Our conversation with Mr. Ayed bin Abdulrahman Al-Ayed, General Manager of Al-Ayed Industrial Group, has a special taste, full of frankness and honesty, and the group, which now holds the lion's share of the building materials market in the Kingdom of 62%, with a huge transportation fleet that transports materials to customers in any location, is a model for the ambitious company that started from scratch to become one of the largest building materials companies in the Kingdom. We asked him about the stages of development of the company that started with one crusher more than thirty years ago to jump to ten crushers, and how the company entered the world of industry to start with three types of machinery to reach 165 varieties that now compete in the markets of Europe, which was its supplier to the Kingdom, and explains the quality of this industry that it started from where the Germans ended!
\nOur interviewer says that the state supports building materials companies in everything, but they face a big issue in the issue of Saudization, as it is difficult for them to find national labor, and Al Ayed believes in the validity of the saying : \u201dReal estate is sick, not dying.\u201d He confirms the prevailing opinion among real estate circles that the issuance of the mortgage system will contribute to facilitating home ownership, and criticizes our youth today and believes that they are used to everything being offered to them simply because they have not tasted the suffering experienced by previous generations! Come and follow us through the details of the conversation: <\/p>\n
[At the outset, we would like you to give us an overview of Al Ayed Industrial Group]
\nThe company started in late 1395 AH with one crusher. The beginning was simple, but it was successful, thank 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 AD, 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, and our share of the Saudi market represents 62%, and we have a giant transportation fleet to serve our customers anywhere.
\nWe 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 the fact 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....
\nWe have become supporting the national economy with 165 different varieties of fiber, 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 used to import from, and they are currently dependent on our products.<\/p>\n
[What about the difficulties you encountered in the beginning?]
\nThe state supports us from all sides, except for one issue, which is the issue of labor, and we face an issue with Saudization, even though we have implemented the Saudization rate, but we find it difficult to choose national competencies.<\/p>\n
[In contracting, how did you get into this sector and what are your projects?]
\nWe are not contractors, nor have we ever been contractors, we are financiers of contractors, as 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 excellent specifications, and we financed these projects with construction materials such as gravel, sand, and agregates.<\/p>\n
[After the major shift in your business, have you experienced a change in demand?]
\nCrushers went through two phases, the first from 1395 AD to 1404 AH, and the second rise from 1426 AH to now, and we are at a height and a huge demand for building materials, as 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.<\/p>\n
[You said we are now in the second phase of the rally, when do you expect this phase to turn down?]
\nSince this is a healthy spike, I imagine it will be long-lasting, and by healthy I mean that it is not caused by other unusual causes such as wars or a particular period, but that it may stagnate rather than atrophy.<\/p>\n
[Based on your experience, do you think real estate prices are now overpriced or reasonable?]
\nIt's reasonable for traders, but for young beginners it's very difficult, unless there are facilities for them.<\/p>\n
[Facilitation, in what way?]
\nIn addition, young people are accustomed to finding everything simply, not like before, even if some facilities are provided to him, he finds that they are few because they have not tasted the taste of suffering that we experienced, unlike our previous generation, when we got something we used to rejoice, but now our children, if they get something, do not consider it valuable, they care more about luxuries than necessities, so that their motivation has become weak and dependent.<\/p>\n
[What's the strangest thing you've encountered in real estate in the last 10 years, and will it face a downturn?]
\nWe are now at the beginning of the end of the rise, and it is assumed that the property does not rise further, because it is not in everyone's interest if it rises, and the best things are in the middle. .<\/p>\n
[We notice many properties on King Fahd Road and Al Olaya Street with \u201dFor Rent\u201d signs, especially commercial towers, what is your comment on the current situation, is the demand commensurate with the supply?]
\nThe 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 were 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, it is better than continuing.<\/p>\n
[Do you expect the demand for administrative offices to rise to match the supply after the completion of the King Abdullah Financial Center mega project, King Saud University and other major projects?]
\nNo, I imagine that there will be attractive offers due to the large supply, and there will be vacant offices, and I remember that Olaya went through such a stage, as it was in 1404 and 1406 H. The rent was 30,000 riyals, and it decreased to 20,000, to the point that you see windows indicating abandoned offices, in which there is no one, so I expect that the supply will exceed the size of the demand.<\/p>\n
[What about residential?]
\nAs for residential, you find that the age group from 15 to 25 years old 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 that 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.<\/p>\n
[For existing schemes with real estate contributions, will there be a decrease in land?]
\nI 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 area of investment.<\/p>\n
[Do you expect mortgages to make home ownership easier?]
\nMortgage is a new experience, and it depends on the way it is managed, as it has a positive and negative side, because the more years the mortgage has, the more negative it is.<\/p>\n
[For rapid prefabricated houses, what are the solutions that address the issue of construction speed?]
\nAs 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.<\/p>\n
[Don't you see that the quality of construction is less than it used to be, and you see a building built 25 years ago in better condition than a building built 10 years ago?]
\nThe 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, as people are now building in valleys and on burial grounds, which causes building collapses, whereas if the building is built on solid and strong ground, it prolongs the life of the building.<\/p>\n
[Don't you see that the water issue in Riyadh is getting worse with the population density?]
\nUnfortunately, Riyadh is going through the beginning of a water crisis, and the Kingdom is also going through the beginning of a water crisis. Some believe that the issue is the transportation of water from the sea, but the real issue is finding the water.<\/p>\n
[When we asked the 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?]
\nI 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 cut off, 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.<\/p>\n
[Assuming that the solution to increasing water consumption is seawater desalination, what is the solution if our seas are threatened by petroleum pollution, is it easy to purify and desalinate them?]
\nThere are precautions taken with ships crossing the straits, as their cargo 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 levied on them.<\/p>\n
[As a financier of contractors and building materials manufacturers, how do you see prices at the moment, and what are your expectations for the future?]
\nI think it's high now, because the prices we're selling at are high and overpriced, and not what we want.<\/p>\n
[So, do you think the material that's on the rise now is iron?]
\nI expect steel to go down, because there is now external competition, not just internal factories.<\/p>\n
[Why are construction costs rising?]
\nJust manipulation by traders, where there is no oversight, because these prices have no basis.<\/p>\n
[Since your company is one of the manufacturers, what is your position on height?]
\nWe are manufacturers who rely 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, and if it goes down, we lower the price.<\/p>\n
[What are the substances that have risen on you?]
\nEquipment prices have doubled, we are now paying fees to the state, labor wages have gone up, and raw materials have gone up.<\/p>\n
[Prices have risen by a certain percentage, have they risen by the same or more for the consumer?]
\nNo, it went up on the consumer by 60%, while it went up on us by 22%, and the consumer is always the victim.<\/p>\n
[The price of labor 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 this?]
\nStrange, 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 mold has increased from 110 to 120 riyals, now it is 220 riyals.<\/p>\n
[You are now a financier of the contractor who is doing the molding, is there anything that has gone up?]
\nYes, many things have risen, cement has risen by a small percentage, but grit, labor, and even pomp have risen in price, and all engines have doubled in price, and it appears that there are unwritten agreements between traders.<\/p>\n
[Did the decision to keep crushers away from Riyadh harm the market or increase the price?]
\nYes, the price of soil has increased to 100%, because the distance is more expensive.<\/p>\n
[Are there crushers operating within the city, and what about in the north?]
\nNo, but there are crushers in the east, west, and south that feed the north.<\/p>\n
[Do you expect the real estate and construction market to shrink?]
\nNo, because the Kingdom's geographical nature helps horizontal expansion, in addition to the fact that the need for housing units has not yet been met, and as we said, there will be a decline, but not sharply.<\/p>\n
[Some fear that liquidity will be withdrawn, especially after it was announced that companies will come to the market to invest in real estate, do you expect this to happen?]
\nIt doesn't, because the demand will be huge now and in the future, because right now prices are overpriced, and rents are overpriced.<\/p>\n
[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?]
\nThere are small factories like 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 go back to real estate.<\/p>\n
[We are now noticing the migration of Saudi families from some neighborhoods, what are your comments on this?]
\nThis is happening because the old areas are starting to fill up with expats and laborers, annoying Saudi families and forcing them to move out of these areas.
\nWe 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 converting them into offices, and this is because they have not solved the issue of workers' housing, workers' housing is an urgent necessity, so how do you want an industrialized country without labor, and this labor how do you want it without housing, so it 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.<\/p>\n
[Do you think the saying \u201creal estate is sick, not dead\u201d is true?]
\nYes.<\/p>\n
[In your opinion, what are the success factors of a merchant?]
\nHonesty, observing God in his actions, giving each person his due.<\/p>","protected":false},"excerpt":{"rendered":"
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