Saudi Real Estate Company: In-Depth Analysis of Financial Performance

The Saudi Real Estate Company was established by royal decree in 1396 AH (1976 AD), becoming one of the first publicly traded real estate companies in the Saudi market. The company's establishment came during a period of significant economic boom in the Kingdom due to rising oil prices, leading to the expansion of urban development and infrastructure projects. From the outset, the company focused on acquiring and developing land suitable for construction in vital areas, particularly in Riyadh, benefiting from the increasing demand for housing and commercial facilities.

In its early years, the company relied on substantial capital raised from shareholders and began developing medium-sized residential projects to meet the needs of Saudi families. Over time, its activities expanded to include the development of commercial complexes, mixed-use buildings, and providing project management and procurement services. This diversity in activities allowed the company flexibility in facing market transformations and changes in real estate demand.

With the advent of the new millennium, the company, like the rest of the real estate sector, faced economic fluctuations due to changes in oil prices and economic policies, prompting it to restructure some of its activities and focus on developing strategically valuable land in the capital and its surroundings. The company's shares have been listed on the Saudi financial market (Tadawul) since early on, providing it with a broad investment base and enhancing transparency in its financial reports. Thanks to this long history, the company has gained significant cumulative experience in understanding the cycle of the Saudi real estate market and adapting to new regulations, which is evident in its ability to persist despite the economic challenges it has faced in recent years, especially in light of global market changes and local real estate sector competitiveness.

The Saudi Real Estate Company relies on a relatively stable capital structure, with a paid-up capital of 3.75 billion Saudi Riyals distributed over 375 million nominal shares valued at 10 Riyals per share. This size places the company among the small-cap companies in the Saudi real estate sector, with its market capitalization expected to reach approximately 6 billion Riyals by early 2025, based on a share price around 15.95 Riyals at the end of February 2025. This level of market capitalization is relatively small compared to major developers like Dar Al Arkan or Emaar Economic City, whose capitalizations exceed tens of billions.

This capital structure provides the company with flexibility in managing its financial obligations, but it makes it more susceptible to market fluctuations, as changes in trading volume or share price significantly impact its market value. With the share price fluctuating between a low of 14.94 Riyals and a high of 29.95 Riyals over a 52-week period, it demonstrates the sensitivity of market value to slight price changes, especially with a daily trading volume of around 624,000 shares valued at nearly 10 million Riyals on a typical day.

This trading volume and daily liquidity are considered acceptable but not high compared to larger companies, which may affect the ease of entry and exit from the stock for large investors. In terms of the price-to-earnings (P/E) ratio, it is often unstable or high due to limited or fluctuating earnings, reflecting the competitive environment and challenges the company faces in achieving sustainable profits. In summary, the capital structure and number of shares represent a fundamental starting point for understanding the position of the Saudi Real Estate Company in the market, reflecting a mix of stability and flexibility coupled with high sensitivity to financial market fluctuations.

The activities of the Saudi Real Estate Company revolve around owning and developing land suitable for construction, building residential and commercial projects, and selling or leasing these properties after development. The company's strategy focuses on selecting strategic locations in Riyadh and its suburbs, where the highest demand for residential and commercial units is concentrated, giving it a competitive edge in attracting a wide range of customers seeking quality and prime locations.

In addition to land development, the company offers project management and procurement services related to construction, enhancing its ability to control construction quality and reduce operational costs. This integration of services allows it to provide comprehensive offerings to clients, whether individuals or companies, and grants it flexibility in responding to market changes. The company also engages in some manufacturing of materials and equipment related to construction, which helps secure project needs and reduce reliance on external suppliers, thereby mitigating the risks of rising raw material costs.

The company's activities extend to providing innovative real estate solutions that meet local market aspirations, especially in light of the transformations taking place in the Kingdom under Vision 2030. For example, the company aligns with the requirements of national housing programs such as the "Sakani" program and seeks to capitalize on opportunities provided by partnerships with both the public and private sectors. This approach has contributed to enhancing the company's presence in the Saudi real estate management and development sector, despite challenges related to fluctuating interest rates and rising construction costs. Overall, the business model of the Saudi Real Estate Company reflects the ability to adapt to market demands and provide added value to customers and shareholders while remaining competitive in a rapidly changing market.

The financial performance of the Saudi Real Estate Company during 2024 and 2025 has shown clear variations reflecting the nature of the real estate sector and market challenges. In the absence of final profit data and officially announced distributions for the mentioned period, some indicators available from sources like Gulf Base indicate a negative financial state, as the term "Negative" appeared in recent financial reports, reflecting the company recording a net loss or decline in profitability during that period.

It is noted that the company has not announced any periodic dividend distributions since 2023, likely due to retaining earnings or incurring losses, prompting the board of directors to adopt a cautious policy regarding returns distribution. This comes in the context of an economic environment characterized by rising global interest rates, which has affected real estate demand and led to a relative slowdown in residential unit sales. Additionally, rising costs of construction materials and changing investor priorities have contributed to pressure on profit margins.

In terms of liquidity, trading data showed an average to acceptable daily trading volume (around 624,000 shares daily valued at approximately 10 million Riyals), indicating reasonable liquidity but not very high compared to major real estate development companies. The beta coefficient of 1.07 indicates that the stock's price fluctuations are close to the market average, with a slight tendency towards higher volatility.

As for the price-to-earnings (P/E) ratio, in the absence of stable profits, this ratio becomes high or unavailable, adding a layer of risk for investors in the company. Nevertheless, the company continues to develop new projects, attempting to capitalize on any opportunities arising from national housing programs and government support. In summary, recent financial indicators reflect a mixed reality of opportunities and challenges, highlighting the need for greater caution in financial management, especially during times of economic volatility.

When analyzing the price fluctuations of the Saudi Real Estate Company stock during 2024 and 2025, it becomes evident that the stock experienced notable volatility, ranging from a low of 14.94 Riyals to a yearly high of 29.95 Riyals. This wide range of fluctuation reflects the stock's sensitivity to factors affecting the real estate sector in particular and the Saudi financial market in general. The stock's beta coefficient (1.07) indicates that the stock is slightly more volatile than the market index as a whole, meaning its movements often follow or exceed market fluctuations, influenced by sector news, quarterly earnings results, and macroeconomic policies.

In terms of liquidity, trading data indicates that the average daily trading volume was around 624,208 shares with a trading value of approximately 9.97 million Riyals on a typical day. This figure is considered good for a small-cap company, but it is lower than trading volumes for larger real estate companies. These figures show that entering and exiting the stock is accessible for most investors, but liquidity may be affected during market fluctuations or the release of significant financial news.

When looking at the factors influencing stock price fluctuations, it is found that the Saudi real estate market in 2024-2025 was affected by rising interest rates, changes in housing demand, and construction costs. Additionally, news related to dividend distributions or their absence, and negative information regarding financial results, often directly impact the stock's movement. For example, the company's failure to announce profits or distributions during the period, coupled with negative signals in financial reports, led to downward pressure on the price during certain periods. Liquidity also plays a role in determining the ease of price correction during fluctuations.

In general, understanding price volatility and liquidity is a crucial element for any evaluation of the Saudi Real Estate Company, as they reflect the rapid response to changes in the real estate sector and the risks associated with investing in its shares, especially in light of financial instability in recent years.

The Saudi Real Estate Company occupies a clear position in the real estate management and development sector within the Saudi financial market. It is officially classified within the "Real Estate Management and Development" sector, which includes the largest residential and commercial development companies in the Kingdom. The importance of this sector lies in its being one of the main drivers of national economic growth, especially with the government's focus on increasing homeownership rates among citizens and supporting housing projects.

The Saudi Real Estate Company is distinguished as one of the older companies in the sector, but it is currently classified in terms of market capitalization as a relatively small company compared to giants like Dar Al Arkan and Emaar Economic City. Its strategy relies on geographic focus in the Riyadh area and neighboring regions, which gives it the opportunity to benefit from the ongoing demand for housing in the Saudi capital. In contrast, larger companies have a wider geographic diversification and large project portfolios that include luxury residential complexes, commercial centers, and mixed-use towers.

Despite this disparity in size and scope, the Saudi Real Estate Company remains an important player in the sector, capable of providing integrated real estate solutions, especially in medium-sized projects that require flexibility in execution and quick responses to market demands. Its long-standing presence in the market provides it with experience in dealing with changing real estate regulations and managing risks associated with fluctuations in demand and costs.

The biggest challenge facing the company is its ability to compete with larger companies, especially in terms of financing and executing large projects. However, its focus on developing land and residential projects in the capital gives it a relative advantage in a market experiencing continuous population growth and government support to stimulate homeownership. Ultimately, the company's position reflects a balance between its rich history and expansion challenges, with a real opportunity to benefit from government support programs and ongoing economic transformations.

The Saudi Real Estate Company faces strong competition in the real estate management and development sector from several large and medium-sized companies, each with its own strategies and strengths. Among the most prominent competitors is Dar Al Arkan Real Estate Development, which is the largest in terms of market capitalization and project size, exceeding tens of billions and executing large projects in Riyadh, Jeddah, and Dammam. Dar Al Arkan focuses on developing integrated cities and luxury residential projects, giving it a significant market share among customers seeking luxury.

Another notable competitor is Emaar Economic City, known for the King Abdullah Economic City project and the "The Lagoons" projects in northern Jeddah. Emaar is distinguished by its affiliation with a large investment group and its provision of a comprehensive urban environment that combines housing, business, and entertainment. Meanwhile, Dukhon Madinah specializes in developing projects in western Saudi Arabia, particularly in Mecca and Medina, benefiting from the demand for housing units during the Hajj and Umrah seasons.

In addition to these giants, there are medium and small companies such as Al-Badr Real Estate, Bawani, and Al-Andalus, which often focus on local or specialized projects. These companies are characterized by greater flexibility in executing small or specialized projects, allowing them to meet specific market needs.

In this competitive context, the strengths of the Saudi Real Estate Company stand out in its ownership of strategic lands in Riyadh and its long experience in developing medium-sized projects. However, challenges lie in its ability to compete with larger companies for financing large projects and expanding its geographic scope. Competition in the sector relies on innovation in offering new real estate products, cost control, and leveraging government support programs. Overall, the competitive landscape reflects the vitality of the Saudi real estate sector and underscores the importance of continuous development in the quality of projects and services offered.

Government policies and housing programs play a pivotal role in shaping the business environment of the Saudi Real Estate Company, as much of the demand for housing units relies on government initiatives such as the "Sakani" program and the National Vision 2030 projects. Vision 2030 aims to raise the homeownership rate among citizens to unprecedented levels by encouraging the private sector to develop diverse housing projects and providing financing facilities for citizens.

The Saudi Real Estate Company benefits from these programs through increased demand for residential properties, especially in major cities like Riyadh. Support programs such as tax exemptions, real estate financing facilities, and partnerships with the private sector provide a fertile environment for real estate developers to implement new projects or expand existing ones. Additionally, government initiatives to develop infrastructure (such as roads, schools, and health facilities) enhance the attractiveness of the real estate locations in which the company invests.

On the other hand, the company is also affected by changes in monetary policies such as rising interest rates, which increase the cost of real estate financing and limit individuals' ability to purchase properties. Sudden changes in support programs or delays in implementing certain government projects can also lead to fluctuations in real estate demand, impacting the company's sales and revenues.

Notable examples include the company's benefit from partnerships with the Ministry of Housing to implement projects under the "Sakani" program, which ensures a minimum level of demand and provides relative revenue stability. However, intense competition for government-supported projects requires the company to improve the quality of its products and offer innovative solutions. Ultimately, government policies and housing programs are a key factor in the success or challenges of the Saudi Real Estate Company and form a central axis in its future strategy.

The performance of the Saudi Real Estate Company is directly affected by macroeconomic factors, especially interest rates and financing costs. During 2024 and 2025, both the Saudi and global economies experienced rising interest rates, negatively impacting individuals' and companies' ability to obtain real estate financing. Rising interest rates lead to increased borrowing costs, thereby reducing demand for purchasing residential units, which reflects on the company's sales and revenues.

Additionally, changes in the prices of construction materials (such as cement, steel, and glass) affect the company's profit margins, as rising costs lead to increased expenses and reduced net profits. In an environment characterized by price volatility, the ability to control costs and manage the supply chain becomes a critical factor in maintaining profitability. Furthermore, fluctuations in oil prices, as the main source of government revenues, indirectly affect the level of public spending and infrastructure projects, which in turn impacts demand in the real estate sector.

On the other hand, supportive government policies, such as massive investments in Vision 2030 projects, may open opportunities for the company to participate in developing new projects or benefit from increased housing demand. However, these opportunities are coupled with challenges such as intense competition, rising financing costs, and the need for the company to maintain sufficient liquidity to cope with any decline in revenues.

In summary, the interaction between interest rates, financing costs, construction material prices, and government spending policies forms the economic framework that determines the performance of the Saudi Real Estate Company. Success in this context requires careful monitoring of financial markets and continuous adaptation to economic changes to ensure financial stability and sustainable growth.

The dividend distribution policy of the Saudi Real Estate Company in recent years has been characterized by extreme caution, as it has not announced any periodic dividend distributions in 2023 and 2024. This is due to several factors, the most prominent of which are recording negative financial results or net losses, as well as the board's desire to retain earnings to support financing for future projects or reduce financial obligations.

The company's financial strategy relies on achieving a balance between financing new projects and ensuring the sustainability of operational activities. In light of market fluctuations and rising construction costs, the need to retain liquidity becomes a top priority, often leading to restrictions on dividend distributions. Additionally, the absence of stable profits or net losses in some periods forces the board of directors and the general assembly of shareholders to make careful decisions regarding dividend distribution, taking into account the company's long-term interests.

Moreover, the distribution policy is subject to the requirements of financial regulations in the Saudi market, which mandate companies to fully disclose their financial results and the reasons for not distributing dividends if that occurs. This coincides with investors' expectations for profits to be reinvested in new developmental projects that would enhance the company's market value in the future. Practically, investors noticed the absence of any announcements regarding distributions during 2023 and 2024, which reflected on the stock price and led to additional fluctuations in its market value.

Through this financial policy, the company aims to ensure the continuity of its operations amid economic challenges while focusing on developing strategic projects that secure future growth. At the same time, the issue of distributions remains contingent on improved financial performance and increased net profits, which may open the door for resuming the distribution policy in future periods if financial conditions improve.

The Saudi Real Estate Company plays an important role in achieving the goals of the economic transformations taking place in the Kingdom within the framework of Vision 2030, which focuses on diversifying the economy and increasing the private sector's contribution to development. The Saudi government aims, through this vision, to raise the homeownership rate among citizens, develop smart cities, and stimulate investment in infrastructure and tourism and entertainment projects.

The Saudi Real Estate Company responds to these transformations by developing residential and commercial projects that align with the vision's requirements, seeking opportunities to participate in large national projects such as Qiddiya, the Red Sea, and NEOM. It also works to adapt its real estate products to meet the requirements of new housing programs, which aim to provide diverse housing units at competitive prices and high quality.

In this context, the importance of partnerships with both the public and private sectors emerges to implement joint projects that contribute to achieving the vision's objectives. For example, the company may participate in developing residential complexes within supported housing programs or invest in commercial projects that meet the needs of new cities being established under government initiatives.

Although the company has not announced any alliances or major new projects in 2024-2025, its presence in the capital Riyadh and its continued development of land and residential projects qualify it to benefit from any future opportunities. Its ability to adapt to new policies and innovate in products gives it a competitive advantage in a rapidly changing market.

Overall, the role of the Saudi Real Estate Company in economic transformations is part of a broader system aimed at achieving sustainable development, improving quality of life, and providing new investment opportunities for the private sector in the Kingdom, in line with the aspirations of Vision 2030.

The Saudi Real Estate Company faces a range of challenges that impact its financial and operational performance in the Saudi real estate market. Among the most prominent challenges are fluctuations in demand for residential and commercial units, resulting from changes in interest rates, financing costs, and local and global economic conditions. Rising interest rates in recent years have increased borrowing costs, limiting individuals' and companies' ability to purchase properties, negatively affecting the company's sales and revenues.

Other challenges include rising costs of construction materials, such as cement and steel, which increase project expenses and pressure profit margins. Additionally, the intense competitive environment in the real estate sector, with large companies possessing substantial financial resources and extensive project portfolios, makes it difficult for the Saudi Real Estate Company to expand rapidly or capture a larger market share.

On the financial management side, the absence of stable profits and the lack of dividend distributions for shareholders add further pressure, especially with investors' expectations for periodic returns. The company also needs to develop real estate products that align with changing market demands, such as smart and sustainable projects, to ensure its competitiveness in the future. Challenges also include the impact of global events, such as the COVID-19 pandemic, which affected consumer and investment spending and led to a relative slowdown in some projects.

Despite these challenges, the Saudi Real Estate Company has long experience in the market and the ability to adapt to changes, but overcoming these obstacles requires developing new strategies for product innovation, improving cost management, and leveraging opportunities provided by government support programs and major national initiatives.

Despite the challenges it faces, the Saudi Real Estate Company has promising opportunities for growth and expansion in the Saudi real estate market, especially amid ongoing economic transformations and government support programs. Among the most prominent opportunities is participation in supported housing projects under the framework of Saudi Vision 2030, which aims to raise the homeownership rate among citizens through partnerships between the public and private sectors. Benefiting from programs like "Sakani" could ensure stable cash flows for the company and new opportunities to develop competitive housing projects.

Additionally, large national infrastructure projects, such as the development of smart cities and commercial and tourism complexes, open the door for the company to enter new sub-sectors or expand geographically beyond Riyadh. As demand for modern and integrated facilities increases, the company can direct its investments toward developing projects that meet the needs of emerging markets in major cities and tourist areas.

On the other hand, the company can leverage innovation in construction technologies, such as using smart materials and rapid construction technology, to achieve a competitive advantage in reducing costs and speeding up project delivery. Furthermore, collaboration with other real estate development companies or entering into strategic alliances could enhance capital and expand the customer base.

Moreover, the expected improvement in the economic environment with the stabilization of interest rates in the future, and increased opportunities for real estate financing for individuals, could raise demand for residential units and enhance the company's revenues. Additionally, focusing on developing real estate products targeted at the middle and lower market segments, which are experiencing high demand, could grant the company a larger market share in the future.

Overall, exploiting these opportunities requires adopting flexible and innovative strategies, efficiently investing financial and human resources, while continuing to focus on quality and meeting customer aspirations in a rapidly changing market.

As of mid-2025, the Saudi Real Estate Company has not recorded any significant news regarding the launch of major new projects or large strategic alliances. The company's focus has remained on developing traditional projects in Riyadh and neighboring areas, with no official announcement of its entry into major infrastructure tenders under Vision 2030. There has also been no notable change in the shareholder structure or board of directors during the mentioned period.

Regarding general assemblies, the company held its annual meeting in the first half of 2024, where financial results were reviewed without announcing any dividend distributions due to ongoing losses or weak profits. These financial results reflected the negative signals that appeared in some reports like Gulf Base, which highlighted a "negative" financial state for the company, explaining the absence of distributions and caution in launching new projects.

The company has not published reports about its participation in major national projects or winning government tenders, nor has it announced any merger or acquisition plans with other companies during 2024-2025. The circulating news has been limited to the company's continued development of some medium-sized residential and commercial projects, focusing on cost control and improving operational efficiency.

In contrast, the company has continued to disclose its financial and operational data through the Saudi financial market (Tadawul) website, adhering to transparency in announcing any significant events affecting the stock or the company's market value. Investors and financial analysts remain on the lookout for future earnings or distribution data, which may reflect an improvement in the company's performance if economic conditions change or it benefits from new investment opportunities. Overall, the company is currently focusing on continuity and risk management while anticipating any positive developments in the Saudi real estate sector.