Face to face: Ahmed AlKhoshaibi, KBW Investments
Ahmed AlKhoshaibi, group CEO of KBW Investments, says Arada’s $408m debut development, Nasma Residences in Sharjah, will act as a blueprint for other community-minded projects in the GCC and beyond
Established in January 2017, Arada is an ambitious newcomer to the Middle East’s real estate market. It took less than two months for the UAE-based developer to announce details of its inaugural project, the scale of which is somewhat larger than one might typically expect from an industry debutant.
Located in Sharjah, less than 30 minutes’ drive from Dubai International Airport, Nasma Residences will host 800 residential units and a broad range of community amenities, including a mall, an international school, a mosque, and health and leisure facilities. With a gross development value (GDV) of approximately $408m (AED1.5bn), Arada expects to complete its sizeable debut project by mid-2019.
Whichever way you look at it, Arada is a start-up. But to describe it purely in these terms would be to undersell its credentials. Despite its relative youth, the company has a pedigree that could make even the most established regional real estate developers a tad envious.
Arada is a partnership enterprise formed jointly by KBW Investments and Basma Group. The former was founded by HRH Prince Khaled bin Alwaleed bin Talal, a member of Saudi Arabia’s royal family, while the latter is chaired by HE Sheikh Sultan bin Ahmed Al Qasimi, a member of Sharjah’s ruling family.
This may go some way towards explaining the initial success enjoyed by Arada, which managed to sell all 107 units of Nasma Residences’ Phase 1 within the space of a month. Ahmed AlKhoshaibi, group chief executive officer of KBW Investments, openly admits that the developer has benefitted from its association with Prince Khaled and Sheikh Sultan. However, he also emphasises that Arada’s high-profile backers are more than mere figureheads; on the contrary, he tells Construction Week that they are involved in every aspect of the development process.
“Arada may be a start-up, but it’s a strong start-up,” AlKhoshaibi explains. “Name another start-up that sold out its first phase – or any phase, for that matter – in a month. Of course, you have to look at the situation holistically, but our promoters have given confidence to investors that Nasma Residences is going to be a success.
“The relationship between KBW Investments and Basma Group [did not start with Arada],” he continues, noting that the partnership began with Majlis Grand Mercure Sharjah Resort & Spa, a $100m (AED367m) five-star hospitality project. “The organisations have partnered several times before, and there are other [ventures] in the pipeline. This has been a blessing for us because [Prince Khaled and Sheikh Sultan] think alike; they are more like brothers [than business partners].”
Indeed, the long-standing relationship enjoyed by KBW Investments and Basma Group has enabled Nasma Residences to get off to a flying start. “The project’s infrastructure has already been completed,” says AlKhoshaibi. “Basma Group has several companies, one of which specialises in infrastructure. This company took on the work, which was great because, typically, most project delays stem from [problems during the infrastructure stage]. It meant that there was no risk in this respect.
“Nasma Residences now has beautiful roads; the asphalt is there, the paint is on, and the streetlights are up. If you go to other [regional projects,] you’ll often find that the [residential units] are finished but there are no roads. We wanted to finish the infrastructure first because this will make things a lot easier for the contractors.”
The decision to complete Nasma Residences’ infrastructure at the earliest possible stage seems particularly sensible within the context of Arada’s aggressive development timeline. AlKhoshaibi and his colleagues intend to float the tender for Phase 1 at the end of May, select the main contractor at the end of June, and commence mobilisation following Ramadan.
Nasma Residences’ initial phase, which will include 107 townhouses and villas, and numerous amenities, is scheduled to complete in October 2018. Overall, the community will be developed in five phases, the construction of which will be implemented in three-month intervals.
“We’re pulling out all the stops,” says AlKhoshaibi. “Because the infrastructure is already complete, building the [residential units] should take less time. We can deliver [Phase 1] in 15 months, although we’re aiming [for early completion]. Work on Phase 1 will commence in mid-July, and construction will continue [with three-month intervals] between phases. Construction of Phase 2, for instance, will start in mid-October, and we’ll follow the same pattern [thereafter].
“Based on our current forecasts, we hope to sell out the entire project – all 800 residential units – within 12 months. [In terms of construction,] we expect that Nasma Residences will be completely built by mid-2019 at the latest,” AlKhoshaibi reveals.
The company that is awarded the main contract for Nasma Residences’ Phase 1 will certainly have its work cut out. In addition to the project’s aggressive residential development timeline, the contractor will be tasked with delivering community amenities up front.
“Construction of Nasma Square, the development’s 6,600m2 retail complex, is actually going to commence at the same time as the Phase 1 [residential units]. The mall will be built and completed even before the homes are finished,” says AlKhoshaibi. “The neighbourhood park will also be developed during this phase and, potentially, the school as well. We want to get the amenities in place as soon as possible.”
This strategy is in keeping with Arada’s community-led approach to real estate development. As AlKhoshaibi explains, the company is more interested in securing long-term goodwill than short-term profits. He elaborates: “We believe that the first buyers should be rewarded. They shouldn’t have to wait until other investors come on board before they are able to access amenities, which is often the case in this region.”
The absence of service charges within Nasma Residences represents another example of Arada’s commitment to customer satisfaction. “We’ve taken the decision to cover these costs by sacrificing some of our profits,” says AlKhoshaibi. “We’ve allocated the income from the community’s leasable areas to cover maintenance costs.”
He continues: “[Prince Khaled and Sheikh Sultan] are disruptors in the positive sense of the word. They want to bring about positive change. Arada’s vision is to create developments that benefit their surrounding communities, not their promoters. Sharjah deserves the best, so we’re going to give the best. And actually, people don’t always appreciate the level of involvement that Prince Khaled and Sheikh Sultan have had in this respect; they have been the driving force behind this strategy.”
So what’s next for Arada? While AlKhoshaibi is keen to point out that Nasma Residences represents his team’s immediate priority, he also alludes to additional developments that are on the horizon – and not only in the UAE.
“Arada is here for the long term,” AlKhoshaibi emphasises. “Nasma Residences may be our first development, but there will be many more in the future. We already have projects that you could say are in the pipeline. We’re not [yet in a position to announce full details,] but I can say they are [significantly larger] than this community.
“Arada’s second development will also be in Sharjah,” he reveals. “Its third will be in Dubai, and we also have a fourth and a fifth project [planned]: one in the United Kingdom, and the other in Sydney, [Australia].”
AlKhoshaibi concludes: “Arada will not stop [with Nasma Residences]. We’re an international developer. The idea is to initially focus on the local community [of the UAE,] and then expand internationally.
“Prince Khaled and Sheikh Sultan are visionaries, but they also want to make a difference quickly. And that’s great; it’s good to be a part of an organisation that is in a hurry to achieve its goals.”