Basma Group and KBW Investments formed property joint venture Arada Developments in December last year. CEO Ahmed Alkhoshaibi talks about how the company will deliver its ambitious $6.5bn Sharjah project, before looking to expand to Dubai, Saudi Arabia, London and even Sydney
As a developer starting out, Arada took little time to announce itself on the real estate scene in the UAE.
Its first project, Nasma Residences, a residential community of villas in Sharjah, sold out within four weeks in March this year, which is virtually unheard of in an emirate where property is expensive and demand is normally reserved for apartments.
For its follow-up, announced last month, Arada launched the $6.5bn Aljada, Sharjah’s largest ever real estate development. Spread over 2.2 million sq m, the ambitious project will take seven years to complete, creating a whole new city once completed in 2025. The apartments, villas and commercial units are expected to be fully sold out over the next five years.
Arada launched the first tranche of Aljada’s first phase, numbering 272 apartments, to a select number of private investors just before Cityscape, moving half of those units at one event. At Cityscape itself, opened to buyers for the first time since 2008, it was equally successful, selling out nearly 500 units in total.
For Arada CEO Ahmed Alkhoshaibi, ambitious sales targets might not be all that challenging after all. “My superiors tell me I’m ambitious [with my targets] but we have a great team and we have a great product,” Alkhoshaibi tells Arabian Business.
“We have a great chairman and vice chairman who both have a clear vision, which is backed by a roadmap and they give us full support. There’s no bureaucracy in making decisions and it’s spontaneous. That’s an advantage we have as Arada; we’re very agile.”
The chairman, Sheikh Sultan Bin Ahmed Al Qasimi, and vice-chairman, Prince Khaled Bin Alwaleed Bin Talal Al Saud come with some real estate pedigree of their own, as exemplified by their respective companies, Basma Group and KBW Investments. It goes a long way to understanding the investor confidence that allows Arada to sell out phase after phase of their debut projects.
“KBW Investments doesn’t need an introduction. Even though it’s still a young platform, it has made its mark in the market,” says Alkhoshaibi, who is also group CEO of KBW Investments.
“[Basma Group’s] Sheikh Sultan is also very prominent and a great businessman. Tilal City – the first major freehold, mixed use community in Sharjah – was his baby. So they [the investors] see who is promoting it, who is putting the money into the development. These are not guys that will let them down.”
Quality plus value
Beyond the sound financial pedigree, Alkhoshaibi insists the quality of offering is equally important to its success. Aljada, which will house a population of 40,000 residents when completed, was three years in the planning before it was launched. Prior to Arada’s involvement, a previous company had worked with Sharjah Urban Planning Council to put forward a masterplan designed by global architectural firm, Wood Bagot.
A year ago, KBW came on board and worked with the “genius design” – as Alkhoshaibi describes it – for a new city to bring it to the next level.
“The idea was to make it a walkable city, which in theory sounds nice but it’s a challenge, obviously, with the heat.
So that was the focus plan,” he says.
To address this fundamental issue, he explains the designers referred back to the history of Sharjah to see how their ancestors coped with the temperatures. “If you look at how they lived in courtyards, using a lot of sikkas (alleyways) and shading, that’s where you can say the core of the design came from.”
The sikkas run horizontally and vertically between buildings throughout the whole project. Alkhoshaibi says they are designed to capture the breeze using wind-tunnelling. “There was a study done to see the distance that someone can walk before in the heat before it becomes an issue and they calculate it to be about 350 metres, or five minutes, so it has been designed in a way that the amenities are all within this distance,” he says.
The city will also include a transportation system of electric buses and solar panels in common areas, while the irrigation water will be reusable.
“It’s a green development so we’re going to make it as sustainable as we can,” says Alkhoshaibi.
He estimates there will be about 10,000 combined units across the project, the vast majority of which will be apartments. “We see this as a downtown. There are maybe 300 villas, but that’s really a small component. This is a city and anywhere you go in the world, cities have apartments,” he says.
Another important consideration was value for money. Alkhoshaibi says when they looked at the Sharjah property market, they were astonished to find that you could not buy a townhouse or villa for less than AED2m ($544,500), whereas neighbouring Dubai had properties of a similar size for half that price. Prince Khaled, he says, insisted on bucking this trend, by developing premium communities that were still accessible price-wise.
“It was very clear that he didn’t want to go with AED20m ($5.4m) mansions that were going to just tap into the one percent. He wanted to go to the masses and give back to the communities; a vision shared by our chairman, Sheikh Sultan,” Alkhoshaibi reveals.
Location, location, location
Sharjah is an emirate known for its major traffic snarls at both ends of the working day. Aljada, he insists, won’t get caught up in the daily traffic grind, thanks to major infrastructure investments planned by Dubai Roads and Transport Authority (RTA) and the Sharjah government that will see new roads and interchanges built.
He says its location, boasting direct access to Al Dhaid Road, close to Sheikh Mohammed Bin Zayed Road, and just five minutes’ drive from Sharjah International Airport, is away from the prime areas for congestion.
“There is a clear vision from Sharjah government that infrastructure is a priority which is needed to back the real estate plans. This gives confidence to investors, because when you invest in a property you want to make sure the infrastructure is there to support it.”
The traffic situation will also be important if Arada is to achieve its aim to create an entertainment destination in the heart of the city. “We’re looking at some good partners to come in and energise our entertainment section,” says Alkhoshaibi.
“It’s really important to us how to make this city an entertainment hub, and not just for Sharjah but for the whole UAE. We want to have people actually jump in the car from Abu Dhabi and drive to Aljada because it’s a destination they want to experience.”
Sharjah, then the world
For a veritable start-up that launches a multi-billion dollar project within its first year, inevitably the question is: where next?
“Arada is a developer; it’s not a local company,” says Alkhoshaibi. “It’s founded by two international players whose visions are clear: to focus on Sharjah, do it right, get to a certain level and then move to Dubai.”
Saudi Arabia, London and Sydney – closer to home for Australian Alkhoshaibi – are on the horizon, but not before the current projects are well developed.
“To be honest, we have a lot on our plate and we want to deliver on our promise; that is our utmost focus. Buyers have come early and trusted Arada and we appreciate the trust and we want to deliver,” he says.
In Dubai, Arada is considering a signature tower or a destination-style development to help put it on the radar. “We believe always in location, location, location and go for good quality. We want something we can be proud of. It could be a destination, but it doesn’t have to be if it’s a nice signature tower. We would still keep that accessible price point.”
The exact location, he says, is under consideration. Options include land owned in Dubai by Arada’s shareholders.
Saudi Arabia would be next on the agenda, closer to home for Prince Khaled, with potential plans for gated communities and villas, in keeping with local market demand. In London and Sydney, he says it would most likely be towers, but they’re mostly thoughts right now, more than solid plans.
The next major announcement is likely to come from Alkhoshaibi’s other job as head of KBW Investments, which does as the title says – invests in companies. “It’s in the works. We’re always growing; we’re not slowing down. Arada is our focus point, but KBW is still investing and we hope to make a couple of nice announcements before the end of the year, which I think will shock the market a bit.”
Pushed on what industry the company is currently looking at, Alkhoshaibi says it’s a “construction-centric company”.
Following on from that, Arada expects to award the first phase contract for its Aljada project next January, with the tender process opening in November. While KBW will have the capability to carry out the works through its subsidiaries, he insists there will be no favouritism in the contract award.
“As CEO of Arada, my first focus is Arada and they (KBW) will be treated like any other participant in tendering,” he says. “Our choice will always be based on quality, time, price... the usual factors. We don’t do favours for our sister companies; we give them an opportunity. It’s an advantage having them because we get to tap into resources without any contracts and it’s been very helpful having all these resources so between KBW and Basma’s resources I’ve had a lot access to a lot of data and that helps the team to make the right decisions.”