Right place at the right time

Mohammed Akif, the managing director and founder of the interior design company Hammer & Nail, says he literally stumbled into the real estate business.

After a night out at a party in Dubai about 10 years ago, the former bank salesman came across a queue of people waiting outside of a sales centre of the property developer Emaar to reserve residential units.

He says he joined the line out of curiosity and by the morning he found that there were more than 500 people behind him. He was about number 14 in the queue.

“I didn’t want to buy anything and I asked if someone wanted my position,” says Mr Akif, 35. “And one of the guys asked me “how much will you sell that place for?” And I said “what?” So I said Dh10,000. He said OK. He paid me cash. And I was like wow, my salary in one night. It was unbelievable.”

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And thus Mr Akif’s real estate business was born as he went around joining to queues to make money on the side. Soon he left his sales job with United Arab Bank and started up a real estate brokerage with his brother called Deja Vu.

Those were the heady days before the big crash of 2008 and 2009 when selling reservation receipts of properties that had not yet been built was a profitable endeavour and the stock market seemed to be on a permanently high plateau. But the days of easy money quickly slipped away and with it Mohammed and his brother lost everything that they had worked so hard for.

“In two years money we made money we never would have dreamed of making in a lifetime but after the crash, we got wiped out completely,” he says.

But bit by but he grew his business back. Once profitable again, he decided to branch out into other real estate-related activities to hedge against any future downturns in the property market.

Thus was born Hammer & Nail, a company that both finishes, repairs and manages properties for their owners.

Mr Akif says it was a novel idea at the time in mid-2008, when the company was conceived because a lot of new properties were being delivered and there were very few property management companies to service them. The ones that existed were mostly in the established areas of Bur Dubai and Deira that were attending to the needs of properties in those areas.

For Mr Akif, branching out into a new business that he was not intimately familiar with came with its challenges.

At first, the company subcontracted work but then discovered that the people that they had hired were not delivering on time, causing them cash flow headaches and quality concerns. Eventually, the company hired its own architects and builders.

The UAE has been striving to bolster support for SMEs. Even though small businesses represent almost 92 per cent of the total number of companies here and provide more than 86 per cent of jobs in the private sector, they account for only about 4 per cent of total bank lending. SMEs frequently complain that they are not able to get funding and when they are, the interest rates that they are offered are too high. With access to funding difficult, the growth of the sector is being held back.

Banks typically do not give a breakdown for lending to SMEs, but almost every other type of lending has grown and anecdotal evidence suggests it is the same for SMEs.

The need for funding, Mr Akif says, usually stems from one of the biggest problems facing SME: that clients don’t pay on time.

“Sixty per cent of SMEs must have gone out of business because of cash flow issues,” says Mr Akif. “The biggest challenge is getting money off of your clients. People find excuses to delay.”

Because of his banking sector background and accounting skills, Mr Akif says he solves any short-term financing needs with long-term loans which he takes from a bank and periodically settles before the debt matures to avoid paying interest. The idea he says is that if he takes a loan for one year then he will have to pay big instalments, but if he takes a four-year loan then the monthly payments are manageable and he can close the facility at his choosing and not be left in the lurch if he is short on cash for obligations such as paying employees.

Since starting Hammer & Nail, Mr Akif has expanded his work force to 68 from five and from zero profit at the beginning, he’s now targeting Dh8 million in profit this year. His clients now include not just residential property owners but commercial ones such as the French supermarket chain Geant.

The next big step for Mr Akif is to go into contracting and construct properties. He says he is unfazed by the recent drop in oil prices even if the economy does slow from last year.

“In the last couple of months we have seen a slowdown in [property sector] sales because of the drop in oil prices and the off-plan market has been hit,” says Mr Akif.

“The drop in oil has obviously affected everyone. Real estate plays a very important part of this economy and the minute that real estate market starts to slow you find that people stop spending, people become more cautious. In Dubai it plays a very key role.”


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