One story has dominated our news feed and headlines since November last year. The anticipated launch of Noon.com, the MENA’s latest e-commerce platform, with $1bn in what can be considered as seed funding left everyone in awe.
But don’t be misled – grandiose, generously funded projects were not uncommon for the man behind it, Mohamed Alabbar, the chairman of Emaar Properties, one of the world’s biggest property developers.
Biographers might attempt to decipher why years ending in seven have been the turning points in Alabbar’s career.
In 1997 he founded Emaar Properties, masterminding an aggressive growth strategy to diversify the company’s interests in real estate, retail and hospitality in the following two decades. Before that Alabbar had won plaudits for leading the Department of Economic Development (DED), within which he initiated the Dubai Shopping Festival, one of the world’s best-known shopping fiestas, among his other professional endeavours.
Due to Emaar’s rapid progress over the years, today’s commentators are prone to believe that the entrepreneurial path of Alabbar, as we know him today, has been a smooth ride.
In 2013 Alabbar shared with Arabian Business a story about how his boss – the Ruler of Dubai HH Sheikh Mohammed Bin Rashid Al Maktoum – had simply left the meeting without saying a word after Alabbar had presented nine possible designs for the Burj Khalifa, today’s tallest building in the world, leaving him to ponder what that meant.
He also talked about how he dealt with the sudden launch of two competitors, much stronger than Emaar Properties at the time, namely Nakheel and Dubai Properties, both real estate developers founded by the Dubai government itself.
From 2017 onwards, Alabbar has decided not to rely solely on safe, low-yielding real estate investments, but to start playing a role in the digital economy. That is the decision that came as a thunderbolt to many.
“I have a digital officer who is turning the company [Emaar Properties] upside down, right now as we speak,” he says at a press conference on the sidelines of the 14th Arabian Business Forum held in Dubai last November.
“My advice to any company in the world is do not think whether to change the way you do business or not. Digitise! It took us one year to search for the chief digital officer for Emaar. Why does a real estate company need a digital officer? Because we also need to change.”
However, Emaar’s undergoing digital transformation is just a part of Alabbar’s plans. The region’s fast-growing online retail market appears to be his new playing field.
Noon, funded by Saudi Arabia’s Public Investment Fund (PIF) and a group of investors led by Alabbar, each of the partners contributing US$500mn, should launch this month. It is expected to help drive e-commerce sales from 2 percent of the market, or US$3bn, to 15 percent, or $70bn, over the next decade.
To secure Noon’s taking the “lion’s share” of this sum, Alabbar previously acquired Kuwait Food Co, which owns the Middle East franchises for KFC and Pizza Hut, for US$2.4bn; led two investor groups to buy a combined 16.45 percent stake in Aramex, a Dubai-based courier; and formed a joint venture with YOOX Net-a-Porter (YNAP) to conquer the region’s online luxury retail sector.
Among other announced digital projects are his plans to launch a phone messaging service for the Middle East to compete with WhatsApp.
“I was asked: ‘What are you doing with this? Where is your focus?’” he says at the press conference. “I told them that there were only two ventures, to be honest. There is a digital venture and there is my traditional real estate business, which is where I belong.
“I don’t think that my age fits the digital revolution, but I’m participating in it. I support and promote the ideas, but my bread and butter is my real estate business.
“We all go through cycles. These things happen in business. You have good years, you have slow years, but in general this market is okay. Not as rosy as in previous years, but it is really good in the long term.
“However, no matter who is investing in which business, I think that the digital path is a path that we have to open up. We have to open it up, we have to be involved.”
In the days following Noon’s announcement, some observers raised eyebrows questioning not only its viability but also its necessity; others expressed concerns about its possible deterrent effect on the development of the local start-up ecosystem.
Nonetheless, as the story follows us from 2016 into 2017 and beyond, it might unfold favourably for local entrepreneurs – sooner rather than later.
“I think it will attract attention to the start-up ecosystem,” says Hasan Haider, CEO and founder of Tenmou, Bahrain’s first formal angel investment group, when asked for his opinion on the impact of Alabbar’s latest initiative on the region’s entrepreneurship ecosystem. Haider was speaking to a group of journalists, including Arabian Business StartUp, during the MENA Angel Investor Summit 2016 held in Manama last November.
“One of the things I have heard is when Mohamed Alabbar announced that he had started to look into tech, other traditional real estate investors started to think: ‘Oh, if he’s going into it, there must be something to it.’” Haider adds.
“So, I think this might actually trigger more investors to come into the market, whether they will be the right angel investors or not still has to be seen. But what I have seen is that in some markets, like in Kuwait and Saudi Arabia, the younger generation is getting the go-ahead from their parents who are like: “Oh, if Mohamed Alabbar is doing it, maybe the thing you’re talking about isn’t so crazy, so I’ll give you a little bit of money to go and invest in this tech start-up stuff.”
When conveyed Haider’s opinion on the matter, Alabbar says: “If this is true, then my job is done. [I was also asked] ‘Why do you have to start this thing?’ I said that it was an amazing opportunity, but then it became a purpose as well.
“I think that my generation needs to respect the digital revolution and we need to contribute. Money, fame, that’s okay, but now we need to participate in it.”
As with many other projects, Alabbar is hardly wrong with this one as well, and a valuable way of participating in the digital revolution is by supporting local technology companies.
The UAE has already become a significant incubator of these, with the country’s 32 most well-funded tech start-ups collectively raising $2.3bn since 2013, according to a recent report by…