SUMMARY OF RISK FACTORS
D- Risks Related to the Offer Shares
3. MARKET OVERVIEW
3.6 Retal’s competitive positioning .1 KSA developer profile
Saudi Arabia’s residential market has been a key point of focus for government initiatives over recent years with a range of regulatory, finance and supply side reforms enacted which aimed to underpin activity in this sector.
3.6 Retal’s competitive positioning
This leads to the suggestion that while SME developers exist in large numbers in the market, they are facing significant challenges executing projects and bringing units to market.
According to statements made by the Crown Prince through government declarations, demand for housing is estimated to reach 4 million units by 2030, with a demand gap of 2 million units according to MOMRAH. This will be the result of population growth (the Royal Commission for Riyadh City (RCRC) is planning on almost doubling the population in Riyadh from around 7.5 million in 2020 to 15 million in 2030), as well as the incentives introduced by the government to boost homeownership rates among Saudi nationals from around 60% currently to 70%.
Regulatory efforts such as the white land tax and the mortgage law, display clear intent from the government to engage with the issues facing the residential market. The Government aims to enhance home ownership by making homes more affordable and accessible for their citizens. It does this by increasing the participation of the private sector by providing incentives to enable them to efficiently develop homes at an affordable price.
The trends witnessed in Riyadh, Jeddah and DMA have been driven by various government initiatives such as the expansion of the mortgage market and increased private sector participation in the housing market.
3.6.2 Market share analysis
By dividing the total number of units Retal sells in each city each year by the total number of new supply in that city during that year, we can estimate Retal’s market share and project its progression through the years 2020 to 2028.
Table (3-49): Riyadh Market Share
2020 2021 2022 2023 2024 2025 2026 2027 2028
Number of Units Sold 588 690 781 975 996 1,278 1,710 1,855 2,000
Market Share 1.5% 1.7% 1.7% 2.1% 2.1% 2.6% 3.3% 3.5% 3.6%
Source: Retal, Knight Frank
Note: The numbers of units sold were provided by Retal and have not been validated by Knight Frank.
Table (3-50): Jeddah Market Share
2020 2021 2022 2023 2024 2025 2026 2027 2028
Number of Units Sold 0 0 0 195 199 256 342 371 400
Market Share 0% 0% 0% 1.5% 1.5% 1.9% 2.5% 2.7% 2.8%
Source: Retal, Knight Frank
Note: The numbers of units sold were provided by Retal and have not been validated by Knight Frank.
Table (3-51): DMA Market Share
2020 2021 2022 2023 2024 2025 2026 2027 2028
Number of Units Sold 1,052 1,061 1,095 780 797 1,022 1,368 1,484 1,600
Market Share 16.8% 16.6% 14.5% 10.1% 10.1% 12.7% 16.6% 17.7% 18.6%
Source: Retal, Knight Frank
Note: The numbers of units sold were provided by Retal and have not been validated by Knight Frank.
Retal’s market share in Riyadh jumped from 1.5% in 2020 to 3.6% in 2028. In Jeddah, Retal’s market share went from non-existent in 2020, to capturing 2.8% of the market in 2028. Retal’s market share is by far the largest in DMA, going from 16.8% in 2020 to 18.6% in 2028, positioning Retal as the number one private residential developer in DMA, delivering 8,807 units valued at USD 2.23 billion, or SAR 8.39 billion.
It is important to note that the decline in Retal’s market share in DMA is not an indication of poor performance, but rather the fact that they are ramping up development. In other words, when Retal is developing their pipeline, they’re not selling.
Competitive Landscape
Retal Urban Development is a large real estate developer from the private sector. As such, Retal does not compete with government-owned developers such as those behind “giga” projects, but rather competes with other developers from the private sector such as Dar al Arkan, Alinma Invest and Sumou to name a few. It is only by excluding government Real Estate developers can we have an accurate analysis of Retal’s standing in the market. To better understand the competitive landscape in KSA, we have sampled seven prominent developers from across the tier-1 cities and provided a brief overview of the nature of their business:
Dar Al Arkan: Founded in 1994 and based in Riyadh, Dar Al Arkan is a public shareholding company listed on the Saudi Stock Exchange, with SAR 10.8 billion in capital and SAR 26 billion in assets, making it one of the leading real estate companies in the Middle East. While Dar Al Arkan runs diverse operations, residential real estate development remains the focus of its business, delivering over 15,000 residential units across KSA.
Alargan: Founded in 1994 and headquartered in Kuwait, Alargan is a contracting company that operates across the MENA region. It established its development subsidiary in Riyadh in 2006, and has since become one of the leading real estate companies in the region. Alargan mainly develops urban communities which serve as residential, commercial and mixed-use destinations, and has in its portfolio projects in the realms of hospitality (dining, hotels and resorts), residential, healthcare and education.
Emaar Properties: Founded in 1997, Emaar Properties is a multinational real estate Development Company located in the United Arab Emirates. It is a public joint-stock company, listed on the Dubai Financial Market, and has a valuation of US$9.7 billion as of June 2018. Emaar operates internationally providing property development and management services. With six business segments and 60 active companies, Emaar has collective presence in 36 markets across the Middle East, North Africa, Pan-Asia, Europe and North America.
Alinma Investment: Launched in 2010, Alinma investment is a Saudi closed joint stock company wholly owned and established by Alinma Bank. It provides a full range of Shariah-compliant investment products and services. The firm engages in many activities, including dealing as Principal and Agent, underwriting, managing investment funds, portfolio management, arrangement, providing advisory and custodial services with respect to securities business.
Sumou Real Estate: Established in 2008, Sumou Real Estate, part of Sumou Holding, is one of the premier provider of real estate development management services in Saudi Arabia. The company supports its clients from conceptualisation and execution to facilities and asset management, and income generation. Sumou Holding Company also establishes Private Public Partnership (PPP) joint ventures with local municipalities to support flagship real estate projects in KSA.
Ebdah AlHarbash & Sons Group: Founded in 1984 in Kuwait, the group consists of industrial and trading companies.
The group operates in real estate, oil field services, aluminium industries and automotive industry, among others. The real estate division currently owns and manages many high rise apartment and commercial complexes with plans for further development to meet surging demand for housing across the region.
Jenan Real Estate Company (JREC): Established in the Eastern Province, JREC is a closed joint stock company. The company was established to fulfil the need for high quality, modern residential and commercial real estate in the Kingdom of Saudi Arabia’s Eastern Province. JREC develops properties that offer a diverse range of products, as they also provide quality, affordable housing.
Private Sector Real Estate Developers in Riyadh
The net project value of the top 7 private developers in Riyadh account for a combined 24% of the total value of all residential projects in execution. Retal comes in 1st place for the value of projects in execution in Riyadh, delivering 10,107 units worth USD 4.12 billion.
Table (3-52): Top Seven Private Sector Real Estate Developers in Riyadh (Projects in Execution)
Retal Dar al
Arkan Alargan Rafal AlBayt Maskan
Arabia Mohamad Al Habib
Net Project Value ($Mn) 4,120 1,320 200 137 80 80 40
Source: MEED
Saudi Arabia’s residential market has been a key point of focus for government initiatives over recent years with a range of regulatory, finance and supply-side reforms enacted to underpin activity in this sector.
While Retal was not on the list of developers of completed projects in Riyadh, it jumps to first place for projects in execution, with a sum of net project value more than triple its closest competitor.
Most of Retal’s projects in Riyadh occupy the mid-market segment, capturing 3.6% of the market by 2028.
Private Sector Real Estate Developers in Jeddah
The net project value of the top 7 private developers in Jeddah account for a combined 96% of the total value of all residential projects in execution, with JEC accounting for 55% of the total. Retal comes in 6th place, delivering 1,616 units worth USD 354 million.
Table (3-53): Top Seven Private Sector Real Estate Developers in Jeddah (Projects in Execution)
Jeddah Econom-
ic Company Al Shamiyah Ur-
ban Development Emaar
Properties Alinma
Invest Sumou Retal Al Masarat Construction Company Net Project
Value ($Mn) 28,157 16,550 1,923 1,524 427 354 180
Source: MEED
When it comes to residential projects currently in execution in Jeddah, Jeddah Economic Company ranks first in terms of net project value, with at $28.1Bn, or SAR 105.6Bn worth of assets.
It is worth noting that Emaar properties appeared in the list for completed projects as well as projects currently in the pipeline.
Private Sector Real Estate Developers in DMA
The net project value of all the completed residential projects from the top 7 private residential real estate developers in DMA account for a combined 38% of the total value of all completed residential projects in DMA to date. Retal is ranked third among the seven.
Table (3-54): Top Seven Private Sector Real Estate Developers in DMA (Completed Projects)
Al Harbash
Group & Sons Emaar
Properties Retal Jenan Real Estate Company (JREC)
Alargan Inter- national Real Estate Company
Rikaz Properties
King Fahd Univer- sity for Petroleum
& Minerals Net Project
Value ($Mn) 400 400 386 270 180 165 146
Source: MEED
When it comes to completed residential projects in Jeddah, Al Harbash Group & Sons and Emaar Properties are tied in first place with a sum of net project value of USD 400 million, with Retal following with a sum of net project value of USD 386 million.
Private Sector Real Estate Developers in DMA (Projects in Execution)
The net project value of the top 7 private residential real estate developers in DMA account for a combined 53% of the total value of all residential projects in execution. Retal comes in 1st place, delivering 8,807 units, worth USD 2.2 billion, more than triple its closest competitor.
Table (3-55): Top Seven Private Sector Real Estate Developers in DMA (Projects in Execution)
Retal Jenan Real Estate Com- pany (JREC)
Dhahran Techno Valley
Company
Ajdan Real Estate Com- pany, Al Oula
Anan Real Estate Com-
pany
Gulf Address Real Estate Investment
Macro Busi- ness Group Net Project
Value ($Mn) 2,238 735 480 292 198 20 18
Source: MEED
Retal is the market leader in DMA, delivering 8,807 units and reaching a market share of 19% by 2028.
In DMA, Retal’s project occupy the full spectrum of the low-med-high end markets. Delivering 8,807 residential units by 2028, Retal captures 18.6% of the market.