Mishal Kanoo, Chairman, The Kanoo Group • Interview

Keeping companies from fracturing during generational transitions is crucial to maintaining long-term equity.

How has the legal framework evolved to make it easier for a company to partner with a local player or establish themselves here?

It is still hard to figure out the rules and regulations, because there are federal laws, state rule, and the laws that apply to the free zone. In some cases, it is clear how they interact with one another, as they have been doing it for years; however, in other cases it is just starting. Figuring out which law applies is difficult. It is not easy as a foreign entity to know where to go. Recently, there was a new law that allowed foreign entities to come in and set up 100%, but it was not clear which industries would be eligible. These are teething problems that will be resolved over time. However, unless there is a clear picture, then it becomes harder for entities to decide where they fit in. The easiest way around this is to set up a joint venture, where, over time, each company will decide how best to approach this.

Will the Expo have more of an impact on travel or real estate?

Travel will see more of an impact as we get closer to Expo, but where we feel an impact is the products that have to do with the infrastructure. Any company or service working on the infrastructure of Expo will benefit. If we look at the entire region and need excellent communication, transportation, housing, and ability to attract people from around the world, and a central location for your business then you would choose Dubai. Dubai does not only serve the UAE, but all the way from West Africa, Central Asian countries, and beyond to certain parts of Eastern Europe and the Indian Subcontinent. The rules and regulations here compared to the region are much easier to work with and much more internationalized. That makes it so attractive.

What is your assessment of the real estate and construction sector in the UAE?

When there is more supply than demand, prices go down, as there are significantly more choices. That is what is happening right now. There is demand, but it cannot keep up with the growth of supply in certain areas. Eventually, supply will match demand, and eventually demand will outstrip supply. Because there was so much demand while the price was so high, everyone was excited about the sector. That is why we ended up with an oversupply, and prices are now starting to go down. Real estate in Dubai is not collapsing but going from the natural tendency of under to oversupply. Since 2000, we have gone through that cycle twice. If you do not take advantage of that situation now, then it will be too late in one or two years.

What highlights would you underline in technology development across your business lines?

There is no way around technology. You cannot survive by building a moat around your castle. You have to embrace technology, though the question is to what degree you can defend it. If you are too early an adapter, then your product might be too expensive for customers; however, if you are too late, then someone else may have taken over the market. Most of our businesses are not in the consumer space, as the majority of our clients are B2B. As such, we look at the requirements of our business partners, suppliers, and end users. The hard part is figuring out where the next threat will come from. Having a USD1 billion war chest should put you in a favorable position, but if I have that while competing against companies that spend USD1 billion a day, then I cannot compete. Even a company set up in the e-commerce space here that thought USD1 billion would be enough to become a significant player is now discovering they have competitors in the market, and it is hard to overcome them. However, can they afford not to be in that area? That is the question. Digital can be beneficial and is not something you can fend off. We are fortunate to be living in a city such as Dubai. There are few cities or states that are trending toward being the first mover in the digital space. Dubai is one of them. ✖