Holland Gulf Chamber of Commerce » Jeddah

Riyadh tops in real estate with SAR99bn deals

jochemgeheniau — Wed, 04 Dec 2013 10:31:05 +0000

Riyadh, with SR99 billion real estate transactions, has ranked as the most sought-after city in the Kingdom. The capital city outweighs Jeddah, which had recorded more than SR90 billion of real estate transactions as per the real estate index issued by the Ministry of Justice.
The real estate sector has revealed the positive impact of the economic and social stability experienced across the Kingdom as per the Ministry of Justice index. The index closed at a value of SR99 billion of commercial and residential deals for the year 1434H in Riyadh, surpassing last year’s deals that registered SR87 billion.
The index recorded more than 43,476 real estate deals in Riyadh city covering a total area of 227m2, with SR47 billion commercial transactions and more than SR51 billion residential transactions. This reflects the need toward seeking large locations to develop residential units to meet the increasing demand in the market.
Jeddah comes second with more than SR50.6 billion of residential transactions and SR39.9 billion commercial transactions, which represent 40,132 deals and over 90m2 of real estate area.
Majed Al-Hogail, MD, RAFAL, described as the premier residential communities innovator, said: “The economic and real estate cycle is moving rapidly and positively, and the demand on innovative residential units is increasing, which urges the real estate developers and investors to work on providing innovative residential solutions.”
Al-Hogail added: “We at RAFAL are investing in new strategic locations and the innovation of more than 3,950 residential units over the next 5 years with cost of over SR5.1 billion. Our growth strategy covers the Kingdom with new and bold opportunities within a prosperous real estate investment in the Kingdom.”
To facilitate the ownership of housing units by the citizens, more mortgage companies will be launched in 2014, as the Saudi government is working on activating the mortgage systems as per the enacted mortgage laws and regulations, to work alongside local banks and related governmental sectors, such as the Real Estate Development Fund and the residential units provided by Ministry of Housing.
The first half of the year 1434H has witnessed more than 70 percent of real estate deals, which indicates the investors’ activity who conducted SR62 billion of real estate deals in Riyadh city alone.
Al-Hogail said: “RAFAL leads the dynamic lifestyle pattern that requires an enriched, homogeneous social environment, as well as common facilities adhering to environmentally friendly and safety principles to create vibrant residential hubs, self-sustained communities, desired by many Saudi and expatriate families.”
According to Al-Hogail, the challenge facing the real estate market in the Kingdom is interesting, where the demand is increasing at an annual rate of 8 percent and is expected to last for a minimum of 10 years.
“This requires a consistency between the way of business and the regulations and challenges faced by the sector. Therefore, the performance has to be distinguished in order to be among the leading real estate development companies.”

GCC industrial water treatment chemicals market revenue to soar

jochemgeheniau — Mon, 18 Nov 2013 09:02:15 +0000

JEDDAH – The water and wastewater treatment chemicals market in the Gulf Corporation Council (GCC) is making considerable headway as the dire water shortage has lent momentum to water treatment activities. Industrial water reuse schemes and stringent desalination requirements are further necessitating the deployment of high-quality treatment chemicals as a means to boost operational efficiency, cost-effectiveness, and environmental sustainability.
New analysis from Frost & Sullivan titled “GCC Industrial Water and Wastewater Treatment Chemicals Market” showed that the market earned revenues of $396.0 million in 2012 and estimates this to reach more than $568.2 million in 2017. The research covers pH conditioners, coagulants, flocculants, corrosion and scale inhibitors, biocides, and disinfectants, among other chemicals.
The focus among GCC countries to diversify into downstream industries such as refining, chemicals and petrochemicals has increased water usage as well as wastewater generation, providing significant thrust to water and wastewater treatment chemicals market.
“Tighter government regulations too will encourage companies to opt for more effective water and wastewater disposal and reuse methods, and thereby increase the demand for treatment chemicals,” noted Vishnu Sankaran, Associate Director and Head-Chemicals Practice, Middle East and North Africa, Frost & Sullivan. “For instance, the Treated Sewage.
Effluent reuse policy implemented by the Saudi Ministry of Water and Electricity serves to enforce effective water and wastewater treatment in industrial areas, in turn widening market potential.”
While participants will be buoyed by the effect of regulations on their market prospects, they will also be concerned about the control that a handful of companies have over major industries. Ultimately, this skewed balance of power pushes down prices of water treatment chemicals and curbs revenues.
Moreover, end users do not fully understand the advantages of high-quality, costlier treatment specialty chemicals and prefer to rely on regular commodity chemicals. Manufacturers too are reluctant to offer these advanced solutions as customers refrain from testing these products on a large scale fearing the loss of operational efficiency and reduced profitability.
“To achieve sustainable growth, suppliers must work hand in hand with end industries in the testing and selection of specialty chemicals that have a high performance to cost ratio,” added Sankaran. “Educating users on the long-term environmental, operational and profitability benefits of such chemicals is also a crucial part of this process, and will ensure a steady rise in overall sales.”
The GCC’s water and wastewater treatment equipment market is set to reach $2 billion by 2016, Frost & Sullivan said in an earlier report.
The market is currently being pegged at $1.3 billion but is growing at a compound annual growth rate (CAGR) of seven percent over the next five years.
As economic development gains speed, Middle East governments are moving aggressively towards promoting water conservation/storage, wastewater recycle and reuse and desalination of sea water in order to meet the burgeoning water consumption needs of all sectors, the report stated.
The region has begun investing heavily in water and sewerage networks to ensure 100 percent connectivity to the growing population, it said.
Water requirements by all the three sectors – agriculture, domestic and industrial – are set to grow from 35 billion cubic meters (BCM) to 49 BCM by 2020 in the Gulf region.
Whilethe sewage collection rate in the GCC is 52 percent of the total sewage generated however, contribution of recycled water to total water withdrawal is between four to eight percent.
The industrial growth in the GCC region is expected to unfold opportunities for advanced water and wastewater treatment solutions, according to the report. Desalination is expected to continue playing a critical role in the overall water supply in the MENA region. Across the Middle East, a total of 39 million cu. m/day of desalination capacity is expected to be added between 2010 and 2020.

GCC emerging as an attractive investment destination

jochemgeheniau — Thu, 07 Nov 2013 09:48:46 +0000

JEDDAH – “GCC offers strategic advantages, such as availability of cheap energy and feedstock supply, low tax environment, well-developed infrastructure, growing population and increasing income levels, conducive for the development of various industries in the region. All these advantages if properly showcased could attract substantial investment flows from Indian corporates, who are looking to expand their global footprints and scouting for distinctive cost advantages to remain globally competitive,” said Sameena Ahmad, Managing Director, Alpen Capital.
“The GCC is emerging as an attractive investment destination for Indian companies. We as Alpen Capital specialize in the GCC-India corridor and have concluded several transactions in this sphere. There are several opportunities that exist in the GCC for Indian companies and we see a lot of interest from Indian corporates to establish a presence in the GCC. This trend is on the rise and we will continue to work closely with our clients and the respective governments to facilitate these transactions,” said Sanjay Vig, Managing Director, Alpen Capital.
A variety of catalysts for investment growth exist in GCC. While the oil industry is undeniably a pillar for the GCC economies, the region’s priority is to achieve sustained economic growth through development of non-oil sectors. This can be achieved by increasing private sector participation, strengthening local technological capabilities, developing a skilled workforce, improving the competitiveness of exports in global markets and by attracting substantial overseas investments.
Continued government spending to boost competitiveness, self-reliance and developing local skilled work force would offer potential investment opportunities in sectors such as Petrochemicals, fertilizers, plastics, pharmaceutical, sugar refining, aluminium & steel. In addition government support and infrastructure is expected to grow in sectors such as Information & Communication technology (ICT) and agriculture, food processing, education, financial services and EPC.
GCC offers substantial cost advantage for industries like petrochemicals, fertilizers, pharmaceuticals and metallurgy among others, as the region boasts of one of the lowest energy costs globally due to abundant availability of resources. Natural gas prices in GCC range between $0.8-1.5 per million British thermal units (mmbtu) compared with the global average of $4.0-6.0 per mmbtu. The availability of low-cost feedstock provides the region with distinctive competitive advantage. Average electricity prices for end users in GCC states are much lower at $3.7cents/kWh compared to countries that enjoys the reputation of being generation powerhouses ($10.5cents/kWh in USA and $9.4cents/kWh in China).
GCC’s twin surplus condition leads to economic stability: GCC’s large fiscal surplus (averaging ~9.2 percent of GDP over 2007-11) and trade surplus (averaging ~ 16.9 percent of GDP over 2007-11), low levels of public debt (averaging ~4.5 percent of GDP over 2007-11), and low external debt translate into a better rating, in terms of macro-economic health, than developed counterparts. On the other hand, economic diversification initiatives, growth in non-hydrocarbon sectors, pegged currencies, large forex reserves, well-developed infrastructure, and a moderate inflation environment provide an overall attractive business environment vis-à-vis emerging economies.

Kingdom plans to expand ports capacity by 29m tons

jochemgeheniau — Wed, 06 Nov 2013 09:28:30 +0000

JEDDAH – Saudi Arabia is planning to expand its ports handling capacity by around 29 million tons to face a steady rise in demand, the head of the ports authority in the kingdom was reported as saying.
“The projects include the construction of 20new quays which will be ready for operation within two years to boost the existing capacity of 208 quays,” Musaed Al Darees, general manager of the Saudi Ports Authority told the Arabic language daily Al Watan.
The new projects, to be launched shortly, will raise the combined capacity of the Western Red Sea port of Jeddah and other sea ports in the world’s largest oil exporter to nearly 500 million tons a year from the current 471 million tons.
Al Darees did not mention the actual cost of the project, but said the new developments are within an overall expansion plan for the country’s ports, in a bid to respond to “a steady increase in business and demand.”
Besides quays, the new projects comprise the construction of more stores, importation of new equipment and services, and introduction of advanced technology.
“The authority is working with the private sector to carry out projects aimed at bolstering the capacity of the Kingdom’s ports to stimulate sea trade and boost confidence in our ports,” Al Darees said without elaborating on the private sector’s role.
Saudi Arabia is one of the largest markets in the Middle East, with its imports receipts of goods and services standing at nearly $211 billion in 2012, according to the Kuwaiti-based Inter-Arab Investment Guarantee Corporation, a key Arab League establishment.
The Kingdom’s exports of goods and services were estimated at about $410 billion last year, representing nearly 28 percent of the total exports in the Arab region.

Growth opportunities seen in Gulf as world trade shifts to emerging markets

jochemgeheniau — Mon, 04 Nov 2013 10:09:59 +0000

JEDDAH – Islamic trade finance in its current state is still a small sector compared to global trade finance industry as a whole, a report issued by KFH -Research, a subsidiary of Kuwait Finance House KFHabout international Islamic trade finance “Reality and Growth Opportunities” said.
However, the strong capabilities for commercial growth of the countries of the Organization of Islamic Cooperation, especially Middle East area and the GCC countries in particular, in addition to the increased interest in Islamic finance enable Islamic trade finance sector to be a promising sector in the near future. The report explained that the Islamic finance focuses on supporting concrete economic businesses, and commercial finance is one of businesses sectors that fit with the principles of sharia.
Therefore, sharia compliant banks are in a good position to take advantage of financial flows from Organization of Islamic Conference.
Moreover, due to the fact that the overwhelming majority of Middle East and Islamic Cooperation Organization Countries are highly interested in enhancing the Islamic finance, the increase of commercial flows into these countries represents a promising opportunity to finance Islamic trade to substitute traditional one.
Globalization and advances in modern information and communication technologies have led to a surge in the number of organizations being involved in cross-border trade. Consequently, as the volumes of global trade expand into the 21st century, trade financing offers remarkable opportunities to financial suppliers to tap into the ever expanding market.
As per various industry estimates, the trade finance sector generated approximately $29 billion in revenues for the suppliers in 2011. In the near future, it is expected the sector would expand to generate revenues worth $38 billion by 2015.
The geographic composition of world trade has shifted to reflect the divergent growth performance of the developed and emerging economies.
Emerging countries are now an increasingly significant part of the global economy as these economies grow wealthier, entailing shift towards higher domestic demand. Within the emerging markets, the Organization of Islamic Cooperation (OIC) countries and in particular Middle East and North African (MENA) region countries are also gaining importance in the global trade sphere. As per an earlier study, the MENA region is expected to experience an impressive 131 percent compound annual growth rate (CAGR) increase in trade during the period 2012-2026. The corresponding figure for the increase in global trade during the same time period is 86 percent. In addition, intra-OIC trade rate is targeted to be 20 percent by 2015.
Given that majority of the MENA and OIC countries are showing keen interest in promoting Islamic finance, the increase of trade flows within these regions represents a promising opportunity for Islamic trade finance to become an alternative to conventional trade financing. The global Islamic financial industry flamboyantly progresses ahead into 2013 with total assets estimated to exceed $1.8 trillion, marking approximately a 15 percent year-on-year growth compared to $1.6 trillion assets as at end-2012. Consequently, the various sub-sectors of the Islamic finance industry such as Islamic trade financing stand to benefit and share in the increasing growth. As per market estimates, total trade financing amongst the OIC member countries, including Saudi Arabia, Malaysia and Turkey stood just under $4 trillion as at end-2012.
There is general market consensus that Islamic trade finance transactions are roughly 1.5 percent of total world trade finance value. Hence as at end-2012, it is estimated Islamic trade financing would have supported approximately $250 billion worth of merchandise trade while as at end-2011, revenues generated for Islamic trade finance suppliers is estimated to be $435 million. In MENA and OIC in general, the Islamic trade finance sector has been supported by Islamic Development Bank (IDB), the leading multilateral development agency.
A major IDB initiative for promoting Islamic trade financing is the setup of International Islamic Trade Finance Corporation (IFTC). As per ITFC 2013 statistics, it has approved Islamic trade transactions worth $4.446 billion in 2012, reflecting a 47 percent increase from $3.033 billion in 2011. The corresponding figure was $2.554 billion in 2010 and $2.167 billion in 2009. Furthermore, the Asia/CIS region held the largest share (69 percent) of the total approvals in 2012, followed by the MENA region (26.0 percent) and Sub-Saharan Africa (5 percent).
Islamic trade financing in its current state is a small sector of the global trade financing industry. Yet, the strong trade growth potentials of the OIC/MENA/GCC countries coupled with growing interest in Islamic finance enables it to be a promising sector worth Islamic financial institutions attention in the coming future.
Looking forward, Islamic finance players need to explore new growth areas for Shariah-compliant solutions in order to maintain the industry growth momentum. Islamic trade financing offers a fantastic opportunity for these institutions to venture into given the strong fundamentals of the OIC/MENA/GCC economies where Islamic finance is making strides. Globally, trade finance is facing funding pressures as European banks, who have been traditionally strong in this sector, continue to deleverage and adjust to the requirements of Basel III. Given Islamic finance’s emphasis on supporting tangible, real economic activities, trade finance is a business segment which fits well with Shariah principles and business model. Banks with Islamic operations are therefore well-placed to take advantage of the sizeable trade flows of OIC/MENA/GCC.