Mohammed Al Karashi
Governor of the Public Pension Agency
The Public Pension Agency (PPA) is the government agency that manages the retirement benefits of all military and civilian government employees. It manages its investment portfolio through SAMA and follows the general Saudi trend of investing in government bonds rather than volatile equities. However, during the past two years it has increased its shares in local companies, partly to compensate for the shortage of traditional sources of financing, but also to take advantage of a growing local market.
“We currently support 915,000 people, 320,000 of which are pensioners and the rest dependents - wives and children - of deceased retirees, who remain entitled to the full benefit,” says the governor of the Public Pension Agency, Mr. Mohammed Al-Karashi. “We provide social security, but our mandate also obliges us to invest the available balance, and our board of directors is very eager to diversify our investment portfolio. So we spread the risk over various securities, equities and real estate, both locally and internationally.”
The PPA has invested in 52 companies covering virtually every economic sector from agriculture to petrochemicals and from pharmaceuticals to banking and insurance. “Currently, our portfolio is about 45% international and 55% domestic,” Mr Al-Karashi explains, adding that there are no hard and fast limits to these numbers and investment goes where the agency sees the best opportunities.
“Internationally, our main areas of interest are the Eurozone, the US, Japan and other East Asian countries. We buy either fixed income securities or equities of prime companies and banks. Nationally, we have in the past invested in residential construction – notably two major projects in Mecca and the famous Diplomatic Quarter of Riyadh – as well as in office space and the retail market. But due both to the current unstable conditions of the global economy and the intrinsic value of the investment, the most attractive proposals for us now are the government-driven mega-projects that are complementing private sector activities in the KSA.”
Although the PPA is a government agency, Al-Karashi insists that bureaucratic procedures do not hamper its operations: “There is a well-established process of decision-making. We do need to go to our investment committee to get approval for decisions, but this can be done in one day. It is not cumbersome or time-consuming and doesn't limit our reaction speed. On the other hand being a government agency works to our immense advantage. We are very well supported by the government, whether it is through creating incentives to invest in our projects or giving us licenses and permits easily and making exceptions for our projects as for the number of floors allowed and many other details. They realise we are working with the money of people who served the country well and deserve their retirement benefits,” explains the governor of the PPA.
In 2009, the PPA created Rayadah Investment Company (RIC) as a subsidiary to invest in the growing real estate sector and run one of the largest developments of the moment in Saudi Arabia, the King Abdullah Financial District (KAFD).
KING ABDULLAH FINANCIAL DISTRICT - THE NEW FINANCIAL HUB OF THE MIDDLE EAST
The crown of the amazing financial achievement of Saudi Arabia is yet to be put in place: the $10 billion King Abdullah Financial District (KAFD) currently under construction on a 1.6 square kilometre site in the north of the capital Riyadh. When completed in 2012, the district is expected to transform KSA, the largest GCC country, into the strongest financial centre of the Middle East consolidating its position as the Middle East financial capital. In other words, KAFD is designed to become the Middle Eastern Wall Street.
With over 3 million m² of floor space, KAFD comprises not only smart offices fully integrated into a state-of-the-art ICT network, but also residential buildings and hotels, conference centres, recreational facilities, retail spaces and even a new financial academy offering courses up to master's level. All structures will be built to comply with LEED environmental certifications.
A green city for the capital markets
“KAFD will become an important hub and meeting point. It is designed to promote interaction and enhance transactions between national and global institutions and players by concentrating them geographically,” says the PPA's governor, Mr. Mohammed A. Al-Karashi. “We expect the district to reflect the financial and economic dimensions of the kingdom, which are considerable. We are working on every level to make it the most advanced dedicated financial centre in the world and have already signed MOUs (memoranda of understanding) with major global players.”
Government institutions will serve as 'anchor stores' in this financial 'mall' and will be the first occupants. The Tadawul stock exchange as well as all other commodities markets will move to KAFD, to be joined by the headquarters of the Central GCC Bank, representing the imminent monetary union of a number of Gulf countries. “A number of major local banks has already signed up too, as well as some offshore banks, insurance companies, brokers, and the World Trade Centre. A financial academy will be set up in cooperation with a renowned international institution.”
King Abdullah Financial District will benefit directly of the membership of Saudi Arabia in the WTO, which opened the country's financial industry to the world in 2005. KSA’s financial sector is more attractive than ever after surfing almost untouched through a global financial crisis. Its sound financial system is also one of the leaders in Islamic finances with a strong trajectory on shariah-compliant financial services, sukuks and bonds, and with assets ranking at top positions worldwide.
A unique location with a unique design
For a project meant to change the face of Riyadh forever, no expense is too high. The developers have engaged some of the greatest architects of our time. Foster, Gensler and Bruder are some of the award-winning designers that have participated in the creation of the unique buildings at KAFD. The one-of-a-kind master plan was designed as a leaf-shaped site divided into different areas around the Financial Plaza, where five landmark buildings will house the Capital Market Authority (CMA), the World Trade Centre (WTC), the GCC Central Bank, Tadawul and the SAMBA Financial Group, representing the main focus of the district’s primary activity and visual drama.
On the first floor, a pedestrian system of skywalks will connect the Financial Plaza with the rest of the district. A monorail with six stations will encircle the commercial node. One of the monorail stations within the Leaf will connect to the proposed Light Railway Train (LRT) station on Olaya Street nearby. Indeed, the site is strategically located in the commercial corridor of Riyadh with direct access to the highway network. The conference centre, the spas and attractions like the aquarium, the Science Museum or the Grand Mosque will complement the city at both ends of the Wadi, a linear traffic-free connection at 5.5m below ground level.
Gross Site Area: 1,608,029 sqm
Total Floor space Provision: 3,085,026 sqm
Total Parking Provision: 61,472 spaces
Total Parking Floor space: 2,302,781 sqm
Saleable Floor space: 2,853,738 sqm
Office: 1,658,117 sqm
Residential: 626,811 sqm
Hotel: 152,511 sqm
Business: 52,838 sqm
Convention & Exhibition: 52,550 sqm
Retail: 310,912 sqm
Government and Community: 71,487 sqm
Attractors: 159,878 sqm
The highest building in the project will be: CMA headquarters at 385 m height
Our latest investment report on Kuwait was recently published in one of the leading Spanish dailies, ABC. FindMe in Kuwait explores the economic perspectives of Kuwait and the country´s future plans to compete with its fast developing neighbours. Once the leading country of the Gulf, Kuwait has remained silent for the past decade. And although many would like to see faster changes, Kuwait is moving, at its pace, to them. Inexorably. Learn about who is who in Kuwait and read what the leaders say about their own future in our upcoming release: FindMe in Kuwait Mobile app.
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