KSA: for the high profit of commercial centers, all RE company's are looking to launch more centers in different areas.
Saturday 2nd July 2005, series 9713 Riyadh: musaed al zayani As the volume of commercial businesses is increasing in the Saudi market, especially partition and market sectors, and under the need in the country for tourism and entertainment areas, many investors invested in Malls construction all over the Kingdom.
According to Real Estate sources this overgrowth in Malls construction is due to the satisfaction of the customers whether in finding their needs or to fill their different needs in entertainment like finding restaurants and different markets or ground play for their children in a closed air-conditioned area.
The sources add that the families and the children in all cities of Saudi Arabia prefer to spend the weekends at the malls which fulfill all their needs and tastes especially the one which includes Hypermarket which recently started to grow in the major cities like Giant, Carrefour, Giant stores, Azizia Panda and it attracted lots of customers and visitors and for this reason lots of trade mark shops opened branches in these Malls.
He finally pointed out that lot of major real estate companies which work in the food industry to invest in the Malls like Safola Company which invested 240 millions Saudi Riyals (64 millions $) in the market sector throughout the second half of this year, the ministry of Municipal Affairs required minimum qualifications of the basic requirements that should be present in commercial and housing projects. The purpose of this is to simplify the work that is to be done by municipals in order to give license for such projects under scientific basis; to which they will be implied. The ministry stresses that the goal of these requirements is to simplify the process of investment for potential investors, such as that the commercial centers has a modern and architectural style that goes with the progress of this country. The current projects are unrestricted before issuing these requirements; under the condition that this will not affect the public safety. And it gives two years notice to correct their conditions to comply with the needed requirements. RE investors note that the RE and housing growth in KSA has added in the increase of investments in commercial centers that exceed 2500 center scattered around KSA, and that also exceeds billions of dollars of investments.
Riyadh –population of more than 4.5 million and growth rate that exceeds 7%-is considered the lead of having such a huge number of commercial center; this is apparent through al mamlakah with three levels; one in which is for women and the other two for general public; al mamlakah is a new concept of commercial centers. Also al faysaliah that is located in the high rise at olaya street middle of Riyadh. Such centers and malls attract a lot of Riyadh residence along with near municipals.
The high competition was the reason of launching new centers at olaya area, until now having around 12 centers; al mamlakah, al faysaliah, olaya mall, al mousa center, al aqarya (which is three connected malls; aiming for the fourth), al basateen center owned by amjad company which provides a new idea in the shopping world, al nimir center, al kheriji, two centers for al muqren group near al mamlaka tour, tiba and owayes markets, saad al rosas center. All of which contributed in the increase of land in that area to reach 8000 riyals per meter , along with prince Abdullah road that encompasses a number of commercial centers such as sahara and hayat mall owned by al habib RE company which is worth of 350 million riyals. As for the centers at circle road there is al majd market, Granada center owned by insurance public institute, bushra female market. The high demand on commercial centers is due to the high profitability of feasibility study and ROI.
In west of Riyadh al badeya mall is distinguished, owned by abdul mohsen al mokren and brother group, and it is located in badeya area, it is estimated to cost more than 130 million riyals (34.6) million dollars, and it is located in 35000 square meters; containing more than 260 shop.
On the other hand, Jeddah city comes in the second rate of having chopping and commercial malls. This has happened in the last three years as huge number of centers has been open since then. The reason for this is that Jeddah is the gate to mekkah, also it’s a stop for all pilmirage; and considered to be the number one tourist city in KSA in the summer time. As it is located near the red sea and its nearness to madina and mekkah. Therefore those are the reasons of the high ROI for having such a huge number of centers.
At this time; more centers are under construction. One of which worth mentioning is the centers located at prince Muhammad bin abdulaziz road. Having around 6 malls, Jeddah mall, sultan mall, lo mall, bin hamran center and sooq tujjar Jeddah. All of which contributed in the increase of price of the square meter to 13000 riyals. Also medinnah road has al aziziah mall, al muhmal souq (city center), al kornesh owned by al sadan RE company; that is estimated for the value of 500 million riyals (133 million dollars) containing 2600 shop on a 350000 square meter.
At abha, they are witnessing the launching of the first modern style chopping mall. Al habib RE Company announced the launching abha mega mall beginning of august, for the value of 100 million riyals (26.6 million dollars) located on a 50000 square meters.
Engineer saleh al habib the business development manager states that at Mohammed al habib RE Company's reason for increasing the investment in commercial centers is due to the high increase of population, which is considered from the highest in the world, also the high evolution in the shopping concept and the new thinking. In which was able to attract large companies and visitors, and entering the new idea of hyper markets. Also due to the WTO, new investors in local markets and finally the high expectations of increase in economics. Along with what the government has provided in facilitating the procedures.
The business development manager at al habib RE Company has expected that the centers market will reach the point of saturation in the making and launching of commercial centers, which will affect the current centers in a way that will lead to the decrease of their performance. While prosperity and success will only be to the malls which provide full services.
Al Habib pointed out that the industry of commercial centers is considered one of the most risky industries because it does not accept partly solved solutions and so it is highly profitable if it succeed.
Al Habib mentioned that Mohamad Al Habib Company is considered to be one of the oldest RE companies that work on launching commercial centers for 32 years. As it has built the first commercial center in Riyadh "mekkah center" which the first idea of modern centers has been applied. Afterwards more centers have been launched such as tebah, al andalus and the business Saudi center. At this time the company is seeking to construct more projects at different areas of the kingdom, at this time hayat mall is being under construction, al andalus center in Jeddah, al salam plaza in al madina and mega mall in abha , nijran plaza, and in khobar jarir plaza.