The wrong project
Maskan Arabia CEO Engineer Hossam Al Rashoudi, says little has changed to tackle the quality, supply and legislative issues in Saudi Arabia’s real estate market.
Created to address a gap in the market for trustworthy developers and quality developments, Maskan Arabia was somewhat of a personal mission for the businessmen who established it.
Entering the market four years ago with a clear remit to build smaller, easier to manage and affordable villas and apartments, it’s an approach that is paying off with a track record of 100% lease rates on all its projects to date.
“We were not happy about the quality of development, so we create Maskan to fill in the gap,” says company CEO Engineer Hossam Al Rashoudi, who today runs the company alongside chair Waleed Abdulaziz Al Saghyr.
“We understand that individual buyers do not have a trust in developers because they are not up to standard, once you have a gap in any business, it is very smart to take the opportunity and work on exploiting that, and focus on the basic needs to meet the consumers’ demands,” continues Al Rashoudi, who worked as a consultant designing residential units before the business was established.
Today the developer is working on a string of residential projects including a 300 unit project north of Riyadh – financed by an award winning SAR600m fund – while aiming to create a brand synonymous with trust and aligned to both its commercial and social responsibilities.
“In reality, this is a very complicated job. It requires a lot of skills, starting from understanding what today’s market needs are and then developing different products that will cater to the different market segments,” Al Rashoudi relays, explaining the business is structured to assign dedicated teams to research, product development and engineering, as well as the more abstract quality and excellency.
But in the grand scheme of Saudi Arabia’s housing demands Al Rashoudi says these projects are far from enough to house a population that is predicted to hit 31.6 million by 2020. It’s an issue not even $15bn of state spending looks likely to solve.
“We do observe a lot of projects coming in, but even with all these projects there is still a huge shortage of supply.
“Also, most of what is supplied today in the market does not meet the demand in terms of the project type and the price. Up to date, the final resolutions of the mortgage law have not been announced, but at least, introducing this law is part of regulating the market, and any regulations should have a positive impact in the future,” he adds.
Growth
Harnessing the opportunities while they still exist, Maskan is planning to expand into the country’s lucrative Eastern province in Q1 of next year with major and secondary cities next on its radar.
But despite the massive opportunities to be had on the back of rapid population growth, challenges remain. Practically, building in secondary cities is still nigh on impossible as there is little or no provision for quality utilities infrastructure.
Additionally, municipality regulations approve only five housing typographies for construction, whereas worldwide there is closer to 15.
For Al Rashoudi, who lives by the mantra that ‘nothing is impossible in engineering’, these challenges too will have an effect on the price of any completed development.
“Right now we are working on developing new products, such as rural housing and other different kinds of residential units, but these would require municipality approval. The main challenge is presenting this kind of development to the municipality and trying to get approval for these kinds of development. This will definitely have a tremendous effect on the pricing per unit,” he predicts, and he would know. Graduating from KFPUM with a major in architectural engineering, Al Rashoudi wrote a thesis on value engineering and begin his career in project management.
Maskan’s project pipeline may be a drop in the ocean when compared to the 500,000 units by 2013 target set by the housing ministry, but it is market awareness that has seen the developer grow from start up to “dramatic prosperity” in four years.
“We worked very hard and built on our internal and external procedures to create a team of successful members and employees in the company,” Al Rashoudi says.
“It is very competitive industry and what developers need to understand is the residential market is very limited in the kingdom,” he adds. Yet his observations are far from a white flag to the Kingdom’s challenges.
“There is no limit to our ambitions; we want to be in every single city in the Kingdom and beyond. Our company name is Maskan Arabia and we would like to be in the GCC area and then the rest of the world within the coming decade.”