Jabal Omar Development Company leads the construction sector in the MEED 100 ranking
The largest real estate company in the Top 100 this year is Saudi Arabias Jabal Omar Development Company, which after several years of delay is now making strong progress on its major project in Mecca. With a market capitalisation of $20.8bn, the firm has risen up the ranking in 2015 to 9th position from 29th in 2014.
The multibillion-dollar Jabal Omar Development is being built across 57 acres and includes 37 towers, as well as hospitality, residential, retail, commercial and religious facilities.
US-based Hill International has been the project manager on the development since 2010, and contractors working on the various phases include the local Nesma & Partners Construction, a joint venture of the local Saudi Arabian Baytur Construction Company and the local Azmeel Contracting & Construction Corporation, and a joint venture of Lebanons Arabian Construction Company (ACC) and the UAEs Drake & Scull International.
In January this year, Jabal Omar Development Company secured a SR4bn ($1bn) loan facility to refinance the construction costs of the first phase of the Mecca development.
Saudi Arabias National Commercial Bank (NCB), a new entrant to the MEED 100 this year, provided the funding, which refinances a previous facility signed with six local banks in September 2012. The new loan provides far better financing terms, with an extended repayment period of 15 years rather than eight years. This includes a grace period of three years, with repayments due to start in September 2017.
The second-largest real estate firm in the MEED 100 is the UAEs Emaar Properties, with a market capitalisation of $12.8bn. However, the developers ranking has slipped in 2015 to 22nd position from 14th in 2014.
Emaar Properties, which built the worlds tallest tower, Burj Khalifa, spun off its retail and malls division in September, raising $1.6bn for an extraordinary shareholder dividend through an initial public offering (IPO) of a 15.4 per cent stake in Emaar Malls Group. It was the largest IPO on the Dubai Financial Market in seven years.
Emaar Malls Group entered the MEED 100 in 26th place. Emaar Properties valuation was not overly affected as it still retains most of the companys shares. The developer also has plans to list its hotels division, Emaar Hospitality Group, possibly in the second half of this year, depending on market conditions. It has 12 hotels and resorts in its portfolio.
The developer has made great strides on projects in Dubai since the emirates property sector started to recover in late 2011, but those gains have been tempered by a cooling off due to fears of oversupply since mid-2014. Nonetheless, it saw a 30 per cent year-on-year leap in net operating profit for 2014. In February, US ratings agency Moodys Investors Service revised its outlook for the company from stable to positive.
The only other real estate company with market capitalisation exceeding $10bn is Qatars Ezdan Holding Group, which is worth $11.4bn. In December last year, the company agreed to increase its foreign ownership limit from 25 to 49 per cent, following calls from Emir Sheikh Tamim bin Hamad al-Thani for locally listed firms to allow greater foreign investment to help boost the stock market.
Ezdan Holding currently owns more than 18,000 real estate units and plans to launch several projects in 2015.
The real estate and construction company that had the most tumultuous year was Dubai-listed Arabtec Holding, which entered the MEED 100 last year in 70th position, but has bounced out of the table this year. On 18 June 2014, the companys CEO, Hasan Abdullah Ismaik, resigned as Arabtecs share price fell from a high of AED9.9 ($2.7) on 7 May to close at AED4.4 on 17 June. The firms share price is now below AED3 and shows little sign of returning to the highs of last year.
Ismaik had been driving forward an ambitious strategy that aimed to turn Arabtec into one of the 10 largest construction companies in the world by 2018. The plan was to do this through inking multibillion-dollar construction contracts; forming joint ventures that would take the firm into new sectors, such as oil and gas and heavy infrastructure; taking complete ownership of subsidiaries; and targeting companies for acquisition.
Following Ismaiks departure, much of this strategy appears to have been abandoned and the company has retrenched senior executives and a limited number of staff to boost productivity and reduce costs.
The turmoil at Arabtec led the UAEs Securities & Commodities Authority (SCA) to investigate in July whether firms listed on the countrys stock markets meet the standards of regional regulations and international best practice. The move was in response to investors accusing the SCA of not having clamped down on Arabtecs share price fluctuations.
In November, Abu Dhabi-based Aabar Investments raised its stake in Arabtec to close to 35 per cent by purchasing Ismaiks shares. The firms net profit for 2014 was almost half that recorded for 2013.
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