BUILDING ON A SOLID FOUNDATION
The National talks to the Zawaya Realty chief, whose property company has a uniquely charitable remit
Phillip Caraiscos, chief executive of Dubai’s Zawaya Realty, admits the property business he runs is “unusual”.
But he insists it is a “commercial-minded” venture that can compete effectively with other property broking and management businesses in the city.
Zawaya is one of the first businesses that was set up by Noor Awqaf – a joint venture between the banking and insurance group Noor (which is itself owned by Investment Corporation of Dubai) and the Awqaf and Minors Affairs Foundation – a Dubai government foundation set up to supervise charitable funding for minors.
“They basically look after endowments, which are called Waqfs in Arabic, and they look after minors – anybody that is under 21 that doesn’t have a legal guardian,” says Mr Caraiscos.
Noor Awqaf was set up in 2012 as part of the UAE Vice President and Ruler of Dubai Sheikh Mohammed bin Rashid’s initiative to make Dubai a global hub for Islamic finance. The vehicle’s remit is to make money from commercial operations that can then be channelled into other Islamic businesses.
Zawaya Realty was formed in January 2014 – which is when Mr Caraiscos joined the company, having previously worked as director of community and property asset management for Dubai Multi Commodities Centre (DMCC) Authority, which is the free zone authority behind the Jumeirah Lakes Towers (JLT) district.
“I saw JLT from 2007 where it was just like a piece of sand and a couple of buildings coming out of the ground, to when I left in 2013 when there was about 60-odd buildings that we had completed. To [DMCC executive chairman] Ahmed bin Sulayem’s credit, they had created the biggest free zone in the UAE. It’s amazing what happened there.”
One of the tasks for which Mr Caraiscos was responsible during his time at DMCC was the creation of the facilities management company, known as Concordia, that carries out much of the work in the JLT area.
“So here [at Zawaya], I got the opportunity to create a company again from nothing,” he says. “A good real estate company with, we think, a good real estate proposition.”
The Zawaya name comes, he explains, from traditional lodges for travellers that were set up as Waqfs, or endowments. He says the Ottoman Empire encouraged the spread of Waqfs, where benefactors would donate money or property that would fulfil a variety of charitable or municipal roles.
“It was a good way of benefactors donating money that would be leaving behind a legacy for them, but at the same time servicing humanity.”
Zawaya was set up to manage the property portfolio not only of Noor Bank, but also of the Awqaf and Social Care & Minors Affairs Foundation.
“The bank has certain criteria that it needs to meet, so it focuses on its core business banking. Awqaf focuses on providing services to the needy. That is their core business.
“So we created this real estate business to service both entities and at the same time have the flexibility to grow the business to create more equity, more profit for the Awqaf so they can service more people as well.”
It is already a sizeable concern. Operating from the eighth-floor office of Noor Bank’s Emaar Square premises, the company has a team of 41 staff that manages both of these estates, as well as buying, leasing, maintaining and managing properties for third parties.
It handles the entire operating property portfolio for Noor Bank, including its branches and head office space, as well as a major portfolio of apartment buildings and retail units for Awqaf. In total, this adds up to about Dh5 billion worth of assets it has under management, including 63 buildings and about 4,000 leased units. Some 2,600 of these are residential units and the remaining 1,400 are all retail.
“About 400, roughly, of those 1,400 retail units are basically ones that are adjacent to mosques. The revenues that are generated from those units goes into paying for the imam in the mosque, but also the upkeep of the mosque,” Mr Caraiscos says, adding that the Awqaf Minors and Affairs Foundation also works hand-in-hand with the General Authority of Islamic Affairs and Endowments.
The residential units are typically in low to mid-rise residential buildings with retail units on the ground floor.
“The foundation, basically, is the custodian of those units, whether those are retail or residential. And we manage them on the foundation’s behalf,” he says. “We try and maximise the rent from them.”
Mr Caraiscos says many of these buildings are typically housed within non-freehold areas throughout the city, for which there has been plenty of demand, with the portfolio offering returns of about 6 per cent in recent years.
“So it’s a lot better than the market. I think there’s a lot of demand for affordable housing, that’s the key.
“If you’ve got a source of affordable housing I don’t think you have to worry about occupancy. Our occupancy is around 99 per cent because it’s in locations that have good transport and is affordable,” he says, with typical studio or one-bed apartments starting in price from Dh45,000 to Dh50,000.
Alongside this, Zawaya advises Awqaf on the land assets it holds, formulating development plans for the best use of this.
The profits generated from Zawaya’s activities either go back to Awqaf or they are fed into Noor Awqaf to help fund development plans for future Islamic businesses, Mr Caraiscos says.
“The businesses that they are looking at at the minute is quite diverse and there’s a lot of activity in the pipeline that you will see in the next couple of years,” he says, adding that its remit will be in creating businesses within the financial management sphere.
For Zawaya, however, its expansion is geared towards advising external clients – both corporate and individual – on property deals.
“What we’re trying to do is grow that third-party business and build the brand,” says Mr Caraiscos. “For us doing that, it will secure more funding for Noor Awqaf to be then able to carry out a plethora of projects.
“So we’re continuously looking at third-party mandates from the business wherever we can get them.”
He says Zawaya is helped in this regard both by its links to Noor Group and Awqaf.
For instance, Noor Bank has a large home loans business to which it can direct clients who need finance, while there have also been many generous donors to Awqaf who might also require valuation or property management advice on some of their commercial deals.
“We do property management valuations, we sell or buy properties. We’ve got RICS-qualified [Royal Institution of Chartered Surveyors] valuers, we’ve got certified brokers, we can manage real estate end-to-end.
Mr Caraiscos says it can value, or manage, any type of property, from apartment buildings to offices and hotels.
“What we do is value it, we’ll help source it, then we can help also to finance it through Noor Bank, we can insure it through Noor Takaful, we can lease your property, we can maintain your property, we can then also sell your property.
“If you’re generous, if you’re a benefactor, we can help you donate your property. There are lots of generous individuals who have donated property, who have donated entire buildings or sometimes land to develop. Sometimes they’ll donate cash as well.”
He says people who donate can set criteria for which purpose the proceeds of its donations will be used, but that once an asset is donated as a Waqf, it cannot then be taken back by the former owner.
“People can basically leave a legacy behind. Our role is to make sure that we preserve that legacy. We manage [assets] from a long-term perspective, not just on an annual perspective. Because they need to generate revenues long term to service a lot of people in perpetuity.”
Abdulla Khaled, an associate specialising in real estate at the law firm Al Tamimi & Company, says people looking to convert land or property into a Waqf must first make sure that it is free from any mortgages, court orders or other claims.
He says people can donate a property – or even a share in a property – to charitable foundations either immediately or conditionally – to be redeemed when they die, for instance.
“There is a lot of flexibility in terms of deciding who the beneficiary is going to be,” he says.
“Also, they can choose percentages. So they can say ‘I want 20 per cent of the proceeds to go to me and my family and 80 per cent of the proceeds to be used for charity’. It’s very, very flexible.”
Mr Khaled recently wrote an article on the practicalities of donating properties via a Waqf, and said conversations with the General Authority of Islamic Affairs and Endowments revealed a diverse group of donors.
“To my surprise, it’s a mix of nationalities who are approaching the foundation and it’s not just Muslims who are opting to choose the Waqf. There are also non-Muslims who have provided either funds or properties for charitable purposes.”
The Zawaya name comes from traditional lodges for travellers that were set up as Waqfs, or endowments