Construction Week's Top 50 GCC Developers 2018: Saudi Arabia
Meet the kingdom's top five real estate giants on Saudi Arabia's 88th National Day and ahead of the full reveal of CW's Top 50 GCC Developers 2018 list
Saudi Arabia, which celebrates its 88th National Day today, remains the Gulf's largest market for real estate development and construction firms alike. Ahead of Construction Week’s Top 50 GCC Developers 2018 list, which will be published in print on 29 September, 2018, CW rounds up the top five Saudi real estate builders that have made the cut this year.
5. Hathal Alutaibi
Alandalus Property Company
The last 12 months have been a mixed bag for Alandalus Property Company, which was formed in 2006. The Tadawul-listed firm is best known for the development of commercial real estate, such as malls and shopping centres, in addition to related amenities such as hotels. Hathal Alutaibi has spent 10 years at the company, and has held his current posts of chief executive officer and board member since September 2017. According to his LinkedIn profile, he was Alandalus’s chief business development officer between May 2016 and September 2017, prior to which he was marketing and business development director (June 2013-May 2016) and marketing director (June 2008-2013). In a filing to Tadawul for the first six months of 2018, Alandalus said that its net profit had decreased by 57.6% “mainly because of the change of ownership interests” by its parent firm in the Al Andalus Mall and the Staybridge Hotel, which are now owned by the real estate investment trust (REIT), Alahli REIT 1. The company’s operating profit also decreased due to the general and admin expenses associated with Alahli REIT 1’s management fees, in addition to a “decrease in income from investment in associate companies”.
This July, Alandalus Property Company announced that design work had been finalised for a project that it is developing in a joint venture named West Jeddah Hospital Co with Dr Sulaiman Al-Habib Medical Group near its Al Andalus Mall in Jeddah. The 30,251m2 is being built with HMG as the developer partner, and excavation work due to begin at the time. Construction work will complete in Q1 2022, with operations due to commence in Q2. The developer’s other assets include Hayat Mall, Sahafa Centre, Tilal Centre, and the planned Al-Andalus Square and Panorama North Jeddah Project.
4. Ahmed Ibrahim Linjawy
Emaar the Economic City
The last few months have marked a period of change at Emaar the Economic City (Emaar EC). UAE-headquartered Emaar Properties’ founder, Mohammad Alabbar, is Emaar EC’s chairman (non-executive), while the firm’s chief executive officer is the newly appointed Ahmed Ibrahim Linjawy. The latter took over the post this month, after Emaar EC announced in a missive to Saudi bourse Tadawul, on which it is listed, that Fahd Al Rasheed had stepped down from the chief executive role after 11 years. Linjawi, Al Rasheed’s former deputy, joined Emaar EC in December 2006, after holding “several managerial positions at Procter and Gamble International in Saudi Arabia”.
Emaar EC leads the master-planning and development of King Abdullah Economic City (KAEC), a project being built off the Red Sea in Jeddah. KAEC comprises six components, which include a sea port, an industrial district, an educational zone, resorts, a residential area, and a central business district featuring commercial, mixed-use, and retail outlets, as well as a financial island. Based on initial forecasts, KAEC will create up to one million employment opportunities in the various industries and service-oriented companies it will host, and will be home to two million residents.
3. Abdulrahman Almofadhi
Al Akaria Saudi Real Estate Company
2018 has proven to be extremely positive for Al Akaria Saudi Real Estate Company (Sreco), which posted a $20m (SR74.9m) net profit for the first six months of 2018 – a modest 5.17% increase on the same period last year. This August, Sreco announced it planned to build the 700ha mixed-use Al Widyan project in Riyadh’s northern corridor. Phase 1 construction work is slated to cost $2.7bn (SAR10bn), and traffic impact studies for the development were completed and approved last year. Al Widyan’s official launch is expected in Q4 2018, with delivery expected over a seven-year period.
At the time, Abdulrahman Almofadhi, chairman of Sreco, told Construction Week that Al Widyan is the first private development to obtain self-regulating approval status in Saudi Arabia, adding: “This unique approval process for such a large-scale, private project creates an investment friendly environment, de-risking the project for investors, reducing complexity in the development phase, fast-tracking permit services, and offering significantly shorter go-to-market timelines.”
While conscious of the challenges presented by Saudi’s typical real estate trends and the global decline in oil prices, Almofadhi said he was optimistic about the impact of Vision 2030 on the kingdom’s property market: “The Saudi market presents some unique challenges. Recently, developers have suffered from price volatility creating additional complexity in the planning phase. In addition, developers have to contend with unregulated self-construction of private family homes, where systems are lacking and finishes are poor quality, which account for a sizable chunk of the residential housing market.
“Saudi Arabia’s economy has been dependent on the export of oil for many decades. Hence the reduction in oil prices has had a huge impact on its economy. The real estate market has witnessed a slowdown, due to the erosion of purchasing power in the kingdom and the introduction of value-added tax (VAT).
“Vision 2030 is truly transformative. It recognises the importance of real estate in diversifying the economy and by vision to reality making change real in the citizen’s everyday life. I think it will be a catalytic change for the real estate sector in Saudi Arabia and it is encouraging to see developers, within the kingdom, adapting their strategies to align themselves with the Saudi Vision 2030,” Almofadhi added.
2. Yasser Faisal Al-Sharif
Jabal Omar Development Company
Not too many companies in the world can claim to share the credentials of Jabal Omar Development Company (JODC). The Tadawul-listed Saudi Arabian real estate giant is behind the multi-use mega development, Jabal Omar, located within a walking distance of The Grand Mosque of Makkah. The project comprises 40 high-rise towers, more than 12,000 hotel rooms, and 800 commercial units. Spanning 250ha, Jabal Omar will feature 15 international hotels, and welcome up to 34,000 guests on an average day. This number is expected to touch 100,000 visitors during the Haj and Umrah seasons. One of the key features of Jabal Omar is its twin towers, which have a prayer area directly connected to the Holy Mosque. The towers will “boost pedestrian traffic along King Abdulaziz Road, which leads straight to the Haram”, JODC says on its website.
With chief executive officer, Yasser Al-Sharif, at the helm, the last 12 months have been eventful for the company – this month, JODC was said to have awarded a contract of undisclosed value to UAE builder Al Arif Contracting for Phase 2 of Jabal Omar. The Saudi Arabian developer announced the decision on its verified Twitter account, stating Al Arif Contracting would "complete the remaining work" for the second phase of the project.
In May 2018, JODC teamed up with UAE-based financial services firm Shuaa Capital to launch and manage real estate investment vehicles in the kingdom. Their memorandum of understanding (MoU) followed a similar agreement signed between JODC and ADFG, Shuaa's largest shareholder, through which both firms would seek to collaborate and form partnerships for projects in Makkah. JODC and Shuaa will look to "create and manage a set of strategic real estate funds" that will focus on the development and expansion of centrally located "real estate hotspots" across Saudi, it was announced at the time. Meanwhile, the MoU with ADFG would pave the way for JODC to explore collaboration and partnerships for “new real estate development opportunities within the holy city of Makkah Almukarama, Madinah Almunawara, and surrounding cities”, Jabal Omar’s developer said in a statement. JODC had already extended its cooperation with UAE firms prior to the Shuaa and ADFG agreements, having signed a non-binding MoU, spanning six months, with the UAE’s Meraas in October 2017.
1. Yousef Bin Abdullah Al Shelash
Dar Al Arkan Real Estate Development Co
Riyadh-headquartered Dar Al Arkan has been among Saudi Arabia’s most successful real estate developers in the last 12 months. The company is one of the two firms bringing a 15-screen, Vox-branded multiplex to Al Qasr Mall in the Saudi capital city, with the UAE’s Majid Al Futtaim. The project is due to open in Q1 20198, and is part of a design that involves a “major retail transformation” of the mall, Dar al Arkan revealed this September. The news comes amid a busy time for Dar Al Arkan, which reported an 892% rise in profits in the second quarter of this year compared to the same period in 2017. Thanks to higher real estate sales, Dar Al Arkan's net profits surged from $2.9m (SAR10.9m) in Q2 2017 to $28.9m (SAR108.6m) in Q2 2018. In May, the firm announced the launch of its $160m (SR500m) Mirabilia residential villas at the mixed-use Shams Ar Riyadh Development, in partnership with Italian luxury fashion house Roberto Cavilli that will design the project’s interiors.
These developments followed the launch of a new department dedicated to real estate brokerage, called Dar Al Arkan Real Estate Investment Company this April, which the company said was significant for “acquiring a lucrative market share”. In the same month, Dar Al Arkan listed a $500m (SAR1.87bn) sukuk on Nasdaq Dubai. This investment brings the total value of Dar Al-Arkan’s listed sukuk on Nasdaq Dubai to $1.85bn (SAR7bn), following three other listings on the exchange in 2014 and 2017.
According to Shelash, the kingdom’s ongoing socio-economic transformation is a key area of focus for Dar Al Arkan. On the company’s website, Shelash writes: “The launch of Saudi Vision 2030 and the National Transformation Program 2020 by King Salman Bin Abdulaziz, the Custodian of the Two Holy Mosques and His Crown Prince, President of the Council for Economic and Development Affairs, Prince Mohammad bin Salman Bin Abdulaziz Al Saud, marks a new era in the kingdom’s history.
“As Saudi Arabia’s largest company, Dar Al Arkan is a major partner in realising the goals of Saudi Vision 2030 for the real estate sector, which will be developed to the highest levels,” Shelash added.