INTERVIEW: Saudi property developer Raza moving from compounds toward communities

INTERVIEW: Saudi property developer Raza moving from compounds toward communities
Waleed Alesia is CEO of Raza, one of Saudi Arabia’s leading real estate developers, with many years’ experience of big projects in Riyadh and elsewhere. (Illustration: Luis Grañena)
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Updated 19 April 2020

INTERVIEW: Saudi property developer Raza moving from compounds toward communities

INTERVIEW: Saudi property developer Raza moving from compounds toward communities
  • CEO Waleed Alesia ‘100 percent sure’ Saudi G20 Summit will go ahead as planned in November

DUBAI: In the emergency era of lockdown and social distancing, Waleed Alesia is more convinced than ever that the long-term trend is in exactly the opposite direction.

He is CEO of Raza, one of Saudi Arabia’s leading real estate developers, with many years’ experience of big projects in Riyadh and elsewhere.

“We’re moving away from compounds and toward community, from isolation in a big villa to a more connected community lifestyle,” he told Arab News.

Raza — owned by the Al Ra’ida Investment Co., which is in turn part of the huge Public Pensions Agency (PPA) — has been behind some of the most successful developments in the Kingdom.

Many traveling businesspeople will have attended events in Digital City, a Raza development, or in the Diplomatic Quarter, where it also has a long-term and growing presence.

“Riyadh is the heart of the country. It’s growing and developing, and can only become more thriving with hotspots around metro stations and maybe a third ring road,” Alesia said.

Under current plans, the population of the capital could double from its current 7 million people by 2030.

Raza will be a major player in that expansion, but with a new approach. The era of the big detached villa set in a walled-off compound is giving way to a millennial need for community living, with retail and leisure facilities within a short distance of residential living space.

And, Alesia believes, rental will be the model rather than ownership. “From an investor point of view, our model is to build, lease and maintain. The end-user customers are young, upwardly mobile professionals who are more interested in living in proper communities than buying. But some will want to buy, and they can do that,” he said.

These trends were in evidence before the pandemic hit. “The coronavirus shows how the world is totally connected — what happens on one side affects everywhere,” he said.

“But all our projects are long term and backed by the PPA. The emergency shouldn’t affect them long term, and we’re pushing ahead with all of them. It’s true the economy will probably lose some time, but I don’t think the economic effect will be as much as a year, maybe a few months.”

If there is anything fortuitous about the pandemic for Raza, it is the fact that it hit when current projects are past the labor-intensive phase and on the point of handover.

 


BIOGRAPHY

BORN: Riyadh, 1962

EDUCATION:

  • Graduate in computer science, Sever Institute of Technology, Washington
  • PhD in chemical engineering, University of Washington, St. Louis, Missouri

CAREER:

  • Director of administration, Capital Markets Authority
  • CEO and project manager, King Abdullah Financial District
  • Board director, Riyadh Bank
  • Board member, Tawuniya insurance company
  • CEO, Raza (formerly Al Ra’idah)

“Our two big projects, in Riyadh and Jeddah, are virtually 100 percent complete and ready for tenants,” said Alesia.

“We’re at the stage of marketing and communicating with future customers, so that can be done virtually. The pandemic will have an effect, but it won’t be catastrophic.”

The Riyadh development is a flagship. Digital City, opened in 2017, is already a successful project in the heart of the capital, housing many big corporations and businesses in a mixed-use environment.

Three new clusters will be added under the current plans, with 2,250 units, including some villas, but aiming essentially to create a liveable and workable urban environment around the East Village residential area and the Village Square retail and leisure site. Around 10 percent of the new project will be used by short-stay customers. Alesia said the existing Digital City development is 100 percent occupied, with a waiting list.

In the Diplomatic Quarter, work is well underway to turn the area into a cultural and social district, as well as the hub for the foreign missions that it has always been.

Raza is developing two new plazas in Al-Fazari and Al-Kindi districts, and linking them with a promenade.

“The Diplomatic Quarter will become more cultural and art focused, with more retail and hotels,” Alesia said.

In Jeddah, work is also well advanced on the Obhur district, on the corniche north of the city. The development will provide 2,550 units in 74 buildings, in an area that is already at the center of the Red Sea coast tourism industry.

Two major lessors are interested in taking big chunks of the project, Alesia said, and are very close to signing up. “We’re preparing for the handover and confident it will happen,” he added.

On the G20, I’m 100 percent sure it will go ahead as a physical event. There have been lots of virtual events, but I’m sure that by November it will be business as usual again.

Waleed Alesia, CEO of Raza

He sees Jeddah as a hub for the big developments along the Kingdom’s west coast, from Neom in the north to the Red Sea Development further south, with all the infrastructure, industry and employment that will create.

There are also plans to develop a big compound in Dammam in the Eastern Province, in line with the Raza mission statement. “We’re moving toward making it a community, not just a compound,” Alesia said.

All Raza developments have a high technology element as part of their “community” orientation.

“In keeping with our commitment to professionalize the market, we’ve introduced new-to-market concepts to Saudi Arabia that enhance the integrated community experience where people want to live, work and relax,” Alesia said.

“In this context, technology plays a critical role, and the digital transformation journey will help us introduce several industry-first propositions in the region.”

Raza has SR13 billion ($3.46 billion) of assets under management, all of it from the PPA, but that could grow rapidly in the next couple of years as it seeks third-party involvement in its business.

It is a fairly common technique to include other asset managers in other parts of the world, and will have the benefit of significantly bringing down costs for the PPA. By then, Raza will be the largest “community” landlord in the Kingdom.

“We launched the Raza model in order to build on our unrivaled experience with delivering large, challenging projects in Saudi Arabia,” Alesia said.

“Raza is designed to preserve and enhance the value of these big investments with a strategic, life-cycle approach to asset management. Our model is to combine our local knowledge and relationships with global institutional standards.”

Another element of the move to international standards will come soon when Alesia unveils a planned joint venture with a global property and facilities management company.

He declined to name the intended partner, but said a deal could be signed in “three or four months.”

He added: “You can build your business from scratch, or via a partnership with a well-established international service company.”

In a previous stage of his career, Alesia was in charge, as CEO and project manager, of the ambitious team charged with making Riyadh a regional financial hub via the construction of the King Abdullah Financial District (KAFD).

Despite delays and overruns, the KAFD is now being run by the Public Investment Fund, and is shaping up to be one of the centerpieces of the G20 Summit of global leaders due to take place in Saudi Arabia in November.

Alesia is convinced that both the KADF and the G20 will be successful, despite the pressures of the pandemic and the lockdown of large parts of the Saudi workforce.

“I’m very confident the KAFD will be very successful. It’s so needed by Riyadh and the country to have a financial district and center. Making Riyadh a financial center for the region and for the world is very important,” he said.

The run-up to the G20, especially the preparatory meetings of finance ministers and central bank governors, has been disrupted by the restrictions on travel and business contact because of the lockdowns in most countries.

But the Kingdom has led the way in replacing these with hi-tech “virtual” meetings and events that have kept the G20 timetable on track.

Will the big gathering in November go ahead as a physical event, or as another virtual gathering?

“On the G20, I’m 100 percent sure it will go ahead as a physical event. There have been lots of virtual events, but I’m sure that by November it will be business as usual again,” Alesia said.

In the fast-changing world under the economic effects of the pandemic, that is an important pledge, as Alesia realizes.

“Growth and change have always happened so quickly, and we need to be ahead of it. We’re ready for it, but predicting the future is always a challenge,” he said.


Egypt spent $100bn on govt projects in 7 years

Egypt spent $100bn on govt projects in 7 years
Updated 43 min 31 sec ago

Egypt spent $100bn on govt projects in 7 years

Egypt spent $100bn on govt projects in 7 years
  • The minister said these structural reforms could play a vital role in accelerating economic recovery from the coronavirus

CAIRO: Egypt’s infrastructure spending during the last seven years amounted to EGP1.7 trillion ($100 billion), according to the country’s Minister of Planning and Economic Development Hala El-Said.

The spending had a direct impact on Egypt’s ranking in the Global Competitiveness Index as it focused on improving the quality of roads and providing uninterrupted power to the private sector and citizens, she said on Saturday.

She also said the government was taking several measures to boost public-private partnerships to expedite economic growth, and that the government had founded the first Egyptian sovereign fund designed to carry out projects in partnership with the private sector.

The minister said that, to strengthen such partnerships, the government kept the private sector and other stakeholders in the loop while formulating economic policies and regulations.

One example was a recent investment law, which encouraged the participation of the private sector and its increased collaboration with the public sector.

The minister said these structural reforms could play a vital role in accelerating economic recovery from the coronavirus pandemic, as well as boosting overall growth.

El-Said said the government was proceeding with the implementation of structural reforms that would protect African economies from external shocks in the future.


Private sector partnerships created 400k jobs for Saudis since 2018

Private sector partnerships created 400k jobs for Saudis since 2018
Updated 6 min 40 sec ago

Private sector partnerships created 400k jobs for Saudis since 2018

Private sector partnerships created 400k jobs for Saudis since 2018
  • Saudi Arabia seeks to raise $54.5 billion over the next 4 years through its privatization program

RIYADH: Jobs have been created for about 400,000 Saudi nationals as a result of 11 Saudization agreements put in place since 2018, the Argaam website reported, citing information from Abdullah Abuthnain, vice minister of human resources and social development at the Ministry of Human Resources and Social Development.

Increased privatization and Saudization of roles are the key goals of the Kingdom’s Vision 2030 program.

Finance Minister Mohammed Al-Jadaan last month said that Saudi Arabia is seeking to raise about $54.5 billion over the next four years through its privatization program.

Al-Jadaan expects to raise $38 billion through asset sales and $16.5 billion through public-private partnerships, he told the Financial Times.

The Saudi government has identified 160 projects in 16 sectors, including asset sales and public-private partnerships through 2025.

Asset sales will include government-owned hotels, television broadcasting towers, and cooling and water desalination plants.

The plan does not include Public Investment Fund entities or the sale of other assets of Saudi Aramco. The new privatization law will be enacted in Saudi Arabia in July this year.

The National Privatization Center (NCP) in March also announced the creation of the Registry of Privatization Projects, a comprehensive central database of information and documents related to projects targeted for privatization.

According to the director general of Strategic Communication and Marketing at the NCP, Hani Al-Saigh, the new system seeks to enhance the existing privatization system. One of its most important roles will be to strengthen existing governance and ensure fairness and transparency.

“The law allows participants from the private sector to set up a committee to submit grievances related to the bidding and selection procedures of privatization projects and lay the regulatory basis to compensate the aggrieved in case the gap cannot be addressed,” he told Arab News.

A report by the National Labor Observatory issued in April this year indicated that the percentage of Saudization in the private sector rose to 22.75 percent in the first quarter of 2021 compared to 20.37 percent during the same period last year.

Recent data has shown that seven major job groupings in the private sector have achieved Saudization figures of more than 50 percent. While the rate across the private sector as a whole is around a quarter, Al-Eqtisadiah newspaper reported that the financial and insurance sector had achieved a rate of 83.6 percent, followed by public administration, defense, and mandatory social insurance (71.9 percent), mining, and quarrying activities (63.2 percent), education (52.9 percent), and information and communications (50.7 percent).

Saudi Arabia has the lowest dependence on foreign labor among Gulf Cooperation Council countries at around 77 percent, while Qatar has the highest, at about 94 percent, according to data from S&P Ratings.

While the Saudization figure is moving in a positive direction, some sectors face challenges. In December, the Saudi government added accountancy to the list of professions set to be Saudized, announcing that 30 percent of all accounting jobs at all local Saudi private sector companies with at least five accounting professionals must be filled by Saudi nationals. 

The ruling will come into effect on June 21 this year, and it is predicted that the move will create around 9,800 job opportunities for Saudi accountants.


Egypt launches KSA marketing drive to boost tourism

Egypt launches KSA marketing drive to boost tourism
Updated 13 June 2021

Egypt launches KSA marketing drive to boost tourism

Egypt launches KSA marketing drive to boost tourism
  • Saudi Arabia ranked among the top countries for travel to Egypt before the pandemic

RIYADH: Saudi Arabia is among the top markets for tourism in Egypt, and now that the Kingdom has opened its borders for international travel, the Egyptian Tourism Promotion Board (ETPB) is ramping up its marketing drive in the Kingdom.

Ahmed Youssef, chairman of the ETPB, told Arab News: “Revenues from tourism reached the highest point at $12.6 billion in 2019. Saudi Arabia ranked among the top countries for travel to Egypt before the pandemic. The Saudi market represents the first and most important Arab market, ranking fifth for visitors to Egypt. The trend continued into the first two months of 2020 that recorded 8 percent year-on-year growth in terms of numbers and revenues, with 2.4 million tourists visiting the country during this period.”

Tourism is a big revenue generator for Egypt, reaching $13 billion in 2019. About 3.5 million visitors traveled to the country last year, compared to 13.1 million in 2019. Although numbers are still below pre-pandemic levels, many establishments have resumed operations in a bid to kick-start the tourism sector, the chairman said.

Saudi Arabia is an important market for Egypt, which is why the ETPB is making significant investments in promotional activities.

“Now that the country has opened its borders for international travel, we plan to run promotions in partnerships with Saudi tour operators,” Youssef said. “In addition, we have incentive programs in place for the aviation industry, where airport landing and housing fees have been discounted by 50 percent. We also launched a digital campaign in the GCC, especially in Saudi Arabia, starting the last week of Ramadan (May 2021).”

“We are already seeing strong interest from travelers based in Saudi Arabia, especially Arab families. Our two countries share similar culture and values, which, in addition to the relative proximity, makes Egypt a highly attractive destination for Saudi tourists,” he said.

Wego, one of the biggest online travel marketplaces in the Middle East and North Africa (MENA) region, said in the run-up to the resumption of international travel on May 17 that Egypt topped the list of desired destinations.

Youssef said: “Our main goal now is not to measure the number of tourists but to reassure visitors that Egypt is a safe tourist destination. Saudi Arabia has now opened its borders for its nationals to travel again. We have also started receiving tourists from Saudi Arabia and we are hoping they will enjoy their time here.”

Egypt has adopted strict precautionary measures to limit the spread of COVID-19 while taking steps to support the economy, including the tourism sector.

The World Travel and Tourism Council (WTTC) granted Egypt its Safe Travels stamp, the ETPB chairman said.

“We have introduced the requirement for tourists to carry a negative COVID-19 PCR test certificate from their country issued up to 72 hours before the time of departure (96 hours for travelers arriving from Japan, China, Thailand, the US, Canada, South America, as well as London Heathrow, Paris and Frankfurt airports). Exceptions apply to travelers arriving by plane at the most frequented tourist destinations — Sharm El-Sheikh, Taba, Hurghada, and Marsa Alam — who can do a PCR test upon arrival at a cost of $30,” Youssef said.

The ETPB is targeting tourism revenue of $8 billion and aiming to attract 8 million overseas visitors in 2021. Demand is expected to stabilize and lead to a growth in reservation rates for the 2021-2022 winter season.

“We hope the numbers will return to pre-pandemic levels by fall 2022,” Youssef said.


King Salman Energy Park wins US green building award

King Salman Energy Park wins US green building award
Updated 13 June 2021

King Salman Energy Park wins US green building award

King Salman Energy Park wins US green building award
  • SPARK is being built on an area of 50 square kilometers

RIYADH: The King Salman Energy Park (SPARK) has been awarded the 2021 US Green Building Council (USGBC) Leadership Award for the Middle East in recognition of its environmentally friendly approach to construction and development.

SPARK was the first industrial city in the world to obtain Leadership in Energy and Environmental Design (LEED) Silver Certification.

Developed by the US Green Building Council, LEED aims to reduce the environmental impact of the construction process, limit resource use, reduce carbon emissions and proactively address climate change.

Saif Al-Qahtani, president and CEO, said in a press statement: “At SPARK, we are committed to ensuring sustainable solutions are continuously implemented as we grow to become the leading energy-centric ecosystem in the world. 

“We have achieved many firsts in our initial stages of development and will continue to adopt and support innovative initiatives that help improve the quality of life for our people, while also strengthening our business and the Kingdom’s economy. 

“We are very proud of our team and the work they have done to guarantee SPARK provides long-term value and supports national and regional programs aimed at building a more sustainable future.”

The 2021 USGBC Leadership Award recipients are selected from among USGBC’s around 10,000 member organizations and the 106,000 LEED commercial projects in more than 180 countries.

SPARK is being built on an area of 50 square kilometers. Phase one will be 14 square kilometers, in addition to a dedicated logistics zone and dry port. SPARK announced in March that 80 percent of the project’s first phase was officially complete.

Oilfields Supply Center Ltd. (OSC) announced in April it is to invest $570 million in building a center at SPARK.


WEEKLY ENERGY RECAP: If oil prices were below $70, would IEA still tell OPEC to open taps?

WEEKLY ENERGY RECAP: If oil prices were below $70, would IEA still tell OPEC to open taps?
Updated 35 min 31 sec ago

WEEKLY ENERGY RECAP: If oil prices were below $70, would IEA still tell OPEC to open taps?

WEEKLY ENERGY RECAP: If oil prices were below $70, would IEA still tell OPEC to open taps?
  • OPEC+ has done a tremendous job and has successfully managed to contain the largest oil demand shock in history

Oil prices continued their rally for the third week in a row, amid confidence in the strong oil demand outlook and accelerating vaccinations allowing people to travel more.

On the week closing, Brent crude rose to $72.69 per barrel. West Texas Intermediate (WTI) rose to $70.91 per barrel.

International benchmarks’ futures forward curves are further tightening, and the Arabian Gulf Dubai benchmark is trading at its steepest backwardation market structure for almost a year, which indicates supply tightness.

Brent crude seems to have settled above the $70 mark since the beginning of June. WTI closed the week above $70 for the first since October 2018, but back then it had moved steeply downward and ended that year at $45 per barrel even though oil inventories from the Organization for Economic Co-operation and Development (OECD) were at 19 million barrels above their five-year average.

The June monthly oil market report of the Organization for the Petroleum Exporting Countries (OPEC) kept the second half of 2021 oil demand growth unchanged at 96.58 million barrels per day (bpd), up 5.95 million from 2020 when demand was at 90.63 million bpd.

OPEC reported that OECD April commercial oil inventories fell to 25 million barrels below the latest five-year average, around 34 million barrels higher than the pre-pandemic 2015–2019 average, and 160 million barrels lower than the same month a year ago. This means that OPEC+ has done a tremendous job just one year on from the largest oil output cuts in history, and has successfully managed to contain the largest oil demand shock in history.

The US Energy Information Administration (EIA) June Short-Term Energy Outlook came with bearish notes that the market remains subject to heightened levels of uncertainty related to the ongoing economic recovery from COVID-19.

However, the EIA sees the global crude oil market balancing in the third quarter of this year. It predicts a decline in oil prices, and expects Brent crude to average $68 per barrel this year and $60 in 2022 as global oil production increases.

The EIA expects US oil output to rise to 11.8 million bpd in 2022. Though WTI has breached the $70 mark for the first time since October 2018, the US still produces 10.8 million bpd through the Permian Basin, where the rig count rose to its highest level since April 2020.

The International Energy Agency (IEA) June report came with huge contrasts as it forecast that global oil demand is set to return to pre-pandemic levels by the end of 2022, but reported that OECD oil inventories fell 1.6 million barrels below the pre-pandemic 2015-2019 average for the first time in more than a year.

How can the IEA suggest to OPEC to open the taps while it forecasts oil demand to surpass pre-pandemic levels by the end of 2022? If prices were below the $70-per-barrel mark, would the IEA still suggest to OPEC to loosen oil output cuts?

The latest figures from the Commodity Futures Trading Commission on June 8 showed that long positions on crude oil futures on the New York Mercantile Exchange numbered 661,994 contracts, up 15,477 from the previous week (1,000 barrels for each contract).

• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter: @faisalfaeq