So much is made of Mohamed A. Abdulsalam’s young age that it almost overshadows the long list of achievements to his name. Almost. The fact that he is CEO at Kuwaiti shareholding company MENA Holding at just 27-years-old is undeniably impressive. But even more so is his relentless dedication to expansion, with some massive projects currently on the table.
The biggest of these is the planned development of 110 million square meters of land in Giza, Egypt. Originally earmarked for agricultural means, this space is now set for urban community use, and once complete, the new city will be home to a million people, as well as housing all the residential and commercial facilities needed to serve them. The city is expected to cost around $50 billion over the course of the project, and will take 25 years to complete in six phases. As a major stakeholder in the Egypt Gulf Company, MENA Holding is one of 20 investors hoping that phase one can begin soon.
The plans have come up against some obstacles over the last five years due to political unrest in Egypt. But progress has been made and the government is now focused on developing infrastructure, enhancing legislation and achieving big projects such as the recent expansion of the Suez Canal. And following a number of amicable consultations, Abdulsalam is hopeful that they are on the cusp of reaching an agreement. “In February, there was a meeting between our group and the Egyptian government in order to reach a fair agreement, and we have now submitted a proposal that we think will be a win-win for all parties.”
And if so, it’s not just the shareholders that can expect positive returns. With Egypt’s vision for 2030 launched in March, the city project could have a direct impact on the economic development and human capital goals laid out by the strategy, which could benefit millions of people. This will affect the growth of the Egyptian economy and support the local community, attracting foreign investment and creating additional resources in housing, education, healthcare and transport.
Ayman Sami, Country Head, Egypt for JLL, thinks that things are on the up following a difficult period. “The Egyptian real estate market has seen significant movement in the rental rates, which is partially directly related to the political and economic situation. Retail, hotels and office rentals were declining in the past due to the lack of stability that the country had witnessed; however, as confidence returns we are starting to see an improvement in the performance across all asset classes.”
Expansion and growth are key themes that run throughout Abdulsalam’s approach. MENA Holding currently has 660 million issued shares, with a nominal value of 100 Kuwaiti Fills per share—its stake in the Egypt Gulf Company is worth the equivalent of over $380 million. The real estate sector is only part of the picture; the CEO is also focused on growing the company’s business in a number of other diverse and lucrative sectors, such as establishing its International Industrial Projects Group in Qatar, expanding industry in Kuwait, and exploring the family entertainment sector in Morocco.
“We are expanding the insulation sector, for example we have established Gulf Insulation in Kuwait. And we have established a company producing a multi-purpose material, which can be used for refrigerators, insulation itself, shoes, etc. We are also expanding in Qatar by building a new steel structure factory—we have been very successful in this sector in Kuwait so we are opening a new factory in Doha to cover market demands.”
Spreading its investments across multiple sectors has served the company well. In fact, its diversified portfolio is what Abdulsalam credits with seeing it through the financial crisis, “We survived because we have assets that are diversified by sector and geography. The evaluation of our properties went down, but these are properties, it’s not like paper or stock debt. Our investment sector was a bit quiet, but construction was working well, as was industrial, family entertainment and agriculture.”
Although he is also still expanding operations more generally—“what I mean by that is day-to-day cash and services”—it’s clear that at the moment Abdulsalam’s key focus is Egypt. And who can blame him? It’s a flourishing industry. According to Homestrings, the real estate sector could grow by 70%, from $7.2 billion in 2012 to $12 billion by 2020. This is partly fueled by a growing population, which has increased from around 78 million in 2010 to nearly 85 million in 2015. Wouter Molman, Director of Cityscape Group, agrees that the market is strong: “Egypt’s real estate market enjoys a strong and resilient local demand for housing, thanks to its large, fast growing and young population, hundreds of thousands of marriages every year, and a growing middle class.”
In the current environment, Abdulsalam considers that private Arabian companies are going from strength to strength both locally and abroad. “There are a large number of private Arab companies that have achieved success in recent years, which has led to the emergence of a strong Arabian private sector that is able to hold competition and expansion in new markets. Many of these companies could also expand and change to become multi-national companies.”
In its 2015 report the Arab Investment and Export Credit Guarantee Corporation indicates that there are more than 1,500 Arabian companies working abroad already through more than 4,600 direct investment projects. This is in addition to the hundreds of billions that the Arabian private sector invests abroad through international stock markets and other financial instruments.
Investment from the Middle East into international markets is big business. According to CBRE Group, the Middle East poured $14 billion into the global real estate market last year, and that’s set to go up to $15 billion in 2015. The majority of this is heading to the US and Europe. And investment is also flowing in the other direction. Research and Markets’ Middle East Real Estate Outlook suggests that in 2014, real estate investments from investors at home and abroad quadrupled the market in the UAE, which could continue to grow at a compound annual growth rate of 6.4% from 2015 to 2019. Molman notes that investment in Egypt in particular is on the up: “Foreign direct investments in Egypt have shown a sharp increase this year with $5.7 billion invested in the first nine months of the fiscal year 2014/15 compared to $3.1 billion in the same period last year. With a target of $10 billion for 2015/16, levels are slowly growing back to the peak reached before the revolution.”
Looking ahead, Abdulsalam believes that, despite some areas continuing to suffer with conflict and instability, the Middle East remains an appealing market for investors. “The Arabian territory has many attractive factors for investors. The most significant are the available natural resources, manpower, geographical location near to the European and Asian markets, moderate climate and the availability of financial surpluses.” The company is, however, continuing to diversify its assets, taking into account the need for flexibility, and expanding business in sectors that are less affected by conflict or the volatility in oil prices, such as the metal industry or family entertainment.
Abdulsalam is approachable as well as ambitious. He has spoken of having an open door policy with his staff and publically attributes his personal success to the teamwork of over 1,200 employees. This humility extends to beyond the company walls. With a vision to contribute positively to the development of society, the organization supports a number of students and university groups to study and exhibit in the US every year. “As far as we are in operation, we are participating in the development of society, the country and the region.”
Asked what his advice would be to newcomers looking to invest in real estate, he laughs, “I don’t need to give people any advice. People here by nature will invest in real estate because it is the safest investment. It might go up it might go down, but it will always be there.”
Speaking to someone who has achieved so much so young, I’m curious—what could this 27-year-old husband, father, graduate and Chief Executive have left on his list of things to do before he’s 30?
“Actually I wrote a list at the beginning of this year. Getting my MBA is on there. Also I want to take MENA Holding to be a truly multi-national company. We are in Qatar, Egypt, Morocco—but I would like to expand into other parts of the Middle East and Africa, and other places too outside of that before I’m 30.” With his MBA from the UK’s University of Lancaster due to be completed in the next few months, he’s already about to tick one item off that list—in the next few years, with this level of determination, no doubt he’ll be able to tick off the rest too.