[First of all, we would like you to give us an overview of Al Ayed Industrial Group]
The company started in late 1395 AH with one crusher. The beginning was simple, but it was successful, praise be to God, so we tended to grow and expand, rapidly, and now we have ten crushers, and productivity is very abundant, we started production in crushers in 1976, and currently we produce 21 thousand cubic meters (equivalent to approximately 32 thousand tons) of sand and gravel, and our company is one of the largest producers of building materials in the Kingdom, our share of the Saudi market represents 62%, and we have a giant transportation fleet to serve our customers anywhere.
We fulfill our financial obligations to others on a daily basis, we do not sleep with a debt, and we do not resort to bank loans, in addition to that from the beginning we give all our loyalty to our profession, because the reason for success in the profession is loyalty to it, it is the source of goals, and development comes after that, we started with three types, and now we produce 16 varieties, then we went to another field to invest in the night industry, and we started producing five varieties, and now we reached 162 varieties of mechanisms in all purposes for water, gas, oil, fire etc...
We have become supporting the national economy with 165 different varieties of liat, so much so that European countries cannot compete with us in the Saudi market, and we stopped importing even from China, and we now compete with established exporters even in quality, because we started where the Germans ended, we brought production lines from Germany to ensure our production, until we reached the highest level of quality with consumer testimony, and we started exporting to the same European countries that we were importing from, and they are currently dependent on our products.
What are the difficulties in this regard?
[What about the difficulties you faced in the beginning? The state supports us from all sides, except for one issue, which is the issue of workers, and we are facing an issue with Saudization, although we have implemented the Saudization rate, but we find it difficult to choose national competencies.
[In the field of contracting, we started exporting to European countries where we used to import.
[In the field of contracting, how did you get into this sector, and what are your projects? We are not contractors, and we have never been contractors, we are financiers of contractors, where we financed King Saud University, Imam Mohammed bin Saud University, the diplomatic neighborhood, and most of the huge bridges on the ring road we financed, because we maintained the excellent specifications, and we financed these projects with building materials such as gravel, sand and agglomerate.
[After the great transformation, we have implemented the Saudization rate, but we have implemented the Saudization rate, but we have not.
[After the major shift in your business, did you face a change in the volume of demand? Crushers went through two phases, the first from 1395 AD to 1404 AH, and the second rise from 1426 AH to the present, and we are at a height and huge demand for building materials, where we are now living the best opportunities that have passed economically, because everyone is benefiting, and the policy of the Custodian of the Two Holy Mosques depends on increasing spending on major projects and infrastructure, which opened more opportunities for everyone, and the market movement continued to rotate.
[You said that we are now at a height and a huge demand for building materials, where we are now living the best opportunities that have passed economically, because everyone is benefiting.
[You said that we are now in the second phase of the rise, when do you expect this phase to go down? Since this is a healthy rally, I imagine it will be long-lasting, and what is meant by healthy is that it is not caused by other unusual reasons such as wars or a certain period, but it may become quiet and not atrophied.
With your experience, you said that we are now in the second phase of the rally, when do you expect this phase to turn down?
[Based on your experience, do you think real estate prices are now overpriced or reasonable? They are reasonable for traders, but for young beginners it is very difficult, unless there are facilities for them.
[Facilitation...
[Facilitation, in what way? Facilitation by being given hope that he will own a house for him and his family, because the average salaries for Saudis are now considered low, in addition to the fact that young people are used to finding everything simply, and not like before, even if some facilities are provided to him, he finds it little because they have not tasted the taste of suffering that we lived, unlike our previous generation, if we got something we rejoiced, while our children now if they get something they do not consider it valuable, they care more about luxuries than necessities, so their motivation has become weak and dependent.
We have a lot of people who have become weak and dependent.
[What is the strangest thing you have encountered in real estate in the last ten years and will it face a collapse? We are now at the beginning of the end of the rise, and it is assumed that the real estate does not rise further, because it is not in everyone's interest if it rises, and the best things are in the middle.
[We notice many properties on King Fahd Road and Al Olaya Public Road, raising ”for rent” signs, especially commercial towers, what is your comment on the current situation, is the volume of demand commensurate with supply? The demand will continue, but it will become less than the rush of real estate people, and their rush is more than the expected demand, for example the markets crowded in Riyadh, but it affected its success, as the supply becomes repetitive, and the situation may now reach the degree of inflation, and if we wait until we succeed is better than continuing.
[Do you expect the volume of demand for administrative offices to rise to match the volume of supply, after the completion of the huge King Abdullah Financial Center project, King Saud University projects and other major projects? No, I imagine that there will be attractive offers due to the large supply, and there will be vacant offices, and I remember that Al Olaya went through such a stage, as it was in 1404 and 1406 AH, the rent was 30,000 riyals, and decreased to 20,000, to the point that you see windows indicating abandoned offices, no one is in them, so I expect that the supply will exceed the size of the demand.
[What about residential? For residential, you find that the age group from 15 to 25 years is almost the largest, and we have a large number of young people, and all of them will need homes in the future, especially now that young people after marriage have moved from the parents“ house, knowing that staying with their parents is better, especially at the beginning of married life, and I expect that the need for residential real estate will continue for a period extending to five years, and I expect after five years the supply will be greater, because the majority will build and sell, especially since Riyadh is expandable and not like some cities limited expansion, in addition to the large population and ambitions are also large.
Riyadh is a city of expansion.
[For the existing schemes that now have real estate contributions, will there be a decrease in land? I expect land prices to stabilize for a while, and this reason may lead to a drop in prices, as the investor will look for another investment area.
[Mortgage, do you expect it to facilitate the ownership of real estate? Mortgage is a new experience and depends on the way it is managed, as it has a positive and negative side, because the greater the number of years of the mortgage, the more negative it is.
[For fast prefabricated houses, what are the solutions that address the issue of construction speed? As for prefabricated villas, they are not as expensive as traditional reinforced construction, but the quality may be lower than reinforced, and I expect that they do not suit the desire of the Saudi citizen, and so far they have not succeeded in Saudi Arabia.
<Don't you see that the quality of construction is less than before, so you see a building built 25 years ago in better condition than a building built 10 years ago? The reason is the lack of diligence in building foundations, and the low quality of some raw materials on the one hand, and on the other hand the quality of the land, people are now building in valleys and on burial grounds, and this causes collapses of the building, while if the building is built on solid and strong ground, this prolongs the life of the building.
[Don't you see the issue of the lack of diligence in building foundations?
[Don't you see that the water issue in Riyadh is getting worse with the population density?
Unfortunately, Riyadh is going through the beginning of a water crisis, and the Kingdom as well. Some believe that the issue is the transportation of water from the sea, but the real issue is finding water.
<When we asked water transportation contractors about the water situation in Riyadh, they said that the infrastructure of water connections in Riyadh is dilapidated and needs to be replaced. What do you think?]
This is true, which wastes about 30% of the total water, and I expect that the waste is now less, but the advantage is that if the water is cut off for three days by the authority, the waste is interrupted, and water waste is not underestimated, as it is one of the most important factors on which the country's strategy is built and includes several factors, the most important of which are security, electricity, water, and communications: Security, electricity, water, and communications.
[Assuming that the solution to the issue of increasing water consumption is desalination of seawater, what is the solution if our seas are in danger of oil pollution, is it easy to purify and desalinate it? There are precautions taken with ships crossing the straits, where what they carry is checked, and if they have excess cargo that needs to be unloaded, they are required to unload it on the high seas before they reach the seas surrounding the Kingdom, or a tax is imposed on them.
[As your company finances contractors and manufacturers of building materials, how do you see prices at the moment, and what are your expectations for the future? I see that they are high now, because the prices at which we sell are considered large and exaggerated, and not by our desire.
[So, do you see that the material that is high right now is steel? I expect that steel will go down, because there is now external competition, and not a monopoly on internal factories.
[What is the reason for the high construction costs? Just manipulation by traders, where there is no oversight or accountability, because these prices have no basis.
[Since your company is a manufacturer, what is your position on the rise? We are manufacturers who rely in pricing on calculating the cost of production, and raw materials are one of the main factors in calculating the cost, so if it goes up, we have to raise the price, but if it goes down, we lower the price.
[What are the materials that have risen for you? Equipment prices have doubled, in addition to the fact that we now pay fees to the state, higher labor wages, and higher raw materials.
[Prices increased by a certain percentage, did they increase for the consumer by the same percentage or more? No, it went up for the consumer by 60%, while it went up for us by 22%, and the consumer is always the victim.
[The price of labor now in the market has not increased significantly, and some of those who are building their houses now have agreed with contractors to build their houses with bone without materials for 90 riyals per meter, what is your comment on that? Strange, previously the price was from 70 to 80 riyals, but now we hear that the price of the bone has increased, knowing that the price of the formwork has increased from the previous, its price rose from 110 to 120 riyals, now it has become 220.
Now you have agreed with contractors to build their houses without materials at 90 riyals per meter, what are your comments?
[You are now a financier of the contractor who does the casting, is there anything that has risen on him? Yes, many things have risen, cement has risen by a small percentage, as for grit, labor, and even pomp, their prices have risen, and all engines have doubled in price, and it appears that there are unwritten agreements between traders.
[Did the decision to keep crushers away from Riyadh harm the market or increase the price? Yes, it increased the price of soil to 100%, because the distance distance entails more expenses.
[Are there crushers operating inside the city, and what about the north? No, but there are crushers in the east, west and south that feed the north.
[Do you expect the real estate and construction market to shrink? No, because the Kingdom's geographical nature helps to expand horizontally, in addition to the need for housing units has not yet been met, and as we said there will be a decline, but not sharply.
<Some fear the withdrawal of liquidity, especially after it was announced that there are companies that will be put on the market for real estate investment, do you expect this to happen? It does not affect, because the demand will be enormous now and in the future, because now the prices are overpriced, and the rents as well.
[What is your advice for someone who has a small amount of money, not enough to buy land or a house, and has no housing? There are small factories such as a dental lab, which costs 50 thousand dollars, and this person can invest this amount of money in that factory, and every two months his factory will gradually expand as a result of working hard, I advise them to go to industry, move it and return to real estate.
What is your advice to a person with a small amount of money, not enough to buy a land and a house, and no housing.
[We now notice the migration of Saudi families from some neighborhoods, what are your comments on that?
This happens because the old areas are starting to be filled with expatriates and workers, which annoys Saudi families, forcing them to move out of these areas.
We now see some companies and institutions have started renting these villas that have been abandoned by their people, and are housing their workers in them, or turning them into offices, and this is because they have not solved the issue of workers” housing, workers' housing is an urgent necessity, how do you want an industrial country without labor, and this labor how do you want it without housing, workers' housing is important to reconsider and find solutions and have special specifications and standards, and there are many investors waiting for this but there is no system for this issue.
You believe that workers' housing is important to reconsider and find solutions for it, and have special specifications and standards, and there are many investors waiting for this, but there is no system for this issue.
[Do you think the saying: "Real estate is sick, but not dead" is true? Yes.
[In your estimation, what are the success factors of a merchant? Honesty, observing God in his actions, giving everyone his due.
