JEDDAH, 24 January 2007 — Amid a record growth in the Kingdom’s construction industry as well as in the rest of the Gulf region, a new Saudi closed joint stock construction company was unveiled here yesterday.
Construction Products Holding Company (CPC), with a capital of SR107 million, is 49 percent owned by the Bin Laden Group and the rest shared by another group of Saudi businessmen. The capital is divided into 10,700,000 shares, valued at SR10 per share.
Dr. Faysal Alaquil, Director of Business Development and the official spokesman of the company, said that “the establishment of the Construction Products Holding Company came as a reaction to the unprecedented growth seen in the construction industry in the Kingdom of Saudi Arabia and the Gulf region in general.” He noted that “as long as the region continues to develop real estate and industrial projects as a result of the strong liquidity resulting from the rise in oil prices, the demand for services provided by CPC would grow and expand.” The new company would also “focus on the Group’s activities in the neighboring countries like Syria, United Arab Emirates and Kuwait.”
He disclosed CPC’s plan to “establish an industrial zone in Riyadh to cover all the (construction) needs of the Kingdom” as the country remains the most important market for the company.
The company also purchased a piece of land measuring 840,000 square meters in Bahra, located between Jeddah and Makkah, where Bahra Company for Construction Steel occupies 40,000 square meters of the land. The remaining area will be developed and processed for the transfer of all construction-related factories. Alaquil said the presence of all the factories in one industrial area will facilitate the provision of supporting services and reduce the cost of managing all the factories. He explained that the “competitive environment in the region, and the Kingdom in particular, will be an incentive for excellence in services for a single company providing all the needs of modern construction,” saying that the CPC aims to serve as a “one-stop-shop” for investment in construction material and other support industries for all kinds of building constructions — from private villas, industrial complexes and commercial malls.
Alaquil laid down also CPC’s ambitious strategic plan for the Gulf markets, saying that it intends to expand geographically to increase production volume. He said four production sites will soon rise in Abu Dhabi to cover the needs of the construction market in the Gulf countries.
He added that CPC has bought a 265,00 square meter lot in the industrial zone in Adra, Syria for building an industrial complex.
It also owns 65 percent of Construction Products Company, Syria — a limited joint stock company — with a registered capital of $170 million.
He said the pace of activity in the construction sector would further rise as economic development accelerates due to rise in oil prices.
He pointed to other economic fundamentals for a robust construction sector, among them, are healthy capital market which made record increases in 2005, as well as the robust growth of investments in the real estate sector.
In the suburbs of Jeddah alone, he pointed out, the rate of return on investment in developed areas raised by almost 15 percent, buildings and constructed areas climbed by 10 percent and a 7-10 percent increase was likewise observed in the leased property.
He further said the government has hiked spending on infrastructure and construction projects in key sectors such as municipal services, education, health, transport and communications. Increased spending had a positive impact on the construction sector, Alaquil said.
He said there is also the urgent need for housing in suburban Riyadh, Jeddah and Alkhobar.
According to real estate companies’ statistics, the number of housing units will double to exceed 9 million units within the next 20 years. In line with population growth, the government and the private sector are trying to meet such demands, he added.