Interview with Mohammed Al Matook, Acting GM of Al Hamra Real Estate Company

What is your evaluation of the real estate market, especially in terms of this office space and retail space? Where do you think the market is going?

At this point the lowering of the oil prices and the deficit that we are going through has had a marginal effect on the real estate sector. As we all know, the real estate sector here in Kuwait has been the backbone for the non-oil revenue here in the country. I have personally been seeing a good demand over the past two years in the commercial properties throughout Kuwait. The office space in Kuwait is hovering around 86% in terms of overall occupancy so that on its own is a very good indicator. As far as the rental rates go, it starts from 7 KD per square metre here in downtown, but then depending on the offering it could go up to 12 KD per square metre for premium properties. We have seen that there is huge demand coming from newly established governmental companies as well as private institutions and international offices that are keen to come to Kuwait with their own agenda. All of those are looking for head offices to be hosted here in Kuwait and definitely downtown always comes in as the first choice for these companies because it is the hub for businesses in the state of Kuwait.

Al Hamra Real Estate Company is involved in the development and management of real estate properties in general, and Al Hamra Tower is your first project here in Kuwait. The Tower is known worldwide for its unique design and for being the highest office building in the Middle East. What differentiates Al Hamra from other competitors here in Kuwait City? Is it the Class A office space?

There are a number of factors that make Al Hamra stand out from the crowds. One factor is the location, where we are today actually marks a very special and historic location, it marks the first cinema that was built here in Kuwait in the 50s, so on its own the name itself has a rich brand equity which is synonymous with prestige and entertainment from the old days. Today, Sharq which is the area where we are located in Kuwait city is very strategic, it is actually the residence for many of the economic leaders here in Kuwait and this is why Sharq is always a target for all of the companies that are looking for offices. As we also discussed in the past, Al Hamra is the tallest and the most advanced property here in Kuwait; this on its own becomes an attraction for those that are looking for those extra business amenities, which are not easily found here in Kuwait. Furthermore I would also say that we differentiate ourselves with the unique proposal of this property because of its multi mix offering, besides office space it actually hosts a very special shopping centre which is a very unique experience that goes beyond normal retail, it includes a lot of food and beverage outlets as well as one of the nicest movie theatres here in Kuwait as well as a very spacious multi-storey parking building.

Who are Al Hamra Tower’s tenants?

We take big pride in hosting a very special family of tenants that goes beyond your typical local companies. Today we have a number of tier one family members that includes very famous local companies such as Alghanim Industries, as well as prestigious governmental offices and the youngest ministry to come to life which is the Ministry of Youth and our largest investor today is the CMA. We also have a very prestigious number of international institutions that have been with us for the last couple of years such as the French Embassy, the German Embassy, the World Bank and HSBC.

We are seeing new malls popping up all over Kuwait. Are you facing competition from malls such as Avenues, 360, or Salhiya, which is also very luxurious mall? How are you trying to differentiate yourself? Have you recently undergone any revamping strategies to make yourself unique and stand out?

No one can deny that Kuwait is increasingly having commercial spaces being done with giants that you have mentioned such as the Avenues, 360 or Salhiya. Of course this actually makes everybody think out of the box and think how to combat this increasing competition. Here at Al Hamra, we came up with a strategic exercise that has been activated since the beginning of 2016 whereby we came up with the idea to adapt the Al Hamra luxury centre from being a typical shopping centre to being an experiential department store where we plan to have every storey from the five different floors hosting a different experience and telling a special story to the audience. For instance with the ground floor we intend to have a luxury cluster for the luxury centre where all the high end brands that we all know will be hosted. To start off with we already have brands such as Hermes, Bottega Veneta and YSL. Now on the mezzanine, it will be a hub for the up and coming bridge brands which are becoming very famous here in Kuwait due to the fact that Kuwaitis are becoming well-travelled and know all the of trends that are coming up around the globe. We also plan to have a very special gastronomic hub to be hosted on the first level which is intended to have restaurants from fine dining to casual dining to gourmet pick n go, which we believe will be a destination not only here for the tower but as well as the nearby offices and also the suburbs that are around Kuwait City. As for the lower ground floor, it will be a place that will host lifestyle brands as well as some entertainment for the children as well as some services that will compliment everything else. On its own Al Hamra will be a complete experience that can take care of the whole family from the mothers to the fathers to the young and the teenagers with fashion, food, and entertainment. This is how we believe that Al Hamra will stand out from the crowd.

On a corporate level, Al Hamra Real Estate Company has a vision to enter into new ventures and move into new developments.

Al Hamra Real Estate Company is a closed shareholding company with a capital of 100 million KD which was first created to look after this iconic project. Part of the main activities that this company was incorporated for is basically to develop land, to buy and sell land and to manage properties. Now going forward, as everybody is looking to diversify their sources of income, naturally we are planning to enter into new ventures. We haven’t really quite specifically identified the type of project yet but we are currently on the quest to see the opportunities out there and to replicate the efforts that we have already put together in this iconic project elsewhere.

Will it be entailed of office and retail mixed use spaces?

Like I said, at this point in time we haven’t identified the type of project yet but it can go beyond the typical offering that we have; we could get into residential for example. There is no specific restriction that is guiding us just to stay within the same domain, we could look beyond the office and retail space to include residential perhaps.

Is this for 2017 or beyond?

I would say probably towards the end of 2018.

What are the main challenges that you are facing?

Like we all know, the lowering of the oil prices and some of the reforms that we have been seeing practised by the government, for instance the gasoline price increase towards the end of 2016, naturally has an effect on the consumers. Because of this, I would say the size of the retail sales has experienced a dip which ultimately has impacted the retailers themselves and led them to be very careful in the way that they look at expansion opportunities. That on its own is a challenge for us because part of this lovely strategic revamp that we are currently looking at, means we are trying to invite people to come in and to take part in this interesting opportunity. People are not the same any more, they come to us, they believe in the project, they see something unique and interesting but I would say that they are extra careful now just because of what they have suffered recently. However, we try to be creative in the way we deal with this, for instance we have created special offers for the retailers which we believe are going to bring in a certain value for the property. We explored new ways of creating deals with key retailers.

Are the most challenges in retail? What about the corporate side?

Actually, despite all of the economic challenges we have seen, office space demand has been unaffected by this. To give you an example, our occupancy in the Tower grew from 69% in 2015 to 86% at the end of 2016. This tells you that the demand is still there for nice premium office spaces. This growth is mainly due to the type of offering we have which makes our potential clients very specific. As we all know; Al Hamra is a premium tower which has a premium office space offering that comes with extra amenities. Overall, it makes our search for potential clients much easier.

What is your medium term vision? How do you see Al Hamra Real Estate Company in two years’ time?

We definitely have a specific vision which is to make Al Hamra Real Estate Company one of the leading regional companies within the commercial real estate sector through the current offering that we have or by going into new ventures where we can replicate this iconic experience somewhere else. I am definitely optimistic with regards to what we are going through right now in terms of the country´s deficit. We have very high spending consumers, as per the IMF, Kuwait’s nationals have very high earnings per person which come to around 6,000 US dollars per month, so despite the challenges that we see, we still believe we have good purchasing power which ultimately will always create the demand for commercial spaces. Furthermore, as you know, Kuwait has become a primary market for many of the international brands that we all know.

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