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Confidence in the future
Majid al-Ghurair, CEO of the Dubai-based conglomerate al-Ghurair Group says that it is important to build confidence in the markets to fight off the recession.
March 31, 2009 2:39 by Aarti Nagraj
Excerpts from an interview given by Majid al-Ghurair, CEO of the al-Ghurair Group to Trends magazine.
Real estate and banking are two sectors that have suffered during the downturn. But you are also involved in retail, which is an area that hasn’t really seen much of a slowdown so far. How do you believe that retail will fare in the coming year?
Retail, like any other business, is going to be affected by what’s happening around us, especially when the banks cut short on their credit, they start tightening up their credit cards.
But the main reason for people not spending is the confidence. And a lot of [investors] are not sure what’s going to happen in the market. But as soon as we restore our confidence in the market I think retail can come back nicely and strongly. We saw a drop in the retail market, but still in the single-digit numbers, not double-digit numbers. So it is fine.
Before the crisis began, there was a debate in Dubai about how much retail space the city can support. With the downturn, do you think retailers there will have to fight for survival?
We are seeing more and more space getting available, we are reaching a size where really, you know, the market is going to have more than it needs, space-wise. … Because the economy was on heat and there was a lot of foreign money coming, and there were a lot of investors who want to invest by opening … retail [outlets]. That’s why we were seeing a shortage of retail, because of that big move of a lot of retailers coming into the region and they want to take a bite out of the boom happening in the region. But now they are thinking twice.
Dubai‘s success has also been about tourism. By 2015, the emirate wants to reach 15 million visitors. What can players like you do to ensure that tourists continue flowing to Dubai?
Although a lot of people are saying there is a “negative happening” out of this crisis, I think on the contrary. Now there are more reasonable hotel rooms available in Dubai, there are better pricings. So I think we can offer a lot of things cost-wise in Dubai. Because there are a lot of tourists who were willing to come to Dubai but the price was really expensive. So maybe now that sector of the market will start looking at Dubai, to become more affordable a destination for them. But again … until we restore the confidence again in the market, those segments of the market will not come.
Looking at the bad news in the banking industry, which you have been a player in, when do you see a turnaround likely to happen? Have you started working on a strategy?
It’s a matter of liquidity. As soon as liquidity comes back to the bank, the bank will go the normal business [route]. I think a lot of people are waiting for the government to take a role in that, to provide more liquidity in the system.
But isn’t liquidity also a worldwide problem?
No, I know it is a global problem. But our problem we can solve internally and fast – and we should take action.
Next year, will we have moved beyond the crisis?
It depends how people respond to this crisis, and how governments respond to this crisis, and how they can stimulate economies again and how they can bring confidence into the market.
And the main part of that confidence is communication. The government has to communicate to the people, to communicate what kind of program they are going to afford. I think by keeping quiet we are dragging the problem more and more.
First seen in Trends magazine.