Riyadh Development likely to unveil new realty projects over coming period: CEO

Jehad Al-Kadi CEO of Riyadh Development Co.

Riyadh Development Co.’s (ARDCO) new strategy aims to expand investments in the real estate development industry, while focusing on Riyadh city as a significant regional hub, CEO, Jehad Al-Kadi told Argaam in an interview.

Al-Kadi stated that the growth of Riyadh city drives the company’s growth.

ARDCO will likely announce new real estate development projects over the coming period, including the development of residential and office towers, logistics complexes in addition to other qualitative projects in the education sector, he indicated.

The following is the detailed interview:

Q: Why did ARDCO’s Q1 2023 financials drop by SAR 106 million year-on-year (YoY)?

A: Al-Kadi attributed this decline to the decision of Tanal Real Estate Investment and Development Co. -an associate company- to shelve plans on selling land plots to discuss their optimum usage, which weighed on the company’s profitability.

The unsold land plots account for nearly 25% of the project area, with ARDCO owning approximately 275,000 square meters (sqm).

Q: Why did ARDCO’s operating revenue increase by 13%, or SAR 8 million in Q1 2023?

A: Al-Kadi ascribed such an increase to the company’s investments in infrastructure, and the costs pertaining to the civil defence licensing, which increased occupancy rates. In addition, he also cited revenue of the new office tower and the repricing of some market services.

Q: What about the reasons behind the increase in the general and administrative expenses in Q1 2023 and even over the last few years?

A: Al-Kadi stated that additional provisions were allocated for old bad debts in addition to some advisory expenses related to the institutional development and strategy. In mid-2022, the company attracted some administrative professional candidates amid the board’s plan to achieve its ambitious strategy.

ARDCO is experiencing a significant transition, with the aim of settling the long pending issues, he noted, adding that it also renovated the infrastructure of markets and centers, which date back to 1994.

Nevertheless, ARDCO’s G&As to total revenue stood at 12% , compared to a real estate development rate of 25% for the real estate developers in 2022.

Q: Tracking the stellar performance in 2021 and 2022, the company should have expectedly pay dividends in line with the historical payments. However, ARDCO did not distribute dividends, would you tell us about the reasons?

A: Al-Kadi indicated that the company’s board of directors is committed to paying dividends on a regular basis, factoring in the balance between the dividend payment and the company’s growth strategy, according to which the company should be able to achieve its ambitious strategy as well as sustainable development. 

After Tanal project divestiture, growth and profitability represent the company’s top priority, Al-Kadi said, adding that the company is currently studying several investment opportunities, which will be unveiled in the proper timing.

Q: Why did ARDCO launch new investment strategy?

A: ARDCO’s new investment strategy came in line with the Kingdom’s launch of Riyadh strategy, which aims to double the population growth and attract international investors as well as tourists. In addition, the board was keen on leveraging the opportunities related to the launch of the Saudi capital strategy, while making the best out of ARDCO’s potential to maintain sustainability, profitability, return and growth.

Q: Tell us in brief about this investment strategy?

A: Al-Kadi stated that ARDCO reassessed the feasibility of the company’s business divisions and explored over 25 new ambitious segments, while evaluating the company’s competitiveness to determine the strategy’s target segments.

Therefore, ARDCO’s strategy aims to expand investments in the real estate development industry, focusing on the promising segments including the residential development, housing complexes, office buildings, logistics investments, as well as the educational buildings to cater for the requirements of the targeted segments via offering qualitative solutions.

The company’s strategy also seeks to invest in fruits and vegetables, aligning with its developmental role pertaining to maintaining the Kingdom’s food security.

ARDCO’s strategy is based on three pillars; building qualitative partnerships, digital transformation and sustainability in a way that would help ARDCO diversify the sources of income and improve quality of sustainable returns.

Q: Aligning with this strategy, what are the company’s objectives?

A: The company aims to turn from an investor into a real estate developer and an operations manager via an economic entity specialized in the real estate development, while generating stable returns, and obtaining economic and development privileges.

It also eyes building a diversified asset portfolio in the fields of the operating business activities as well as the real estate investments, with a special focus on Riyadh.