The Business Year

Khaled K. Al Mashaan

KUWAIT - Real Estate & Construction

Real Estate Ethos

Vice-Chairman & CEO, ALARGAN International Real Estate Company

Bio

Khaled Al-Mashaan has three decades of experience in civil engineering and real estate development. He founded ALARGAN in 1994, which has grown from a family-owned business into a publicly listed company on the Kuwait Stock Exchange. He received his Bachelor of Science in civil engineering from California State University, successfully completed the Financial Management Program and the Advanced Management Development Program in Real Estate at Harvard University Graduate School of Design, and is currently an active member of the Harvard Alumni Association. Al Mashaan also sits on the Boards of Kuwait Foundation for the Advancement of Science (KFAS), INJAZ, and the Kuwait Green Building Council (KGBC).

"It will affect us in a good way."

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 into 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 with 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, and 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.

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

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.

What are your ambitions, plans, and expectations for the year ahead?

Times are not going to be as simple as they were before, and we are already prepared for it. Whatever we are doing is within that line of preparation. We are also very excited about moving into new markets. Morocco is going to be our new territory. We are looking at other territories as well in North Africa, but now Morocco is certain. Iran is another market that has recently become very interesting after the sanctions have been mostly lifted. It is a very exciting market and we will do something there for sure in the future. For 2016 and 2017, there are other things that are already under construction or in the pipeline. We just have to make sure that we meet our deadlines and accomplish those things, and then we have to start thinking about what comes after that.

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