UAE’s Silkhaus eyes KSA’s short-term rental market

UAE’s Silkhaus eyes KSA’s short-term rental market
Silkhaus is set to bring its unique approach to the short-term rental space, aiming to transform it into an asset class and an accommodation experience. (Supplied)
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Updated 28 November 2023
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UAE’s Silkhaus eyes KSA’s short-term rental market

UAE’s Silkhaus eyes KSA’s short-term rental market
  • Increasing interest in rental model underpin fast-growing sector

CAIRO: Capitalizing on Saudi Arabia’s dynamic market growth, UAE-based property technology company Silkhaus is gearing up to make a significant entry into the Kingdom’s hospitality sector.  

Founded in 2021, Silkhaus is set to bring its unique approach to the short-term rental space, aiming to transform it into a real estate asset class and an accommodation experience across emerging markets.

In an interview with Arab News, Sabine El-Najjar, founding general manager in Saudi Arabia for Silkhaus, spoke about the company’s mission and strategy.  

“Our primary goal is to ensure properties operated as short-term rentals generate the highest possible returns in a rapidly expanding market while removing the obstacles associated with long-term leases,” El-Najjar explained.  

Silkhaus’s approach allows landlords to secure 20 to 40 percent higher income than traditional rental models, providing them with the flexibility to adjust prices to align with seasonal and neighborhood demand.

“Our approach provides a seamless, plug-and-play experience for landlords, as we oversee every aspect of property management, from furnishing to maintenance and daily operations, ensuring a hassle-free experience for our guests,” El-Najjar said.

Strategic ambitions

The company’s expansion into Saudi Arabia aligns with the Kingdom’s significant investment in tourism, aiming to attract over 100 million local and international tourists by 2030.  

“The hospitality industry is scaling rapidly, and currently, there is a shortage in operational high-end strategically located accommodation. Silkhaus wants to create that supply by partnering with landlords,” El-Najjar added.

The company’s strategy for regional or global expansion is market-centric, aiming to be among the top three operators in every city it operates in.  

“Our success in Dubai and Abu Dhabi so far is reflective of this approach. As we plan our entry into Riyadh, we believe the same measured approach will serve as well, ensuring sufficient supply and availability of properties, which will let us provide guests with an incredible experience in the Kingdom,” El-Najjar said.

The company’s strategic expansion into the Kingdom aligns with the growing appetite for landlords to monetize their assets. 

I believe that Saudi Arabia is a true testbed to demonstrate the real potential of the short-term rental sector. The strong economy, global appeal, and demand from visitors, highlights the need for flexible short-term accommodations.

Sabine El-Najjar, founding general manager in Saudi Arabia for Silkhaus

El-Najjar explained that the increasing interest in short-term rental models coupled with the Saudi Ministry of Tourism’s push towards private tourist accommodations underpin the fast-growing sector.

“If you look at Saudi Arabia, there’s a constant influx of visitors throughout the year, whether for business, sport or the large number of leisure events being held here,” she added.    

However, Silkhaus aims to differentiate itself from other players in the sector by focusing solely on bringing the best experience to its corporate and individual customers.

“We treat landlords as our partners – ensuring their returns are competitive as they generate passive income without fear of damage to their properties and without needing to manage communication, marketing or operations,” she further added.

The company is already in advanced conversations with institutional investors who own large property portfolios. Additionally, Silkhaus aims to further solidify its expansion strategy by developing corporate partnerships.

With its expansion underway, the company’s metrics are set to see a significant uptick.

“We are definitely looking to outpace our current growth. This will of course be enabled by our market expansion. At the same time, we continue to hire different roles. As we start to operationalize in Saudi Arabia, job creation will be at the top of our agenda, creating opportunities for numerous young local talent,” El-Najjar said.

A regional testbed

Silkhaus aims to completely revolutionize the short-term rental space in the region with the Kingdom as a benchmark for excellence.

“I believe that Saudi Arabia is a true testbed to demonstrate the real potential of the short-term rental sector. The strong economy, global appeal, and demand from visitors, highlights the need for flexible short-term accommodations,” El-Najjar said.

“As the economy grows, traditional hospitality is unable to meet demand – not just from a quantity perspective but also a value for money, experience, and offering perspective. This is where we are able to rapidly transform housing supply, into high-quality guest experiences, while creating economic impact locally,” she added.

Moreover, El-Najjar stated that Silkhaus is set to have a positive impact on other verticals in the hospitality sector like food and beverage, facility management, and personal services.

Technology at its core

She further described Silkhaus’ approach within the so-called “proptech” sector as one where technology plays a critical role.  

“Our internal product team comprises software engineers and developers with extensive sector-specific experience,” she stated, highlighting the company’s focus on developing tools and solutions tailored to both landlords and guests.  

This includes dedicated owner tools for landlords to monitor property occupancy and revenues in real-time, offering complete transparency and control.

El-Najjar further expressed the company’s deep commitment to enhancing the customer journey every step of the way.

“We are working on adding services available to our guests beyond accommodation – to enhance customer experience including food and beverage offerings through partnerships with third parties, personal services and concierge services. This will further support our mandate of being a true option for short-term travelers,” she stated.

“Silkhaus, as a young startup, has been quick to adapt and respond to market feedback. We’ve fine-tuned our unique proposition to become the ideal partner in this evolving landscape, catering to the needs of both guests and landlords. Now we’re excited to bring this to Saudi Arabia,” El-Najjar stated.

Business foundations

The company managed to sustain a revenue sharing business model with its landlords, enabling it to align its goals with its property owners.

“This alignment is achieved by maintaining a delicate equilibrium among factors such as daily pricing, short and mid-term bookings, and the utilization of various distribution channels we partner with like Airbnb, Booking.com, and direct bookings,” El-Najjar added.

“To maintain this equilibrium, we utilize data-driven insights to adapt to price fluctuations, monitor occupancy data, and make accurate revenue projections,” she added.

Furthermore, the company is heavily committed to enhancing its overall rental experience by investing a substantial portion of its profits in new products and solutions.

Silkhaus currently manages over $120 million worth of real estate with a significant boost to that figure underway with its Saudi expansion.

Additionally, the company is well capitalized to ensure a successful expansion strategy after raising $7.75 million in its seed round last year.

“Right now, we are focused on building our foundations in Saudi Arabia, which has kicked off with my appointment as founding GM in the Kingdom,” El-Najjar said.


Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping

Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping
Updated 20 sec ago
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Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping

Oil Updates – crude prices cling to gains amid concerns about Red Sea attacks on shipping

RIYADH: Oil prices on Tuesday mostly held onto gains made a day earlier amid attacks on shipping in the Red Sea that have exacerbated supply worries, according to Reuters.

Brent crude futures fell 1 cent to $82.52 a barrel by 7:35 a.m Saudi time, while US West Texas Intermediate crude futures rose 1 cent to $77.59 a barrel.

“Concerns around shipping disruptions in the Red Sea have supported a rebound in the price of crude oil overnight, offsetting a more hawkish Fed currently weighing on the demand side of the equation,” said Tony Sycamore, an analyst at IG in Sydney.

The attacks by Iran-aligned Houthis in support of Palestinians have increased freight rates and shipping times. On Monday, US Central Command said that the Houthis had unsuccessfully fired a missile at the US flagged oil tanker Torm Thor in the Gulf of Aden on Feb. 24.

US President Joe Biden said on Monday he hopes to have a ceasefire in the Israel-Hamas conflict in Gaza start by next Monday. In public, Israel and Hamas continued to take positions far apart on a possible truce, while blaming each other for delays.

Both oil benchmarks settled more than 1 percent higher on Monday which followed declines of 2 percent-3 percent over the previous week as markets factored in a greater likelihood that rate cuts might take longer to come.

Kansas City Federal Reserve Bank President Jeffrey Schmid on Monday used a debut speech on policy to signal that he, like most of his central banking colleagues, is in no rush to cut interest rates. High borrowing costs typically reduce economic growth and oil demand.

Oil prices were also supported on Tuesday by indications of improved demand in China.

“Concerns over Chinese demand are abating, as refineries continue brisk buying in the physical market after a boom in Lunar New Year travel. This is despite them having planned more maintenance halts than usual,” analysts from ANZ Bank said in a note.

A market focus for the day will be the American Petroleum Institute industry group’s weekly data on US crude inventories which is due to be released at 0.30 a.m. on Wednesday.

Analysts polled by Reuters on Monday estimated on average that crude inventories rose by about 1.8 million barrels in the week to Feb. 23. 


WTO conference spotlights global trade challenges and collaborative solutions

WTO conference spotlights global trade challenges and collaborative solutions
Updated 27 February 2024
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WTO conference spotlights global trade challenges and collaborative solutions

WTO conference spotlights global trade challenges and collaborative solutions
  • Established in 1995, the World Trade Organization serves as global authority governing international trade regulations
  • The four-day conference, which kicked off on Monday, will feature trade ministers, senior officials from around the world

RIYADH: Global trading system accessibility, intellectual property, and dispute settlement take center stage as the 13th World Trade Organization Ministerial Conference commenced in Abu Dhabi.   

The four-day event, starting on Feb. 26, will address these issues within the WTO, featuring the participation of trade ministers and senior officials from around the world, the Saudi Press Agency reported. 

The event will bring together 175 member states, private sector leaders, nongovernmental organizations, and civil society representatives.  

The goal is to collaborate on advancing a more efficient, sustainable, and inclusive trading system while enhancing the effectiveness of trade policies and programs. 

Participants in this conference edition aim to build upon the achievements of the previous ministerial conference held in Geneva in June 2022. The event witnessed accomplishments in supporting fisheries, food security, and e-commerce, the SPA report added. 

Speaking on behalf of the Saudi government, Commerce Minister Majid Al-Qasabi began his video address by pointing out that the event provides a pivotal opportunity to mark the WTO’s 30th anniversary.  

“We all look forward to working with you to achieve successful outcomes of the MC 13. Such outcomes would support restoring trust in the multilateral trading system, that is facing significant challenges and headwinds, confirming the essential role of the WTO, and reiterating the global trade agenda,” he said.  

Al-Qasabi warmly welcomed Comoros and Timor-Leste as new members of the WTO, reaffirming the commitment to accelerating the remaining accession.  

He also announced the Kingdom’s approval of the Agreement on Fisheries Subsidies, noting the WTO’s contribution to the economic growth and development of its members.  

The minister emphasized the importance for the Kingdom to achieve constructive and meaningful outcomes in Abu Dhabi and beyond. 

He concluded by reaffirming Saudi Arabia’s commitment to working constructively with all members to ensure the success of the 13th ministerial conference and beyond. 

Established in 1995, the WTO serves as the global authority governing international trade regulations. Its biennial ministerial conference acts as the paramount decision-making platform, bringing together ministers and senior officials from all member nations to assess, revise, and enhance the treaties shaping the global trade framework.  

Ahead of the event, WTO Director General Ngozi Okonjo-Iweala unveiled a $50 million initiative aimed at empowering female entrepreneurs in developing countries. 

The new fund looks to unlock the power of the digital economy, helping women exporters overcome financing hurdles and capture untapped opportunities. 

“This initiative embodies our collective commitment to empowering women,” Okonjo-Iweala said, adding that it is a crucial step toward addressing the financing gap faced by women entrepreneurs, who are “key drivers of economic growth and development.” 

Meanwhile, Thani bin Ahmed Al-Zeyoudi, the UAE’s minister of state for foreign trade and chair of the 13th WTO Ministerial Conference 2024, announced that the country allocated $5 million to the $50 million fund.  

Abdullah bin Zayed Al-Nahyan, the UAE’s minister of foreign affairs, earlier announced that the Gulf country will provide a $10 million grant to support several key initiatives of the WTO.  

He added that the grant would be allocated to the Fisheries Funding Mechanism, the Enhanced Integrated Framework, and the WEIDE fund that will be launched during the event.

 


Moody’s affirms credit ratings of key Saudi companies

Moody’s affirms credit ratings of key Saudi companies
Updated 26 February 2024
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Moody’s affirms credit ratings of key Saudi companies

Moody’s affirms credit ratings of key Saudi companies

RIYADH: Several prominent Saudi companies received affirmation on their credit ratings from Moody’s Investor Services, a leading global provider of financial assessments, research, and risk analysis.

Following the agency’s recent update to its Government-Related Issuers Methodology, several firms, including Saudi Basic Industries Corp., Saudi Telecom Co., and Saudi Electricity Co., have maintained their A1 ratings, while Saudi Arabian Mining Co., also known as Ma’aden, continues to hold a Baa1 rating.  

For SABIC, the A1 rating acknowledges its strong global presence in the petrochemicals market, competitive cost structure, and robust financial health.  

Moody’s also highlights the cyclical nature of SABIC’s operations and its concentration in Saudi Arabia as considerations. 

stc’s A1 rating reflects its dominant position in the Saudi telecommunications sector, strong financial metrics, and substantial government support. Challenges include market competition and the capital intensity of the telecom industry, Moody’s stated. 

SEC’s rating considers its integrated electricity operations, market dominance, and regulatory support balanced against the company’s growing debt burden due to significant infrastructure investments. 

Ma’aden’s Baa1 rating is supported by its diversified production, low-cost operations, and strategic importance to Saudi Arabia’s economy. 

The company’s exposure to commodity price volatility and its expansion plans are areas of focus. 

The positive outlooks for SABIC, stc, and SEC align with Moody’s view on the government of Saudi Arabia, indicating a high likelihood of state support.  

Furthermore, Ma’aden’s stable outlook reflects its solid financial policies and liquidity management. 

The ratings of the Saudi companies could potentially be upgraded or downgraded based on several factors outlined by Moody’s.  

For SABIC, an upgrade could be on the horizon if the ratings of the Saudi government or Saudi Aramco are elevated or if the company itself demonstrates improved revenue and profitability and maintains strong credit metrics and liquidity.  

Conversely, SABIC’s ratings might face a downgrade if the company experiences a significant downturn in operating performance or engages in heavy debt-financed investments, pushing its deficit to earnings before interest, taxes, depreciation, and amortization ratio toward a multiple of 1.5. 

Similarly, stc could see its scores positively impacted if the ratings of the government or the Public Investment Fund are upgraded, given its status as one of the highest-rated telecom operators globally.  

However, an escalation in competition, debt-financed acquisitions, or sustained negative free cash flow could apply downward pressure on stc’s ratings. Any decrease in the government’s or PIF’s ratings would also likely result in a downgrade for stc. 

SEC’s situation mirrors that of the aforementioned entities, with the potential for an upgrade if the sovereign rating of Saudi Arabia or the PIF improves, contingent upon the company maintaining strong operational and financial performance.  

A downgrade could occur if there is a notable decline in the company’s liquidity profile or its financial metrics weaken significantly. 

Ma’aden’s ratings could be elevated if the company successfully reduces its debt relative to EBITDA and boosts its retained cash flow to net debt ratio while maintaining strong liquidity. 

Conversely, an increase in debt and EBITDA ratio beyond certain thresholds or a significant weakening of liquidity could trigger a downgrade.  

Adjustments in the perceived likelihood of support from PIF or the government in times of financial stress could also influence Ma’aden’s ratings.


Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  

Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  
Updated 26 February 2024
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Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  

Closing Bell: TASI drops to 12,532, records $2.4bn trade volume  

RIYADH: Saudi Arabia’s Tadawul All Share Index closed at 12,531.76 points on Monday, marking a decrease of 72.83 points or 0.58 percent.   

The parallel market Nomu concluded at 25,592.61, registering a fall of 109.54 points, or 0.43 percent. Alongside, the MSCI Index also descended by 3.81 points to settle at 1,616.76, a drop of 0.24 percent.   

By the day’s end, the main index posted a trading value of SR9.15 billion ($2.4 billion) with 42 stocks advancing and 186 declining. On the other hand, Nomu reported a trade volume of SR47.1 million.   

TASI’s top performer was Saudi Arabian Amiantit Co., which saw a 7.69 percent jump to SR31.50.

Maharah Human Resources Co. and Wataniya Insurance Co. also recorded notable gains, with their shares closing at SR7.21 and SR22.56, marking an increase of 6.19 percent and 5.82 percent, respectively. The Co. for Cooperative Insurance and Saudi Paper Manufacturing Co. also fared well.   

On the announcement front, Saudi German Health successfully concluded the offering of its Saudi Riyal-denominated sukuk, reaching a total value of SR1 billion.  

The offering comprised 1 million sukuk, each with a nominal value of SR1,000, and a fixed annual yield of 7.20 percent, paid out quarterly over a maturity period of five years.  

The company has specified that under certain conditions detailed in the base prospectus and the final terms, the sukuk may be redeemed before their maturity date.

Investors can review these final terms, which will be available on Al Rajhi Capital’s website starting Mar. 6, 2024, the entity overseeing the subscription management for this issuance.  

The allocation of sukuk to investors will be finalized by the end of Feb. 29, with the settlement process concluding on Mar. 6, 2024.   

Furthermore, Saudi German Health plans to list the sukuk on Saudi Stock Exchange once all regulatory procedures necessary for the listing are completed, with an announcement to be made at the appropriate time.  

Moreover, Alinma Bank is set to bolster its Tier 1 capital through a strategic move to issue additional sukuk denominated in US dollars.   

This initiative, aimed at enhancing the bank’s capital base and supporting its general banking operations, follows a board resolution authorizing the CEO to manage the issuance process.  

The planned issuance will be executed by a special-purpose vehicle, targeting qualified investors both within Saudi Arabia and internationally.   

Participating as joint lead managers, Abu Dhabi Islamic Bank, Alinma Investment Co., and Emirates NBD, have been appointed to oversee the issuance, as well as J.P. Morgan Securities, MUFG Securities EMEA, and Standard Chartered Bank.


Saudi Arabia records 10% surge in number of factories

Saudi Arabia records 10% surge in number of factories
Updated 26 February 2024
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Saudi Arabia records 10% surge in number of factories

Saudi Arabia records 10% surge in number of factories

RIYADH: The number of industrial units in Saudi Arabia recorded a 10 percent surge year on year in 2023 to reach 11, 549, according to the Ministry of Industry and Mineral Resources.

A spokesman for the minister, Jarrah bin Mohammed Al-Jarrah, revealed that the new industrial establishments were set up with an investment of SR1.54 trillion ($48.4 billion).

The rise in the number of factories falls in line with the Kingdom’s plan of boosting industrialization and achieving a target of 36,000 plants by 2035.

Moreover, the number of new industrial licenses issued in 2023 reached 1,379, with investments amounting to more than SR81 billion.

On the other hand, production began in a total of 1,058 factories during the same year with investments amounting to SR45 billion.

In addition, Al-Jarrah noted that the new licenses were distributed among 25 industrial activities, led by food products manufacturing with 244 permits, followed by the manufacturing of non-metallic mineral products (176) and the manufacturing of formed metal products with 165. A total of 123 licenses were issued to factories engaged in the manufacturing of rubber and plastic products.

With a vision to increase the number of factories to 36,000 by 2035, including 4,000 which will be fully automated, Saudi Arabia is poised to create a dynamic and innovative production landscape.

The adoption of advanced technologies, including artificial intelligence, 3D printing, and robotics, positions Saudi industries as global leaders of this revolution.

The Kingdom’s industrial sector is experiencing sustained growth, with investments in manufacturing reaching $132 billion since the launch of the economic diversification strategy Vision 2030 in 2016.