Performance Review

Real Estate Sector

SEDCO Holding is powering the development of Saudi Arabia’s real estate sector through operating companies that create the infrastructure, residential and commercial properties essential to long-term economic growth. Regional and international assets span Asia, Africa, the USA and Europe.

SEDCO
Development

As part of SEDCO Holding’s overall reorganization of real estate activities in 2019, SEDCO Development was downsized and its Board of Directors was replaced by an Executive Committee.

Zuhair Hamzah
Chief Executive Officer

The objective was to implement a more focused and sustainable strategy, reorienting it to mainly support SEDCO projects. External clients were maintained for development support advisory services, on a selective basis.

Since the reorganization, SEDCO Development has supported the Group on several existing and potential projects. These include the Al-Nawras mixed-use development on Jeddah Corniche, Kilo X Kilo in Obhur, and the Al Rosaifah project in Makkah. For an external client, in 2021 the company provided development advisory services on the development of a luxurious five-star hotel in Madinah.

Over the coming year, the company expects to sign a development management agreement for a project in the Asir Region, in addition initiating the development of Al Nawras project and providing support for Kilo X Kilo. It will also support the repositioning of Galleria, for the hotel and the retail elements.

Al Mahmal
Development

Al Mahmal Development Company is a property manager and developer which was established in 2004 to lease and manage the Al Mahmal Shopping Center in Jeddah and the adjacent parking building. The mall, which opened in 1987, is 80% owned by SEDCO Holding and is one of the city’s best-known landmarks.

Rami Al-Maddah
Chief Executive Officer

“AL MAHMAL SHOPPING CENTER’S POPULARITY HAS ENCOURAGED THE COMPANY TO REPOSITION AND REMERCHANDISE THE MALL TO REFRESH ITS PRODUCT MIX.”

Restrictions on global and religious travel throughout the Covid-19 period severely impacted visits to the Al Mahmal Shopping Center, particularly by the many pilgrims en route to Makkah and Madinah. Further lockdowns and ongoing developments in downtown Jeddah also adversely affected the wider retail sector.

But the retail destination’s ongoing popularity – with 100% tenancy occupancy – has encouraged Al Mahmal Development to reposition and remerchandise the mall to refresh its product mix and drive revenue increases.

The new strategy involves exiting the in-house property management role and outsourcing this to an external provider. We are assessing vendor contracts to maximize value and incentivizing tenants to continue operations and so maintain occupancy levels. The tenant mix is also being reviewed, ultimately to reposition the Center as an ideal venue for government-sponsored and other events.

To date, we have completed the handover of property management activities to Intimaa – including strategies for marketing, tenant mix and leasing – and we have concluded the first phase of the property operations restructuring.

We also applied a second-round incentive scheme for tenants. Further assessment and strategy development work, with a special focus on Vision 2030, is ongoing.

Al Mahmal Development wants the Center to become a major local employer for Saudis. The on-site management function, for example, is currently operated by a team 100% comprised of Saudi employees, as well as a major draw for tourists to the historic Balad area of the city.

Looking ahead to 2022, we anticipate further enhancements to the Center and how it functions, including potentially major changes in the tenant mix and its overall use.

Red Sea Markets

Red Sea Markets Company owns and manages Red Sea Mall, the Western region’s only mall with a connected five-star hotel and a premium office tower. Established in 2004, the company is 49.5% owned by SEDCO Holding.

Geji Masilela
Chief Executive Officer

"THERE WERE SEVERAL EXCITING OPENINGS AND RELAUNCHES DURING THE YEAR, INCLUDING CHANEL PERFUMES, TIM HORTONS, VENCHI, DR VRANJES, SEPHORA, OVERDOSE AND MCM."

The 156-room hotel, which offers spa, banqueting and wedding hall facilities, is leased to Elaf, SEDCO’s hospitality subsidiary.

Our major asset, Red Sea Mall was required to close in early February but this proved to be short-lived. Footfall for the year consolidated at 14 million visitors, which was achieved despite strict capacity controls imposed in response to Covid-19. Retailer trading density showed an upward trend across the year, although some challenges within the wider retail sector remained.

Red Sea Mall continued to host visitors under pandemic guidelines, but with a focus on ensuring the thorough implementation of all protocols. Following spot audits and inspections, the authorities praised Red Sea Mall for setting an example in how to host visitors under the exceptional circumstances.

In the face of these challenges, it is pleasing to report that the mall is undergoing a tenant mix upgrade, with ZARA taking beneficial occupation and scheduled to open for trade in the first half of 2022. There were several other exciting openings and relaunches during the year, including Chanel perfumes, Tim Hortons, Venchi, Dr Vranjes, Sephora, Overdose and MCM.

Red Sea Mall received five industry awards at the Global Business Leader and MENA Retail Congress Awards.

Our mall management outsource, Intimaa, has met the 100% Saudization requirement since introduction in 2021. We have successfully refreshed the mall’s brand which can be experienced through the mall’s new website and social media accounts.

Looking ahead to 2022, Red Sea Mall will continue to prioritize upgrading its tenant mix, in addition to refurbishing a number of facilities such as bathrooms and parking. We will also formally launch our new development project in Abha, encompassing retail, hospitality, entertainment and medical facilities.

Al Mahmal Facilities
Management

Al Mahmal Facilities Management was established in 1988 to support Saudi Arabia’s burgeoning real estate sector in creating the infrastructure, residential and commercial properties essential to long-term economic growth.

Rami Al-Maddah
Chief Executive Officer

"WITH THE ADDITION OF NEW CLIENTS AND CONTRACTS, WE CONTINUED OUR EXPANSION ACROSS THE KINGDOM’S NORTHERN, EASTERN AND SOUTHERN REGIONS."

Al Mahmal supports several large projects and customers throughout the Kingdom in sectors such as commercial, residential, banking, health and industrial premises.

Having taken extensive measures to limit the spread of Covid-19, only 4% of our 2,800 staff were infected. With a near fully-functioning workforce, we met the revenue targets for 2021, securing significant contracts with new clients and renewing existing ones.

A number of these were signed with prestigious clients, including the Ministry of Culture; Saudi Air Navigation Services (HQ complex and 28 airports); King Abdullah Port at KAEC; Tabuk Gallery Mall; Nahdi Medical Company; and Dr. Bakhsh Hospital.

With the addition of new clients and contracts, we continued our expansion across the Kingdom’s Northern, Eastern – where a new branch office was established – and Southern regions.

The IT department launched several initiatives during the year to improve organizational efficiency, monitoring and excellence, including a major upgrade to the latest version of Oracle ERP (E-Business Suite); ERP training modules on finance, procurement and enterprise asset management; rolling out the QHRMS System MSS and ESS to head office, regional offices and projects; improving IT security at the Riyadh office; and providing crucial visual reporting to the maintenance team about the performance of service projects, using Oracle Analytics Cloud.

Our Saudization level was maintained at Green status, with the hiring of 81 Saudi nationals, and approximately SAR 1 million was invested in employee training and development programs.

Al Mahmal continued its support for the community by providing services to several schools to create a healthier working environment for teachers and students. We also received an appreciation award from the National Guard Administration for sponsoring a project by architecture students at King Abdulaziz University to design housing for the National Guard.

Looking to the year ahead, we are planning to achieve certification in LEED Management, CBAHI, ISO 5000; to launch several IT initiatives; to expand further in the Southern region; to carry out a full IT infrastructure evaluation of the Dammam office; and to expand into the entertainment sector.

Intimaa

Intimaa is a premier provider of full-spectrum real estate services in Saudi Arabia. The company was founded in 1997 as a wholly owned SEDCO subsidiary and offers its clients property, mall and project management, real-estate advisory, sales and consultation services.

Maher F. Luqman
Chief Executive Officer

"INTIMAA AIMS TO BECOME A DRIVING FORCE IN THE REAL-ESTATE SERVICES INDUSTRY, A MAJOR NON-OIL SECTOR AND AN ECONOMIC DIVERSIFICATION GOAL OF VISION 2030."

The real estate market in Jeddah continued to be subdued, but there were signs of a rebound in the retail sector and the global economic situation appeared to bottom out later in the year. This mitigated increasing cost pressures and the spill-over effects of Covid-19.

These included the lockdown of commercial centers at the start of the year, which greatly impacted tenants, landlords and other stakeholders, and demanded a coordinated solution from Intimaa, as property manager. We created a scenario-based approach to help landlords deal with the impact of lockdowns and to mitigate the longer-term negative effects.

Operationally, we enjoyed several successes during the year, securing 80% leasing of Mujan Park, a new mall in Khamis Mushayt and successfully completing its trial opening. We achieved record collections for Red Sea Mall; signed a contract to manage the Al Mahmal Center and completed the handover to assume its property management; and we maintained average occupancy at more than 90% across our portfolio.

We also won the Retail Congress MENA Award for Best Direct Sales Event for the Red Sea Mall Winter Festival 2021.

Intimaa’s Saudization drive continued apace, with the workforces of several of our business units now 100% Saudi. We have had plans for several years to ensure priority is given to Saudis for opportunities at all levels of the organization. We remain firmly on track to satisfy regulations that require all real estate related businesses be 70% Saudi and have embarked on a major drive to recruit Saudi female employees.

Intimaa aims to become a driving force in the real-estate services industry. In the year ahead, we plan to undertake a full organizational review with a view to enhancing efficiency and effectiveness. We will continue to target a niche for ourselves as a specialized retail center manager and will conduct a market study to determine Intimaa’s market penetration and market development potential.

Saudi Arabia
Portfolio

SEDCO’s geographic exposure covers the main cities such as Jeddah, Makkah, Madinah, Riyadh, Al Khobar, Taif and Jazan.

"OUR ASSETS COVER MAJOR CITIES AND INCLUDE FULLY-OWNED MULTI-USE COMPOUNDS IN JEDDAH, AL-KHOBAR AND RIYADH."

Retail and Hospitality

Hotel Galleria – one of Jeddah’s flagship buildings combines a five-star hotel and upscale retail mall.
Kindah Hotel by Elaf at Makkah
Bakkah Hotel by Elaf at Makkah Red Sea Mall – one of the largest mixed-use retail developments in Saudi Arabia.
Al Mahmal Center – one of Jeddah’s landmarks.
Apart from these major assets, the portfolio contains many more properties located across the Kingdom’s major cities, including strip retail developments in Jeddah, Riyadh and Al Khobar.

Residential

Our assets cover major cities and include fully owned by multi-use compounds in Jeddah, Khobar and Riyadh. We also offer serviced apartments and strip retail areas.

Industrial

SEDCO owns warehouses in Jeddah and Jizan.

Investment

In 2012, SEDCO acquired a strategic stake in SEDCO Capital Real Estate Income Fund I, the Saudi income-generating fund. The fund has secured properties in the Kingdom’s residential, retail and office sectors.

Land bank

SEDCO has a significant bank of prime lands with sites in Riyadh, Taif, Madinah, Abha, Yanbu, Makkah, Jizan and Jeddah.

Regional and
International
Portfolios

SEDCO’s portfolio follows a balanced strategy and is diversified geographically and by operating sector.

"INTERNATIONALLY, SEDCO OVERSEES A PORTFOLIO RANGING FROM HIGH-YIELD DEVELOPMENTS IN GLOBAL CITIES TO CAPITAL-GAIN INVESTMENTS AND LAND."

Asia and Africa

SEDCO’s Middle East portfolio includes investments and land in the UAE, Egypt, Lebanon, and Bahrain, and investments in funds and assets in Vietnam and Indonesia.

The regional portfolio is well diversified across sectors that include retail and hospitality, as well as residential and industrial complexes.

USA and Europe

Internationally, SEDCO oversees a portfolio ranging from high-yield developments in global cities to capital-gain investments and land. SEDCO’s international assets are located in America and Europe.

We have optimized our international portfolio, with well-timed divestments and new deployments gathering pace. Income-generating properties recorded strong occupancy and have delivered stable returns.

SEDCO is focusing internationally on Grade A assets that generate sustainable longterm net revenues. The international real estate portfolio follows a balanced strategy and is diversified geographically and by sector..

It currently includes a diverse range of real estate spanning retail, office, logistics and healthcare, mainly across America and Europe.