Face to face: Omar Al-Kadi, Injaz Development Co
Infrastructure work on Eastern Province marina site nears completion
One of Saudi Arabia’s breed of new developers is planning to sell schemes on the basis of creating special attractions. Michael Fahy speaks to Injaz Development Co CEO Omar Al-Kadi.
Omar Al-Kadi is a man who appears to have confidence in his convictions. Like most developers, he is not afraid of making bold predictions about particular cities or districts – especially if they happen to link to one of his company’s projects.
When the company began selling plots at its 120,000m2 Al Nada project in Western Dammam in February, just ahead of the infrastructure completing in April, he said that this part of the city was set to “dominate real estate activities” in the area.
“The major investments and projects in the area, in addition to its advantageous location, makes west Dammam an ideal destination for residential projects,” he said.
Similarly, when launching new plots at its huge Al Gamra project in northern Riyadh in October 2012, he pointed to reports stating that new developments in the area should boost its population by 700,000 by 2030.
“We expect a continued flow of investments for urban development across Northern Riyadh in the foreseeable future to meet the demands of the region’s growing population,” he predicted, pointing to its proximity to the new King Abdullah Financial District.
Indeed, it is not too surprising to learn that Al-Kadi’s background is in marketing. Despite this, though, the company does seem to be successful in achieving what it sets out to do. Since Al-Kadi set up the business with members of the Al Rajhi Holding construction empire in 2006, it has built a residential portfolio that is already worth around $1.9bn (SR7bn).
Take Al Gamra, for instance. This is a huge undertaking. Permission for the scheme was granted in 2009 and was sub-divided into 10 individual districts. Infrastructure was created for individual clusters ahead of plot sales, which then funded further development.
Al-Kadi said that all of the 2,020 residential plots at Al Gamra have now sold out, but Injaz is now planning to bring commercial plots worth around SR1bn ($272mn) to market.
“We are about to start sales of commercial plots. That is expected to be the beginning of next year,” he told Construction Week.
The commercial units will be built across a number of low-rise buildings within a central area of the site, which is around 12 minutes north of the city centre. Al-Kadi also argues that major road improvements are planned for the area as new projects like Prince Sultan Bin Abdulaziz Humanitarian City and the 3.2km2 Prince Salman Park are completed.
The company’s other main project is Al Marina, which, as the name suggests, is a project based around water. Again, the company gained approval for the project in 2009.
Al-Kadi said: “The size of this project is 3.3mn m2. It’s a mixed-use development. We believe it will be the best project in Saudi Arabia as it was developed with extra care, extra effort and extra expenditure as well.”
The project will see a number of low- and mid-rise buildings of up to 18 storeys being created around a large, central lake that will also contain fountains.
“These could be used as mixed-use either for residential, hotels or offices,” he explains. To the side of this, the site contains a number of more traditional residential villa plots, while a health centre and a mall will also feature.
The project is situated on a coastal site between the Eastern Province cities of Khobar and Dammam. The lake and fountains are a central part of the project’s offer, which has had to overcome engineering challenges in its construction – specifically with how to bring water into the site.
One was to leave access open, which could have led to pockets of water becoming stagnant, creating smells. The other was to block the end and have giant machines to circulate it.
“That is costly and it requires maintenance,” Al Kadi explains.
Its solution has been to create a culvert system using gates and holes that brings water into the site naturally and circulates it back out to sea over a three-day cycle. The system has been designed in-house and requires no maintenance.
Infrastructure for the site, including landscaping, kerbs and roads, is moving close to completion.
“We believe it will be concluded by the first quarter of 2015,” Al-Kadi says.
Injaz then plans to build a sales office on site allowing potential developers to “see, feel and touch” the project.
Some elements will be targeted towards developers to whom it can sell entire buildings or plot phases. Others will be aimed at private buyers, but Al-Kadi stresses that for the latter it is targeting end-users as opposed to investors as it wants to see homes built in order for the project to gain critical mass.
However, he admits it is “very tough” to assess a buyer’s intentions, and that marketing to developers is, in one sense, easier because clauses can be placed into contracts encouraging construction within a set timescale.
“However, there is also a point you have to reach, which is selling at the right price. If a developer will come, sometimes they will ask to have a huge discount. That is the challenge for marketing such a project.”
The infrastructure work has been carried out by Al Rajhi Construction, but Al-Kadi is keen to stress that it won out through a tender process.
“There was a team of independent board members who appointed one of Al Rajhi’s companies. We needed someone who can come along and be able to execute on time – and Al Rajhi happened to be the right contractor.
“Al Rajhi is a partner in the company and there is no doubt that its experience, knowledge and reputation has helped and assisted Injaz in so many ways. However, Injaz is trying to stand on its own feet – and it is doing so this far.
“The fact is that we are not awarding anything to any owner of the company unless all of the board members say unanimously that the contractor is a plus for the company. And he is into it in a bidding process along with several other contractors. That is exactly what happened with Al Marina.”
Typically, he says, Injaz will give weightings to tender bids from contractors, with price, resources and experience all being given due consideration.
“In order to choose a contractor you have to use your own intelligence of who he is, what he is doing, what is his reputation, how busy he is and all of that.”
The fact that contractors also put up bank guarantees adds another layer of safety.
“There is no 100% safe side with contractors – or anybody, to be honest – but you do the due diligence and ask God for his blessing,” he adds.
As plot sales get underway at Al Marina, Al-Kadi says that Injaz is now looking at other opportunities. It has its own land bank that it can continue to develop, but it will also offer its expertise to third parties to form joint ventures to develop sites.
“We hope that by next year we will secure an opportunity and start developing something else. We have opened our arms for opportunities to develop projects that are not owned by us since we have experience and the know-how.”
In terms of the type of schemes it will favour, Al-Kadi argues that the greatest opportunity lies within the mid-market residential sector.
“The need here is marvellous. You’re talking about not less than 2mn units in the coming years. The other part to this is that the Saudi market is made of youth.”
Citing the example of the so-called Baby Boomer generation in the US, he said that the rapid emergence of a young population can have a profound impact on all aspects of society, including culture.
“That is happening here and that is what’s pressuring everybody – including the government – to try to solve
this problem [of] providing units for this population.”
Injaz - in numbers
Value of portfolio: $1.9bn
No of employees: 45
Total plot size: 2.5mn m2
No of villa plots sold: 2020
Value of commercial plots: $272mn
Commercial plots launch: Q1 2015
Total plot size: 3.3mn m2
Project value: $1bn
Est. no of occupants: 45,000
No of resi plots: 791
No of commercial plots: 98
Breakdown of use: 41.4% residential/commercial, 42.2% public spaces, 16% government services
Plots launched: Q1 2015