Building Blocks

How has your philosophy on real estate, as well as on architecture and design, contributed to the growth of ALARGAN?

It is very basic; we are in the business of adding value. We are not a primary industry; real estate is a secondary industry. Accordingly, when we go and develop or build, we have to build to the specifications of the end user. We focus on the largest segment in society: the middle class. When we go to a new territory, in that territory we make sure we understand quite well what would raise the bar. Right now we are entering Morocco, and we found that there are certain things that are not being served for the middle class. We go the extra mile to provide them with that service. As far as style goes, once something we have built is occupied it is not only a box to come and work in, but a place the client can be comfortable in. We provide our customers with that feeling and basic amenities, whether it has to do with proper parking, services like a gym, an auditorium, or a place to eat. That is why we hope to couple retail with residential with design spaces so that they can be accessed without a car, and in the future we will create entire communities that are developed with that ethos in mind. These are services that complete the basic amenities that our clients are looking for. That is what we do.

Initially your focus was on building middle-income housing, but you have other projects. Where are you looking now and how are you driving growth at ALARGAN?

We announced our 2020 strategy last year. By the year 2020, we will make sure that we secure a 40% return on our capital with 20% every year, so it is 40/20 at 2020. This has brought in another parallel to our focus where we have to produce income-generating properties for which insurance and cash flow is steady and will offset the locality of developments. We are doing a project in Salmiya that has to do with retail; we have another one coming up in Sabah Al Salem, which is mostly a social club, with services, education, and health facilities all together for middle-income families. The health side will be something of a subsidiary of ours. It is focused on something that is really missing in the market from the private sector side: physiotherapy treatment. That has not been up to par with countries around us in the region, and though the demand in the market is there, the supply is really lacking, and that is something we will hopefully have running by 2017. All of these things are happening in order to meet that target of reaching the 40% return on capital by 2020.

Oman and Saudi Arabia are major markets for ALARGAN. What are your immediate plans in those areas today?

We do not plan from here; each country has its own decision-making policies and its own board. However, in terms of markets, Saudi Arabia is going to be running a very tough market very soon and is already in it now because of oil prices. It is good that change is happening; prices have been soaring at least 10-15% per year and are inflated. The way the legislation is being implemented now will eventually trickle it down and that is healthy for everyone. Taxation is an issue, and everybody is talking about it; we will see how people adapt to it. This is something we are already seeing in Saudi Arabia and in Oman also; the economy is slowing down dramatically. There is a lot of desire in the public sector to pass on infrastructure costs to the private sector.

Real estate prices have fallen in Kuwait recently. What effect will this have on ALARGAN?

It will affect us in a good way. It is always good to have a correction. We will also see a drop in retail prices, which is something we already forecasted in our studies about three or four years ago. Our studies are always built on smaller numbers than now. It is going to be much healthier to have this drop now and to make a correction and move in a steady way, which will allow businesses to be able to function in a more healthy way than these inflated prices that we are seeing today.