Introduction
Dar Al Arkan is the largest real estate company in Saudi Arabia based on its market value in comparison with the other industry players, its main focus being the development of the residential and commercial property. It is based in Riyadh and was established in 1994 by members of a well-known family, but currently, it is a public shareholding company.
They had a profound knowledge of real estate and decided to establish the company to try and satisfy the rising demand that was being experienced in Saudi Arabia at the time due to a rapid increase in population. Over the years, Dar Al Arkan has experienced tremendous growth from a small company to the real estate giant that it is today. In the year 2002 up to the beginning of 2004, the company operated as a limited liability company after which it converted into a joint-stock company in 2005. Come 2007, the company had its shares listed in the country’s stock exchange market and has continued to increase its capital through this platform (Dar Al Arkan, 2010, para. 1)
The recent economic boom experienced in the country has led to further growth in the company and the company has taken advantage of this opportunity to increase the range of its activities and projects. It has also taken advantage of the short supply of residential houses for middle-income earners in the country and has taken to supply them with houses. The company has a number of subsidiaries under its umbrella, namely Dar Al Arkan Properties, Dar Ar Arkan Commercial Investment, Dar Al Arkan Sukuk, and Dar Al Arkan project companies. Its main projects include Shams Al Arous, Al Qasr, and Al Tilal residential projects.
Reasons behind Dar Al Arkan’s Success
Dar Al Arkan’s success can be attributed to a number of reasons some of which include the following:
Strategic Partnerships
Dar Al Arkan has formed strategic partnerships with both local and international companies offering services that are necessary for the industry. For example, it has a partnership relationship with Turner Construction Company which offers services like preconstruction consulting, program, project, and construction management services among others, and also Cluttons LLP which is a marketing consulting company in which offers services for main players in the real estate business.
Both these companies offer the necessary expert advice to Dar Al Arkan on the direction to take with its investment and construction projects and marketing strategies that will work to their advantage thus setting them apart from other companies. The local partnerships are with the government and local companies which work towards the provision of housing to the Kingdom’s people.
Quality and Cost-Effective Projects
Dar Al Arkan offers quality residential and commercial properties which are affordable to the Kingdom’s people and families, especially in the middle-income levels. The Kingdom has a growing population
Strategic Business Decisions
Dar Al Arkan has been able to come up which strategic business decisions which have enabled it to grow. For example, it has been able to take advantage of the Kingdom’s increasing population growth over the years and come up with projects that have been able to offset this demand. The company also took advantage of the economic boom that was has been experienced in the past few years and in this way has continued to grow itself by increasing the number of its development projects.
Corporate Social Responsibility
Any company’s success is not only dependent on its strategies and financial success but also on the contribution by the members of the public even if their contribution is not direct. Dar Al Arkan recognizes this fact and thus engages itself in a comprehensive corporate social responsibility program to encourage sustainable development in the community. They do this by coming up with projects and programs that encourage the establishment of integrated communities with schools, police posts, and green parks as well as looking out for the Kingdom’s natural resources (Dar Al Arkan, 2010, para. 3-5)
Credit Viability
Dar Al Arkan has shown its creditworthiness to local and international lenders and it can therefore easily access credit from them to fund its development projects thereby increase its growth and performance. This was evidenced by the company’s successful redemption of its Sukuk which was issued in 2007 by the DAAR International Sukuk Company being the first of its kind to be ever issued on an international capital market by a Saudi Arabian company.
After its initial issue, the company received support from international financial institutions from Europe and various Gulf Cooperation Council countries, and being able to repay the Sukuk issue went further into reinforcing the company’s creditworthiness especially in a time when other companies were defaulting payment. This viability was also supported by Moody’s investor services and the Standard and Poor’s Rating Services who both gave Dar Al Arkan high long-term credit rating scores. This kind of rating puts the company in a strategic position as far as receiving credit is concerned and also shows the strength of the company in terms of the value of its assets.
Dar Al Arkan’s Main Competitors
Dar Al Arkan just like any other company faces competition from other players in the industry. They include Rafal Real Estate Development Company, Rikaz Development Company, and Merfal Real Estate Company. These companies are still able to remain in business despite the domination of Dar Al Arkan because they have also developed strategies that have been able to work for them in the real estate business in terms of expertise, technology, and innovation.
Saudi Arabia as a Kingdom is also experiencing population growth and its previously young people are also providing a market for real estate and commercial development companies who offer residential homes for them as they seek to establish themselves as independent individuals and families. The government has also provided the real estate market with opportunities to grow as it seeks to provide housing for its citizens.
Rafal has done this by engaging in activities that offer their customers and potential customers a variety of quality real estate projects and products and services. This creates value for their customers and puts them in a position that enables them to compete effectively with other players in the industry (Rafal Real Estate Development Company, 2010, para 2-3)
Conclusion
The real estate industry in Saudi Arabia has shown tremendous growth and still continues to show possibilities of tremendous growth since the needs of the country’s population continue to increase and which is composed of a very large young population (Ulf, 2010, para. 2) Companies should therefore continue to develop themselves and come with new innovations that will satisfy the market’s needs while at the same time fulfilling their corporate social responsibilities to develop the community as a whole.
Reference
Dar Al Arkan. (2010). Introduction, Who we are, Services Offered by the Company and Social Responsibility. Web.
Merfal Real Estate Company. (2008). About Us. Web.
Rafal Real Estate Development Company. (2010). Who We Are. Web.
Rikaz Properties. (2007). Who We Are. Web.
Ulf, L. Saudi’s Dar Al Arkan Eyes Similar Product Mix in 2010. Web.