Muscat – October 20, 2010

Season 4 Magazine interviews Majan Development

Season 4 Magazine interviews Majan Development

The following Interview was conducted with the CEO of Majan Development Mr. Mohammed Al-Kindi. It was published on the 14th addition of the 4 Seasons magazine puplished by OPENA .

How has Majan emerged as a real estate development and investment company?

Majan Development Company emerged as an idea to meet local market needs for a corporate body specialized in real estate, with enough professionalism to distinguish reliable investment projects. The founders are well-known for their expertise in monitoring local, regional and international markets and acting accordingly in promoting investments. Majan Development has been founded as an Omani closed, limited partnership at a licensed capital of RO 40 million and a paid up capital of RO 25 million. Majan derives its strength from its renowned founders that are active players in many vital investment and commercial sectors. The founders are:

  • The Defence Ministry’s Pension Fund, Oman
  • The Public Authority for Social Insurance, Oman
  • The Royal Guard of Oman’s Retirement Fund
  • Gulf Investment House • Sharjah Islamic Bank
  • Commercial Real Estate Company
  • Oman-UAE Holding Company
  • Oman Cement Company

Majan Development Company operates as an Omani closed partnership company that offers real estate development projects in serving different sectors of the Omani market. This will include the projects of residential complexes for various social segments, tourism projects, offices and commercial units. The company also operates in basic development of its own activities by evaluating projects and investment opportunities and grabbing the best. Majan will carry out these projects within the context of basic principles of societal growth in terms of non-traditional transactions. Distinction and introducing added value are the two concepts governing our initiatives.

Majan can be considered as a relatively novel company, have you offered any specific projects over the short past period during which the market witnessed a lot of upheavals in prices of lands and construction materials?

Majan is currently developing its main building in Al Khuwair with a lot of distinguished office space, bearing in mind the need to provide enough parking areas and allocating full floors for this purpose. The company is also drafting maps and designs for the development of a multi-purpose project at Al Mawaleh on an area of 42,000 square metres, and this project represents the real launch of the company’s commercial operations. Majan has already completed its building in Muttrah Business District and the building is distinguished for its glass facades and its hi-tech designs. There is no doubt that the high cost of steel and other construction materials impacts the real state sector causing a hike in prices. It may sometimes be the decisive element for certain people who may, accordingly, chose to build personal homes or go for ready real estate units. However, it would not be accurate to always link the change in prices of real estate units with a rise in the prices of steel or other construction material, whose price fluctuations are unpredictable.

How has Majan Development been affected by the global financial crisis in the context of reports about great difficulties being undergone by major real estate companies in the region?
Majan, like other companies on the market, is reacting to developments in its business sector. Financial crises are not to be ruled out at any time due to the trends of global systems favouring profit and unrealistic concept of gain that does not suit the growth and development of countries economies. We, in Majan, believe that investment policy should be balanced and should take into account the realistic factors of market growth, the demographical composition of a country and, above all, proper financial transactions. Such precautions can help investment companies avoid falling prey to financial crises but adapt to the crises.

What is your assessment of the declining trend of land prices in the local market, particularly after witnessing hikes in the near past?
There is actually a type of price stability in the real estate market, with an inclination towards a moderate and local rise. The positive thing is that this trend is contrary to exaggerated rise in land prices that occurred prior to the financial crisis due to miscalculation of indicators. What happened in some areas in the Sultanate can be considered as a correction of status of prices rather than a decline, and it naturally constitutes a positive indicator for many citizens who found it difficult to possess land plots in parts of Oman in general and the capital area in particular. The same principle holds logic for real estate companies. The Sultanate offered freedom to GCC citizens and foreigners to own real estate. Can this be considered a positive indicator of expected profits in future and would therefore boost shareholders confidence in the capacity of the Omani real estate sector to increase its revenues in the future.

Can it reaffirm the country’s regional and international reputation in this field?
The Sultanate is developing a promising real estate market based on factors that would naturally encourage investment in the country. Investment has been elaborately studied to secure the expected benefits and regularize what can be called as investment speculation. Royal Decree No 76/2010 caps this principle of encouragement and we look forward to the decree’s executive regulations to be set by the government departments concerned so that the benefit aspired for can be achieved. We would also like to commend existing laws and regulations pertaining to the purchasing of lands (by non-Omanis) in limiting the scope of speculation and thereby diminishing the probabilities of stronger negative impact from the financial crisis. However, it would not be logical to put the blame on the GCC investors alone, as many other parties were involved in the speculation in real estate sector over the past period.

How do you see the success of Omanisation in the real estate sector and what is the responsibility of companies in this respect?
It is difficult to measure the effect of Omanisation in the real estate sector which is being run by both Omanis and expatriates without much experience or qualification, a situation which negatively impacted the growth of the sector. Hence we stress the importance of developing specialized institutions and we have witnessed the efforts of some local and regional associations that have tried to add a type of organization or referential support in this vital sector. But this does not rid the main real estate companies in the Sultanate from their responsibility in taking initiatives to develop the sector, starting with a number of specific steps, which I can summarise as follows:

  1. Training company staff according to the tasks these employees are assigned to do. This will automatically reflect in professional growth and thereby improve the quality of projects and services.
  2. Organising specialized training courses for developing the market in general.
  3. Focusing on the concept of “positive integration” rather than negative competition among companies.
  4. Laying down foundations for real estate ethics that will set the criteria for transactions