t forget to catch a movie. My day starts with swimming and a bit of workouts. For social networking I am mostly on Whatsapp and Facebook.

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