Ajdan: Discussing Real Estate Lifestyle Development Solutions in Saudi Arabia With Mohammed Al Otaibi

Interview with Mohammed Al Otaibi, CEO of Ajdan

What has been the journey for Ajdan so far?

Our objective was to create more lifestyle destinations. In Saudi Arabia, we lacked lifestyle destinations, whether in Khobar or on the main beaches or the main cities in Saudi. Because of the lack of these destinations, there was a huge market gap. It is a new field that nobody had explored previously. The lack of comparable valuations for such properties was an opportunity that we had to explore. We took the risk, we explored it, and thank God it became very successful. We first had this idea seven years ago and the country has changed during those seven years, so it was a very big plus for us. We are now gaining some of the fruits that we sowed seven years ago. Lifestyle developments are very common internationally, in Europe, the US, and especially here in GCC and UAE, for example, Dubai and Abu Dhabi. We believe that it is a natural growth and evolution of the real estate development market. We did not reinvent the wheel; rather, we started where people had finished previously. We looked at the best practices in international markets and in the GCC markets. We built on that and we created our first product. It was not an idea that revolutionized the real estate sector here in Saudi Arabia. We just evolved naturally and that is part of our success.

What was the initial inspiration for Ajdan?

It started as a sketch. AlOula is a very big master developer. We develop millions of square meters. However, we sell the plots later for sub developers and we retain the best part of the master development or the master plan. We ended up with a lot of good plots scattered between Khobar, Riyadh, and Jeddah. But we did not do anything with them for 11 or 12 years. So, we started with our best plot here in Khobar. Ajdan is a downtown waterfront project which is the collaboration of a fantastic young team that we have. We began development back in 2013 and we actually did not fall in love with our initial concept. We kept evolving it and are still evolving it even today. This is also part of our success. For example, in 2013, there were no cinemas in Saudi. We just got the cinemas approved in early 2018. So, that adaptation is part of our culture in Ajdan. We adapt to the current circumstances and we build on that.

What has been the process with many Saudis going outside of Saudi for this entertainment or destination fulfillment?

It is a shame that we are a top economy country and we do not have enough lifestyle destinations. Our main target is to create as many lifestyle destinations as possible with a focus on quality, whether it is in Khobar, Riyadh, Jeddah, or any other location in Saudi Arabia.

We did a study internally when we started Ajdan Waterfront. The biggest threat that was always brought up by the investors was how we were going to compete with Bahrain. However, we never felt Bahrain was a direct market competition because they are an hour away from us, there is a bridge between us, there is passport control and customs. When we opened Ajdan Walk, the sales of the brands there were almost double the sales of their same brands in Bahrain. That was a very nice indicator for us. Our apartment sales were also very healthy even though we add a 20 to 30% premium on the prices of similar developments in Bahrain. So, Bahrain is not in competition with Khobar; rather, it is an alternative market, especially with the with the lifestyle opening up here in Saudi. A lot of the migration before was people going and watching movies. One of the complexes in Bahrain was actually one of the top 10 complexes in the world competing with the complexes in New York. People want to go and watch movies and they do not have an offering here in Saudi. Whatever we do from lifestyle offering here in Saudi is going to be more profitable, more feasible, because the regulations of the countries are changing.

How difficult is it for a foreign investor to come into Saudi and invest?

Investment in the Saudi Arabian real estate sector is becoming more and more institutional. The solutions in real estate financing are becoming more and more variant. We established a sector in the stock market where real estate investment trusts are now publicly traded. Banks have more appetite for financing real estate developments. One of the biggest positives is the evolution of rules and regulations. With investors coming from international platforms to Saudi Arabia, the rules or regulations had to evolve. There are a lot of rules and regulations coming in from the government on real estate investment protecting the big developers from leakages and competition with international developers, especially people who are developing things that are in line with the vision of the country. The sector is becoming more and more reliable as we speak. The main challenge today is bringing up the professionals locally to the international standard.

How would you asses the economy of Saudi at the moment?

Internationally, not just in Saudi, we have not faced a worse year than 2020 because of the pandemic. How the Saudi government supported the small and medium companies and even the big companies was absolutely amazing. They waived the financial charges from the banks for seven or eight months. They led the way in giving free rent for government properties to the tenants and the private sector followed suit because of that. Most importantly, they thought about the human factor before anything else. We have the lowest rates of infections and deaths in the countries in the region and this helped us rebound from this pandemic far before anyone else. I am really happy with our results in 2020. At the beginning of the year, I was expecting the worst, but at the end of the year, we were doing far better than our initial assessment. We still have dependency on oil when we talk about the economy in general. However, the support we received from the government in 2020 showed us that the government is really behind diversifying the income of the government itself, helping the private sector grow into a better 10 years coming forward, and most importantly, changing the lifestyle of the people and making them more open socially which will help drive the money inwards, not outwards. We will see more and more entertainment and more and more tourism which is how we are going to flourish as an economy in the future.

What are your competitive advantages?

Without short selling all of our other departments, we have a very good sales team. During the worst times that we faced in our history, they met their targets and more in 2020. In the beginning of the year, we faced the pandemic, then the lockdown, then we had the changes in value added taxes here in Saudi Arabia. All of these made it very difficult for us to meet our targets, initially. However, we have a very strong off plan sales team. If you ask any real estate professional in Saudi Arabia, one of the most difficult jobs in Saudi Arabia is to sell things off plan, not like with international competitors who rely a lot on off plan. But in Saudi Arabia, people are more reluctant to buy off plan because of bad history with other projects in the past. So, I am very proud of our 2020 story in off plan sales. We have sold a record number of units. We have never sold like we did in 2020 and, hopefully, we can build on that in the next three years.

That is interesting that you have found this silver lining because many companies have obviously dealt with many challenges recently. Have you seen any other opportunities or any other new strategies coming out of the pandemic that you have been able to take advantage of this year?

We focused more on our weaknesses. We had a huge weakness in digital marketing, digital archiving, communicating through online means. If we had not had the opportunity to reflect on our weaknesses during the pandemic, we would not have caught it. We will now work on developing our digital capabilities in general. Clearly everyone suffered during the pandemic, especially the retail and hospitality sectors. But, they found a lot of lessons learned during this time. Retail is now offering more products online, having more delivery platforms and hospitality will look into becoming more efficient in the future where they reduce their costs when things such as low tourism happen. We are going to see changes in all asset classes, asset types, and real estate coming in the future.

What CSR activities are you involved in?

We are very conscious about our social support in general and our charity. We work with the sectors that are closely related to us, such as civil defense, traffic, police, the Ministry of Health, where we can find similar messages that we want to deliver together. Of course, we even support a lot of entrepreneurs or freelancers who have their own special trades in our showrooms and in our development. This will help us in the future to create more of a lovable brand in our region, especially in Khobar.

Are you personally involved in other projects or other companies? Is there anything else that you are working on and you are passionate about?

To be very honest, 24/7 my work is Ajdan. I have dedicated my full time to the company. I am the CEO of the company, and I am the CEO of subsidiaries of the company. We are right now in our busiest time because we are developing where the market is too big and we need to take as big of a market share as possible. So, on a personal level, I have a 100% focus on this company and our vision for the future.

Ajdan has very unique ethics and a very unique philosophy behind it. What inspired you to get started with this project? What inspires you personally to work in this field and put all of your energy into this?

It is a shame that we are a top economy country and we do not have enough lifestyle destinations. Our main target is to create as many lifestyle destinations as possible with a focus on quality, whether it is in Khobar, Riyadh, Jeddah, or any other location in Saudi Arabia. All of our team are young, enthusiastic individuals. We started with about 30 employees and right now we have approximately 60. 25 to 30% of our workforce is young females who were never given the opportunity in the sector previously and we are looking into growing that number. We have a lot of young talent. One of the main philosophies and cultures in our company is that we do not like hierarchy. Everyone is working together. I do not like when someone calls me Mr. Mohammed or CEO or something like that. We are working in the same field. And actually, we have changed the management team group name to Ajdan Support Team because we support our employees, not the other way around. The culture of young professionals, mostly local people, male and female, and with no hierarchies is how we are developing our company.

What are the big projects you are focusing on for the beginning of the year?

In 2021, we have three active projects: the Fairmont Hotel, Ajdan Waterfront, and we are starting Ajdan Infinity, which is another destination in Khobar. It is an active project and it is under design right now and expected to begin construction in the next five to six months. We are looking into two destinations in Riyadh, one of which we will be closing the deal on very soon. Riyadh is the main market that we would like to be in right now.

What is your international reach?

We also have properties in Dubai, Bahrain, and Egypt. However, they are not the focus of our team right now because we would like to focus more on our local deals here. Once we establish our presence here in Saudi, we can work on our international portfolio more. All of the locations that we own internationally are amazing locations. The majority of these locations will come in the next three years.

What is your ambition for the company for the next three years?

We would like to be the number one developer in Saudi.

How will you achieve this goal?

Being number one in Saudi Arabia, there is an opportunity and a challenge. The opportunity is that there is no clear front runner right now in Saudi, unlike other countries. This is a very nice opportunity for a quality developer to distinguish themselves as the number one frontrunner. The challenge is defining what number one is in Saudi Arabia which is not clear yet because we have a lot of public sector developers, semi-public sector developers, and private developers like us. As a private developer, if I can launch a project and sell it off plan, just like the developers internationally, I would be the number one developer in Saudi Arabia. Today, we have a very good track record in off plan sales. I would like to build on that once we launch our project and sell it totally off plan without going into the site.

What do you need to accomplish this? What are you working on?

First of all, we need people to trust our brand and trust our delivery. We can do that by finishing Ajdan Waterfront and delivering it to the tenants and the buyers on schedule. Later on, our marketing team has to be top notch. Right now, the biggest challenge we have internally is our marketing team. They are an excellent team. However, the job is much bigger than was expected in the beginning. We need to develop this team further going forward. This team will have to close the deals that the marketing people will bring in. But I am not worried about them.

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