Interview with Ralf Schiffer,
CEO of Mogareb Company LTD
What would you say if a very well established construction company in the Kingdom told you that they could build a villa for you in almost less than 3 month?; That it uses long-lasting materials at affordable prices and that they can adjust to your wished-design and built it environmentally friendly? You would think it is a dream comes true: and you are right.
“We have a structure and a concept that allows us to complete a house of 250 to 300 square metres of living area in 50 days. This is a construction type that has never been applied in Saudi Arabia; it is not pre-cast or pre-fab and we were looking for a culture-oriented way of building houses. We have a structure that gives us the chance to apply the cultural requests of our clients matching their diversity in an environmentally friendly way while doing it up to three times faster than by a normal construction”, says convincingly Mr. Ralf Schiffer the brand-new Chief Executive Officer of Mogareb Company.
He is convinced that their new technology to build houses will revolutionise the market and create new opportunities in the sector, generate significantly employment chances in all levels and develop the middle class business in the construction sector. “We still need to discuss a lot with the government but we do expect that we will reach our goals and build between 10,000 to 15,000 houses per year in three years’ time”, he adds.
Mogareb Company will definitely benefit from the new mortgage law pushed finally by the government and on its way to be implemented. It will mean that people of Saudi Arabia will be given the chance to finance their own houses or villas as they wish through a personal mortgage.
“Houses financed through a loan should be ready in a short time with the highest quality, with a sustainable asset value and at the same time built in a cost-efficient way. This is exactly what we are offering. We use a new technology that gives the individual a chance to build his own villa much faster, environmental oriented, with more utilisation time of the asset plus modern and sustainable technologies we use”, he explains.
A NEW APPROACH TOWARDS AN IPO
Mr. Schiffer came to Saudi Arabia a couple of years ago as the CEO of Fraport Saudi Arabia, a German company awarded a huge project in Riyadh and Jeddah: the transformation of King Khaled International Airport (KKIA) and King Abdulaziz International Airport (KAIA). KKIA covers an area bigger than the neighbouring country Bahrain. His experience and his devotion to Saudi Arabia made him think it twice before leaving the country for his new post at Fraport and he opted to stay in Saudi Arabia moving onto a private local corporation that he describes as a great opportunity both for him and for Saudi Arabia: Mogareb.
And it doesn´t surprise anyone when hearing the figures: Over the past five years the company has experienced a growth of over 40 percent. “We have been growing on double digits for many years reaching 40 to 50 percent annually for the past five years. This shows a tendency of appreciation on what we do. The government believes in us and trusts our services and us. We deliver high quality projects on time and besides we have an additional reward with our employees that are very proud of working with us”.
But no company or country can keep up with such a high growth rate for too long without the necessary changes and this is why Mogareb is implementing a complete new approach starting on 2011 onwards. “We turn this company now into the next generation of companies through a 5 to 10 years development plan. At the end of this period we plan to launch an IPO”
But as Schiffer says “the preparation of a company for an IPO needs a very stable and professional development. First we are going to build Mogareb Holding and underneath it we will align the different divisions: Mogareb Contracting; Mogareb Building Innovation Company with an outside partner; we are also adding an IT service company to complement our portfolio and development approach and a company developed to serve General Contracting Services among other ideas.
The new group that Mr. Schiffer is reengineering will be based on international standards and full governance control and transparency with highly educated and trained mainly local employees “to make sure that financial investors find the right ground to put their money.”
Established almost 23 years ago and counting with a workforce of almost 800 employees, Mogareb Company has its roots in the South-West Region of Saudi Arabia, in Abha province where the first projects started. It specialised on construction of houses, schools, private villas, mosques or residential areas and the maintenance and custodian services for some of their constructions mainly for the almost 400 mosques under their portfolio.
Only a couple of years ago the company moved to Riyadh to expand its horizon while keeping the Abha office “still very important for the growth of our company” comments Mr. Schiffer. According to him, “Mogareb is undoubtedly on its way to become one of the leading companies in its field growing faster than 50 percent in the next couple of years. Companies like us will build housing capacity to almost 15,000 per year.”
STRENGTHEN THE CONSTRUCTION SECTOR
Mr. Schiffer ambitious plan still has two more powerful tentacles: he not only wants to convince Saudis to employ environmental friendly procedures and materials but also he aims to change the hierarchy of the construction sector and build a middle class layer.
With the construction industry in the top of the government agenda and billions and billions to be invested in new infrastructure and residential housing projects Mr. Schiffer asks himself: How can we ally construction companies and help to accomplish this big task?
And he answers: “The point is how we can as a company efficiently contribute to the overall implementation of that budget. Some of the big construction companies of the kingdom have long waiting lists of on-going infrastructure projects. Consuming the list one by one will take time to implement, just far too long for the growing population of Saudi Arabia to wait, especially in the residential market needs. What we need is a middle class business that provides quality, employment chances, and accountable products and implements projects in expected manner. The financing market must contribute as well by providing more flexible project financing methods. ”
According Mr. Schiffer small companies can join forces thus projects can be managed with more flexibility, more power, more accountability and more push. “The middle class market will be developed; the smaller construction companies gain more independency and financial strength. The housing projects provide tremendous chances for developing the required middle class business, employing locals in several jobs and levels and for contributing to the society development” he adds.
“The budget to satisfy the need is there. The big companies of the kingdom are engaged and do what they can do but by themselves cannot cope with it alone. The population of Saudi Arabia is growing significantly; there are a lot of people moving to the big cities that need accommodation and employment places. Thousands of small companies in the kingdom with good reputation and track record capable to support the residential housing implementation plan are available,” says Schiffer with energy and determination.
And definitely Mogareb, with its new methodology and technology, financial strength and expertise is one of the candidates to benefit from the growth of the sector but in a “green way”. “The environmental concern in Saudi is continuously building up and we want to become an ambassador for the new constructions techniques that reduce the CO2 emissions,” says Schiffer who has already set up a strategy to work with universities, high ranked officials and even some members of the society to create a greater awareness on the need to go green to preserve Saudi Arabia and ultimately our planet.