Al Othaim

Abdullah Al Othaim Investment Company aligns with the National Quality of Life Program

Meshaal Bin Omairh, Group GCEO, Abdullah Al Othaim Investment Company $400 Million capital, details the company’s plans to revitalize the face of Saudi Arabia’s city centers through its hybrid urban development projects under Saudi Arabia’s Quality of Life program.

As Saudi Arabia enters into an industrial renaissance under its Vision 2030 initiative, local private players are strongly aligning with the country’s goals, including regional powerhouses such as Abdullah Al Othaim Investment Company (AO).

Established in 2004 as Abdullah Al-Othaim real estate , now focused on developing the energy-rich nation’s emerging industries, namely real estate, hospitality, cinemas, food and beverage, fashion retail, entertainment and shopping centers. The company has developed 12 malls in Saudi Arabia and is now the second largest shopping center operator in the country in terms of gross leasable area. Additionally, AO runs more than 70 entertainment centers Located in KSA, GCC countries as well as North African regions and five cinemas in the KSA. As part of its focus on retail, the company owns 70 fashion stores and 40 restaurants and coffee shops in Saudi Arabia. Between 2018 and 2020, the company’s assets saw more than 49 million visitors, with this number expecting to ramp up quickly as more of its mega-projects come on line. On the back of its wide expansion plans, the company’s revenues grew by 14% in 2022, with EBIDA margin of 55% and net margin 32%. AO is rapidly growing, with a staff of more than 3,000 employees and a 70% Saudization rate. “We have the same values today as we did 43 years ago. Although we have changed our financial position, assets, business lines, knowledge and resources, these values are what have sustained the business,” said Meshaal Bin Omairh, Group CEO of AO. “The company’s success has been a continual process, and we must look to the future.”

One of the largest differentiators between AO and its competitors is its ambitious new strategy, which is centered on improving the quality of life of the Saudi population and developing local talent, including a focus on upskilling youth. The strategy is heavily aligned with Saudi Arabia’s Quality of Life program launched in 2018 that aims to develop industries that have a direct impact on its citizens, such as sports, culture, entertainment and tourism. The government’s overarching goal is to have three of Saudi Arabia’s urban centers among the world’s top 100 most livable cities, with AO’s projects a crucial component in meeting its targets. AO currently has 26 projects underway, with most if not all expected to open to the public by 2026. The company is also expanding its number of operated cinemas, with four additional assets set to launch by the end of 2024. The current plan is split between mix-use projects such as its entertainment and retail cities and blue ocean projects such as hotels, residences and offices. By other mean it’s a Gated community with an 85:15 ratio respectively. “A substantial strategy should be built on the company’s strengths, weaknesses and opportunities it may have in the future,” said Omairh. “Our mandate is not limited to development in the Kingdom, and we are open to doing business anywhere. However, we currently require our full capacity to fulfill the needs of the Saudi Arabian market.” Additionally, the corporate frontrunner pointed to its change in management as a key factor in the company’s current success: “While we are family owned, we are not a family business but a corporation with its own corporate governance. This approach has made a real difference in the company’s performance.”

One of the company’s flagship projects is the giant Konoz city in Riyadh, with required investments of more than $1.9 Billion. Dubbed the box of treasures, the project includes building 50,000 square meters of modern office spaces nestled alongside a 20,000-square-meter entertainment complex. The Konoz city will include 15,000 square meters of green areas, a luxury hotel with 250 rooms, 120 serviced residential apartments and a separate apartment complex with 700 residences. The project’s sleek and state-of-the-art design was conducted by international architecture firm Benoy who has 75 years of experience in large-scale multi-use urban developments. The project is currently 10% complete, with its launch planned for the end of December 2026. AO’s second flagship development is the Al Othaim Park in Dammam. The 224,000-square-meter project includes a modern shopping center, a world-class hotel and residences. In March 2023, AO entered into a partnership with construction firm Ledar to build the project’s 10 residential towers containing more than 600 units for around $130 million. AO began developing the hybrid complex in August 2022 with initial investments of $400 million. The project is currently 15% complete, with its launch anticipated at the beginning of January 2025. other developments include the Al Othaim Mall in Al Jubail set to open in June 2024, the Al Othaim Circle in Al Khobar set to open in July 2025, the Al Othaim Mall in Al Mithnab set to open in July 2024, and the Al Othaim Dome in Riyadh that will open its doors in January 2025. Outside of its hybrid complexes, the company also has development projects geared at supporting Saudi Arabia’s nascent tourism sector, including its Jazan Beach development and a multitude of projects in Hail.

AO is taking advantage of Saudi Arabia’s recent shift in policies seeking to boost private sector participation. “The business environment in Saudi Arabia is positive. We have the support of banking institutions on the debt side, and the government on the other,” said Omairh. “This combination is something not found anywhere else.” In line with the region’s upswing in publicly listed companies, AO announced plans for an initial public offering of 30% of its shares on the local stock exchange in May 2022. The company is keen to move forward with its plans. “Our initial public offering will be very soon. We have a strong stock market here in Saudi Arabia and we are seeing high interest from investors,” said Mr.Omairh. “Investing in AO is low risk. Investors are not only investing in one industry but seven. As a rule, we work with low-risk projects. We work in real estate, and all the projects are 70% owned by us. We also have heavy assets and a net margin of 30%, which is something you cannot find anywhere.”

Additionally, the company is also open to partnerships beyond its current roster, which includes the local government. “As a company we are also firm believers in partnerships,” said Mr.Omairh. “We cannot do it alone and require partners to achieve our vision. When choosing a partner, it is crucial they share our vision, values, standards and timeline.” The company leader points to the country’s shifting attitudes on foreign participation as a boon to the business: “New regulations regarding foreign investments have eased foreign participation the Saudi Arabian market. International investors are now happy to come to live and work in Saudi Arabia’s private sector, which was not the case before. We encourage investors to not be influenced by what they hear and to come to Saudi Arabia themselves and experience what is happening in the market.”