Dr. Nazih Al Hamad
General Manager of
a Subsidiary of Dar Al Arkan
In 2007 it established its Affordable House subsidiary to cater to the growing low and middle-income segment of the market with considerable success. Dar Al-Arkan converted to a joint stock company in 2005 and ﬁrst listed its shares onthe Saudi Stock Exchange in December 2007. In December 2008 its capital stood at SAR 7.2 billion (US$1.92 billion), divided into 720 million shares of par value of SR 10 each (US$2.67). The capital was increased signiﬁcantly in 2008 by issuing 180 million bonus shares of par value of SR10 each to its current shareholders, in a non-cash issuance ﬁnanced through re- tained earnings.
Affordable House's modus operandi consists in identifying suitable locations for its projects, designing standardized housing units and the layout of the entire project, and then having its technical department supervise the actual construction work that is outsourced to contractors. The company handles the marketing and sales processes too. The main challenge in marketing its products in the under- supplied market the company caters for is not to ﬁnd buyers but to help them ﬁnance their purchase. “We are eagerly awaiting the mortgage-ﬁnance law announced by the government since 2005, but unfortunately it has not arrived yet. In the meantime, we are working with various private-sector ﬁnancial institutions to develop formulas to help buyers ﬁnance their homes. Usually, these institutions ﬁnance an average of 9% of the purchase price only. Buyers can obtain another 9% as a loan or grant from the government, and the rest is their own capital, or that provided by their family. We work with several banks to offer a formula covering a larger part of the price.” Not surprisingly, the company's formula has turned out to be a success,
and Affordable House is receiving enough orders to keep it
busy for a long time to come. “In 2010 and 2011 alone, we are building 1,500 housing units in various development projects in Riyadh and else- where”, says Dr. Al-Hamad.
One development planned is the Shams Al-Arous Project, which will be located in the east of Jeddah on an area of over three million square meters and developed as a modern integrated master planned community. Currently under construction is the Al Tilal Project in Medina, which will eventually cover a total area estimated at 2.2 million square meters, with the ﬁrst phase comprising 499 villas in traditional Arabic and neoclassical architectural de- sign. Then there is Qasr Khozam, maybe the most ambitious residential project in the history of the Kingdom of Saudi Arabia, planned as cooperation between Dar Al- Arkan and the Jeddah Development and Urban Regeneration Company (JDURC) to rejuvenate the city of Jeddah.