Al-Saedan Real Estate Co: Overview of a Leading Real Estate Company in Saudi Arabia by Bader Al-Saedan

Interview with Bader Al-Saedan, General Manager of Al-Saedan Real Estate Co.

How do you assess the real estate sector in Saudi Arabia as a whole?

Everything starts with real estate. For any project, you start with land. All sectors start with real estate developments. Whether it is residential, commercial, industrial, entertainment, everything starts with the land development process, and that is where our main business is. We start developing the land and then join forces with sub developers. If we start developing residential land, we look for residential sub developers to build their own residential projects. If it is industrial, of course, we look for industrial developers to start developing. But with the New Vision now in Saudi Arabia, the focus has been moved to mostly residential and entertainment. We have the new mega projects in Saudi Arabia, such as NEOM, Red Sea, and Qiddiya. These mega projects have attracted real estate developers and investors from all over the world, including the locals, of course. Any international real estate investor needs the local real estate player first. When I want to start real estate business in Europe, for example, in France, I have to start with local real estate investor development. So, we are looking for international investors to join forces with local real estate developers and real estate investors on all these mega projects in Saudi Arabia. The last project that was announced by the Crown Prince was The Line City in NEOM. It is a great project, a huge project that needs many years to be completed and it needs a lot investments, force, thinkers, investors, all types of investments to build that city. It is a great project and a very nice location. The real estate sector is booming all around Saudi Arabia. Saudi Arabia is a big country with beaches, the desert, mountains. All types of geography can be found in this country. It is really a great location for vacationers and for all types of sports such as water sports, desert sports, etc., because of those various climates. The Dakar Rally is in Saudi Arabia for its second year now. And, of course, in terms of religious visitors, they can visit so many places in the country, including ancient places that have just opened to visitors recently. This makes a great opportunity for all types of investors to start investing in the country.

How do you distinguish yourself from the competition? Why should people look to work with you?

We have a 1 million m2 land development in Riyadh and about 800,000 m2 land development in Jeddah. We are developing two hotels in Mecca and one in Riyadh and we have an agreement with a major American hotel management company to manage all these hotels.

We have a long history and I represent myself as the third generation in this company. We started working in real estate as a family with the creation of the current monarch of Saudi Arabia. We start working from scratch from land development and we have had a very long experience specializing in all types of real estate, mostly in the western sectors such as Jeddah, Mecca, Medina, Riyadh. You should always look for experts who are experienced and specialized, especially if you want to start any business starting with real estate development. We have myself and my father before me. I have just finished 16 years of experience in the Real Estate Department of the Chamber of Commerce. I am part of a regulatory advisory office for the government. If the government would like to change regulations, they always go back to the experts in the Chamber of Commerce. This is a very important thing for myself and the family. We work here supporting the government and regulations. And having the experience with the government, setting up regulations is very important. In the last few years, the government has created so many real estate specialized departments just to regulate the market and to make it very stable and very transparent, especially for international investors. Before, Saudi Arabia was a very local market and international investors did not have open opportunities to join forces building the country infrastructure and to be part of the new developments. But now, it is really open for all international investors and developers. Investment is part of the Vision of the Kingdom 2030 focusing on how to attract investors and all types of investments. Before, only oil and gas was open for international investors. Now, even entertainment, real estate, sports have opened up. This is why you have to select very carefully if you want to invest in Saudi Arabia. With the local real estate market, you should look for family businesses that are really experts. We have a lot of experience in different types of real estate, different types of development including office towers, strip malls, compounds, residential, etc.

What are some of the key projects you are involved in at the moment?

We have a 1 million m2 land development in Riyadh and about 800,000 m2 land development in Jeddah. We are developing two hotels in Mecca and one in Riyadh and we have an agreement with a major American hotel management company to manage all these hotels. We are also doing a study for strip malls and entertainment projects. Riyadh has about 6 to 7 million residents so there is a huge demand for entertainment and it is a hub for business. We need a lot of hotels and we need a lot of entertainment and strip malls, restaurants, all these are in demand in Riyadh, especially. In the Mecca region and Jeddah, we are in need of a lot of hotels as well for visitors. They are doing a lot of rebuilding for the Holy City and we are part of this new development by building new hotels for new visitors. The government has a plan to expand the annual visitors for the holy places for the next few years so all developers need to start joining forces on this. Also, we are waiting for the announcement of the sub projects and entertainment and hotels in the Red Sea, NEOM, Qiddiya mega projects. NEOM is a mix of two Arabic and Latin words: “neo” means “new” in English and Latin and “M” is for “mustaqbal” which means “future”. So, “a new future”. Qiddiya is total entertainment product and there will be a Six Flags and hopefully Disneyland there. Saudi Arabia is also building a stadium there getting ready for the Asian Games. The next Asian Games will be in Qatar and then in Saudi Arabia in 2027.

What is your international reach as a company?

We have real estate development in Morocco, Tunisia, Egypt, and we have also done projects in London, UK. We have international investments, as well, to diversify.

What is your approach when you do these projects internationally?

It started a long time ago before I even started working. I started the project in London. In the UK, there is a very well organized real estate market as well as in other European countries and it is very easy as a foreigner to start doing business. This is the model we are trying to do in Saudi Arabia, to make it very easy, very transparent in terms of legal definitions and legal terms, and also in terms of information. So, we started developing there, of course, joining forces with the local investors in the market. You have to start with the local investor or local developers when you start doing business both in real estate and all over the world.

What are some of your success stories?

I have two big projects in Riyadh, Saudi Arabia. One of them is land development which I am really proud of. It is one of the best land developments in Riyadh. When I start a project, I always go one step further from my competitors – only one step, you cannot go more than that because it is going to be more expensive and you might fail. If you do two or three steps, that is very dangerous. That is what I did. It was a very challenging project because I went more than one step, but it was a very successful project and I am really proud because I have done many things that are not really required by regulations. Because of that, the cost goes higher. But, we always find something iconic and we want to add iconic locations. The other project was the first high rise building we developed called Elegance Tower and it is a very elegant and iconic building. We faced a lot of challenges doing this project, but we ended up with a successful result. We rented out and sold the whole project successfully with good profits. Those are the two major projects in Riyadh that I am really proud of myself because I was really part of the design and the development. I am an engineer myself, so I get involved in the design process and in the construction process to make sure that it is according to the vision I have in mind and in the drawings.

Can you tell us more about Elegance Tower?

I remember an event where one of the high rise towers in Riyadh was on fire. I was watching the firefighters using helicopters to extinguish that fire. Thank God the building was new and nobody was there. If somebody was there, how would they get out? So, during the construction of the Elegance Tower, I added a helipad at the top for the escape of the residents of the tower. If a fire starts, you always escape upstairs so you can evacuate easily.

Real estate development and construction have recently seen a green movement and now in many countries they have to abide by certain new laws and regulations. Have you had experiences where you have had to implement some of these new changes? Has it been difficult or have you seen value in these new regulations?

Being an engineer, I am always involved heavily in the design. That is why the designers like to deal with owners or managers that really understand how the design process works, it makes their life easy, you understand their difficulties, and you understand what they face. I call myself the Green Man. I always use green methods in all my designs. In terms of residential, it is not required by the government or the local authorities that you have, for example, the gray water processing, but I always add it to my projects. Being from a desert environment, the need for water is really very important. So, we always use the grey water for irrigation and take it back to the siphons because irrigation and siphons consume about 40% of water consumption. That even reflects back to our bills. Water is really very important, especially in this country, and also solar power. I always add solar power and solar heating. This is very important. I expect it to be regulated in Saudi Arabia in the future, but they need a lot of publicity about this for consumers. We need to reduce the consumption of electricity and our water consumption. Speaking of NEOM again, the whole idea of this new city is to have green technology, zero carbon emission, and solar energy. This is the future, even if it is not regulated. It will add to the value of any project, any real estate project, you do. This is all over the world, not only in Saudi Arabia.

Going that extra step even when you are not required to, even though it costs more, seems like it will put you in a good position once that does become a regulation because you already have that experience with how to make a building green, how to save energy, using gray water. Do you see this experience as an advantage over your competitors?

We have a lot of competition and it is very good for the market because if you go one step ahead of your competitors, you will succeed. Then, they will go one step ahead of you. And then, it is like a race for success. This competition is very good for the country itself. And the projects, of course, will reflect back on the companies as well.

What is your projection for the company in three years’ time? What is your ambition for the medium term for the company?

For the future, I think I have done my part. I will leave it for others to go for the future. But I will not leave the company until it is very well organized with a new, young management, new head management – non-family, of course – and we are IPO ready, which should be very soon, in the next two to three years. Again, that is assuming everything remains the same and that we have no major changes like before. Three years ago, we had major changes that we had to cope with and really join forces and get up again and change direction. If you change course, you always need some more time to stabilize the business.

What is your inspiration for being this involved in the company and these projects? Obviously, it takes a lot of time, it takes a lot of effort. What is your inspiration for what you do and for how you do what you do?

I am the oldest son in the family. I lived with my father in his young stage when he was very active and creating the business. I lived with all his hard times, hard working. His education background was accounting which was helpful for him to start the company and know about numbers and budgeting and all these things, but it was not enough for him to do the construction and real estate development on his own. That is why I started engineering to go with the construction side. I was a very good helper to him, and to develop the company I lived with him from scratch. My next brother is 14 or 15 years younger. It was a very long time until I had a brother. I am the older brother, the next is two years younger than him. So, we are three brothers. I have an engineering background, the next brother is in finance, and the last one is in law. I think it is a very good combination. I helped my father and they helped support me and we support each other making this business successful. You will always get inspired by people around you. This is how I become better.

Going IPO is a big change for any company. How will you achieve this next step, especially as a family business?

To go IPO, the first thing you should think about as a family business is to separate business ownership from the management. You have to know how to delegate. It is not an easy task for a business founder or someone like me who started working with my father when I was 10 or 12 years old. It is very important to separate from the management. This first task has been completed. The whole management of the company now is non-family. The second step you have to do as a family business is to separate your family from the company business itself. It was a mix all these years, so it is again, not an easy task to separate those two from each other. Then you see that the company can be managed by a non-family team and you support them from the top by giving them directions, policies, procedures, vision, being high management level just to make sure that they have the taste of the family, but are not the family. If you remove the taste of the family, that means you are creating a different company and we do not want to do that. The success of the company came from the family itself and the trust that our clients and investors had in us as a family. We do not want to leave the company as a family even if we go IPO. We will not sell all our shares; rather, we will keep majority ownership to keep that trust with our clients so they do not think we are giving up the company to others that might change the history or the direction. We cannot leave the Board or the ownership. These are the major points for the IPO success of a family company especially when we already have a success story from the beginning and we also have a five or ten year plan so people know where we are heading.

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