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DAR AL-ARKAN REAL ESTATE DEVELOPMENT COMPANY
June 2009
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KSA: Largest MENA Free Market Economy
Nominal GDP - 2007
Population
Saudi Arabia 24 million GCC 36 million (67%) MENA 316 million (7%)
Saudi Arabia US$ 375 billion GCC US$ 775 billion (48%) MENA US$ 1,532 billion (24%)
Per Capita GDP - 2007
Saudi Arabia US$ 15,625 GCC US$ 21,528 MENA US$ 4,848
Source : 2008 Economic Developments and Prospects The World Bank
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KSA: Well Positioned in World Economy
Country Rating
AA- by Fitch (upgraded July 2008), A+ by S&P and Aa3 by Moodys
High Degree of Foreign Liquidity
with prudent monetary policy and healthy banking system
WTO Member Since December 2005
committed to encouraging foreign investment opportunities and freedom and transparency of trade
Leading member of GCC, OPEC
also member of many other organizations including UN, IMF, World Bank More than 20%,10% of the worlds oil and gas reserve respectively
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Our vision about the industry
Drivers for the Industry
Bullish Macro Economic Outlook
KSA: Economic Strengths
One of the fastest growing economies IMF forecasts a GDP growth rate of 3.5 % per annum till 2010
GDP Per Capita
Saudi Riyal
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Our vision about the industry
Drivers for the Industry
Bullish Macro Economic Outlook Growing Population
KSA: Population Demographics
Historical Population Growth An average of 2.5% per annum over 10 years since 1996 Fastest Population growth Future Population Growth 10 million expected over the next 18 years KSA is a Country of the Young Approximately 70% of the population is less than 30 years of age Approximately 37% under 15 years of age Median age of 21.5 years Internal migration to cities boosting housing needs
Millions
Source: UN World Population Prospects
KSA Population Forecast
Large number of young people are entering the housing market
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Our vision about the industry
Drivers for the Industry
Bullish Macro Economic Outlook Growing Population Supply Demand Gap
KSA: Growth In Residential Real Estate Market
Significant under-supply of housing stock to be met from future development An estimated 1.3 million new housing required by 2015 Total new investment in housing expected to be around US$ 180 billion over the next 7 years KSAs housing sector comprises 75% of all real estate activity, in value terms Total projected requirements for housing (2005-2024)
Thousands Total Population New Population Bedrooms needed Total required residential units Total required stock (old and new stock) Existing housing stocks at current rates Market undersupply (difference in both stocks above) Gap % supply and demand
Source: Housing Requirements, Ministry of Economy & Planning, KSA
2005-09 25,327 2,798 2,347 1,027 5,017 4,626 -391 -8%
2010-14 28,317 2,990 2,443 1,063 6,080 5,363 -326 -5%
2015-19 31,442 3,125 2,511 1,089 7,169 6,217 -235 -3%
2020-24 34,450 3,088 2,491 1,077 8,246 7,207 -87 -1%
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Our vision about the industry
Drivers for the Industry
Bullish Macro Economic Outlook Growing Population Supply Demand Gap Mortgage Finance Set to Take Off
KSA: Mortgage Industry at its Infancy
Mortgage market to reach US$ 23.1 billion by 2012. Represents only 4.4% of GDP (currently less than 1%) Mortgage to GDP (as a %)
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KSA: Mortgage Industry at its Infancy
Mortgage market to reach US$ 23.1 billion by 2012. Represents only 4.4% of GDP (currently less than 1%) Less than 10% of population are home owners Proposed legislation Lending limit restrictions (longer tenures/higher limits) Lenders recourse (prosecute delinquent borrowers) Foreign ownership New law will serve as a key catalyst driving demand for real estate Mortgage legislation package to be effective in the course of this year
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Leading Real Estate Developer
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History of Achievements
Managing Real Estate Development Projects & Providing Affordable Home to Middle Class Saudis
Limited number of residential units, land development as well as handling public and private real estate development contracts Focus on managing residential developments for the mid market segment Expansion & increase in production capacity
1994 - 1999
Establishment with SAR 30 Mn capital
2000
2004
2005
2009
DAARs Founders established KIC to assist in providing mortgage finance to DAARs customers
Developed 478 residential units
Capital Strategic Raised increase to alliance with Capital Capital US$1.6 SAR 5.4Bn Cluttons Best Residential Increase Increase billion of and Turner Developer in to SAR to SAR debt kingdom of Saudi 10.8Bn 7.2Bn Arabia for 2006 (Euromoney) Listed on Saudi Total residential Total residential Stock Area under Area In-Process: Raised Exchange construction: 776,824m2 US$200 7,011,960m2 (2,182 units) million of debt
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Our Strategy
How to get there
Focus and Opportunity
Focus and Opportunity
Focuses on developing lifestyle residential communities and other projects targeting middle income households Middle income households are a rapidly growing segment with specific housing requirements The segment expects an annual new requirement of 50,000 residential units over the next few years To cater to this opportunity A shift in focus to development of complete residential environments rather than plain land Develop suburban areas rather than inner city centers
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Our Strategy
How to get there
Focus and Opportunity Competitive Advantage
Competitive Advantages
Name Recognition - Dar Al-Arkan is a name, recognized in the Kingdom of Saudi Arabia for developing quality residential products at affordable prices Developing lifestyle Residential Communities - Pioneered the concept of lifestyle residential communities in KSA in response to a growing demand, capitalizing on its capacity, expertise and product mix Access to land - Have access to raw land via individuals and land banks Growth through product innovation - Regularly upgrade product portfolio through new product extensions and innovative packaging solutions Strong financial performance - Has continued to increase profits since inception and has managed to maintain low debt leverage and high liquidity Experienced management team - Experienced management team which has considerable expertise and industry knowledge of the KSA real estate market
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Our Strategy
How to get there
Focus and Opportunity Competitive Advantage Support development of Mortgage Industry
Saudi Home Loans
We initiated a mortgage finance joint venture Partners are: Arab National Bank, Kingdom Installment Company and International Finance Corporation Capital of SR 2 billion First housing finance company licensed by SAMA
Will provide wider access to property ownership for Saudis and resident foreigners
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Shams AR-Riyadh
Location: Al Mareiah Riyadh Area Cost Units Status : 5 million m : SR 6 billion : 3,200 Villas : Under Construction 20% Completed
Characteristics
Part of Al Derriyah province, an area which plans to invest Billions of Riyals, allowing high future promise Wide streets, pavements and special pedestrian lanes Intense green spaces Area for building sports club and soccer fields Less than 10 km from future financial district
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Al Qasr
Location: King Fahad Road Riyadh Area Cost Units Status : 0.85 million m : SR 2.5 billion : 3,000 Residential : Under Construction 84 % Completed
Characteristics
Comprehensive development covering all aspects of utilities and infrastructure Includes service projects such as parks and facilities Includes
254 Villas 131 Residential buildings (2,800 Apartments) Commercial buildings, offices and centers A 78,000 m shopping mall
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Jeddah Khozam
Location: Jeddah inner city Area Jeddah BUA : 3.7 million m : 15 million m
Status : Master planning & Market Analysis
Characteristics
Central inner city area with high historical value The project plays a key role within the regeneration goals of the city and the Makkah province (Makkah 2020 vision) Objective: developing land to be available for a world class high density mixed-use inner city development. Phase 1: land acquisition, demolition, land development
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Projects in Riyadh
Location
Ishbiliyah
Status
sold
Area (m 2 )
694,900
Units
420
Al Rabea
Sold
349,943
368
Al Munsiyah
Sold
285,822
259
Al Yarmouk
Sold
409,775
389
Al Falah
Sold
110,843
139
Al Tawoun
Sold
30,506
42
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Makkah City Projects
Al Abrar (Sold) Al Mashaer (Sold) Al Awaly (Sold)
Located in Aziah road in Shesha area, near the Holy Mosque Project consists of 400 units Divided into 8 towers with all services present
Located near the Holy Mosque, in the heart of Makkah Project consists of 442 units Contains parking and shopping areas Divided into 7 towers with all services present
Located in Al Awaly area Project consists of 55 villas Exhibits an Islamic theme
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Other Projects In Kingdom
City
Golden Beach Jeddah
Location
Obhor North of Jeddah
Status
Sold
Units
36
Al Manar Jeddah
East
Sold
28
Al Tilal Medinah
7 Km away from AlHaram AlSharif Near Prophets Holy Mosque Near sea and city center
Under Construction
500
Sold
80
Al Noor Medinah
Al Mourjan Yonboh
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Sold
95
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Strong Revenues Growth Momentum
DAARs rapid growth corresponds to a clear shortfall in the supply of housing units and an increasing demand for residential real estate in KSA, in particular within the middle-income segment of the market. Revenues (SAR Million)
* 23%
4,197
24%
5,611
18% 82% 27%
4,353
4,926
26% 73% 74%
2,484
76% 29% 71%
1,238
**
* 2004 - 2008 CAGR ** Year to date March 2009
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Solid Earnings Growth
DAAR registered handsome profitability levels for the 2004-2008 period, growing at a 20% CAGR. The Company is expected to maintain the earnings growth momentum due to the size increase of its operations and the resultant economies of scale Net Income (SAR Million)
* 21%
2,009 1,775 1,814
Net Margins (%)
2,356
1,089
425
**
* 2004 - 2008 CAGR
**
** Year to date March 2008
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Strong Financial Ratios
March 31, 2009
Net Debt / Equity Net Debt / Total Assets Interest Coverage
0.60 0.36 5.0
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Stock Performance
Index (TASI) DAR Price
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YTD Performance: DAR +20% +34% Post 1st Q Results TASI +23%
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The Leading Real Estate Developer in the Kingdom
Strong Financial Position and Proven Track Record in Earnings Growth
Easy Access to Regional Financial Markets
Seasoned Management with an Eye on Corporate Governance
High Growth Opportunities in the Saudi Residential Real Estate Sector
Shareholders Commitment for 3 years Lock up of Shares
Strategic Alliances Resulting in Improved Efficiencies
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FORWARD-LOOKING STATEMENT
This presentation contains forward-looking statements. Such statements are not statements of historical fact, and reflect the beliefs and expectations of the Company's management. The words "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "predicts," "projects" and "targets" and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. Known risks and uncertainties include those resulting from the short history of the Company's operations as a real estate developer, the inherent risk of the execution of large scale master planned development and the introduction of competition, as well as those relating to the cost and availability of financing, the performance of the Saudi economy generally and the levels of exchange rates between Saudi Riyal and foreign currencies. Accordingly, the actual results of operations of the Company may be different from the Company's current expectations, and the reader should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments.
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