Al Akaria to set up holding firm in major restructuring, says CEO

Saudi Real Estate Co. (Al Akaria) is undergoing major restructuring to set up a new holding company and some affiliates, chief executive, Abdullah Ibrahim Al-Ayadhi, told Argaam in an exclusive interview on Wednesday.

Under the turnaround plan, Al Akaria aims to cut costs and boost profitability through forming new partnerships with strategic investors to operate in property maintenance, as well as project management.

The company may also set up supplemental units to operate in construction, providing infrastructure, public and environment services to the parent company and local market.

This move will help ensure high quality, lower costs and timely deliveries, Al-Ayadhi said.

“Two companies were established to operate in construction works and infrastructure projects. Both companies are operating efficiently and other two entities will be set up soon for property maintenance and project management, Al-Ayadhi added.

Al Akaria had earlier received regulatory approval to set up a closed, shareholding company to carry out its local and international infrastructure projects, Argaam earlier reported.

In November 2016, the Tadawul-listed firm joined hands with Turkey’s Kaya Homes to set up a SAR 100 million joint stock construction company.

Meanwhile, Al-Ayadhi attributed the company’s lower profit in Q2 2017 to unrealized losses from SAR 27 million in loan provisions.

An increase in doubtful loan provisions to SAR 16 million from SAR 9 million a year earlier also weighed on Al Akaria’s results.

In addition, general and administrative expenses increased by 57 percent due to the costs incurred for establishing new units.

Al Akaria’s projects are on track, Al-Ayadhi said, adding that off-plan sales at Al-Rimal residential project will be launched in September.

The company’s chief executive also said real estate developers should capitalize on the current market stagnation amid lower costs of building materials, to boost supply and cut unit prices.