The Kingdom of Saudi Arabia (KSA), the Gulf's largest economy, is also developing into one of the region's top real estate markets. While the property sectors of other Gulf countries have been struggling since the emergence of the global crisis, the Kingdom faces demand for 1 million additional housing units alone by 2014. Assuming that current production levels remain steady and that the population maintains its expected annual growth rate of 2.48 per cent, the domestic property sector would have to double the average yearly housing supply in order to meet demand through the next five years.

And this does not even cover the commercial segment yet; as the Gulf's largest economy the KSA will definitely continue to witness several commercial projects going on line. The country will clearly enjoy a leadership position within the region's real estate markets for a long time to come.

Youthful industry

Saudi Arabia's local real estate industry is still relatively young in terms of structure. In 2003, real estate companies in the Kingdom fell into only two groups: those that made huge profits from minimal activities, and those that were very active and yet made less. From 2003 to 2006, some real estate brands began to emerge to attract investors even if there were no concrete projects or transactions behind the sprouting trade names. Governments soon clamped down on the unfair practice, and thus in 2006 the industry started to see clear demarcations among land owners and traders, developers, marketing companies, brokerage firms, and individual brokers.

Real estate branding got off on the wrong foot in Saudi Arabia a few years ago because the market was just too full of potential and industry pioneers had no local industry framework to base standards on. So a lot of the early brands failed to deliver and many of them are now non-existent. The good thing is that current market conditions are perfect for real estate businesses to establish solid brands and ensure the productivity and longevity of their operations.

The branding challenge

A brand breathes identity to a specific product, service or business. A brand could be a name, a slogan, a symbol, a color, or many other forms. Walter Landor, a pioneer in the field of branding and consumer research, aptly describes a brand as '… A promise. By identifying and authenticating a product or service it delivers a pledge of satisfaction and quality.' Real estate is one of those industries that encompass products, services and business; it is a field that has to fulfill a lot of promises. The challenge for real estate companies in the KSA, then, is to ensure physical quality, operational functionality and value stability in all their products and services.

business; it is a field that has to fulfill a lot of promises. The challenge for real estate companies in the KSA, then, is to ensure physical quality, operational functionality and value stability in all their products and services.

KSA strategy

What, then, should Saudi real estate developers do to create and nurture their own successful brands? The first and most important thing that they should focus on is to build a master brand rather than emphasize smaller-scale and temporary project brands. They should then ensure that all projects are successful in their specific areas and for their particular target groups so that the master brand's value continues to prosper. The entire project portfolio could be thought of as a necklace, with each bead or project feeding off of a common thread of values and corporate imagery as projected by the master brand.

It is important that over-branding be avoided as well; efforts should mostly be reserved for developments which have the potential to become lifetime brands, such as 'communities,' 'destinations' and 'lifestyles.' Brands should also be created now, while the proverbial iron is hot and Saudi properties still enjoy excellent market conditions. This lifts the company and its brand over today's highly competitive markets and forms a strong safety net against the effects of a prolonged recession.

No easy task

Convincing Saudi property firms to lay the foundations for their brands is easier said than done, though. Because of the surging domestic market, most companies eschew brand building in favor of making fast and easy money. They need to realize that the world's top brands, such as Coca Cola, Microsoft and Toyota, took decades to build and generate sustained substantial returns. The lack of local mega-developers also means a perceived lack of competition, and thus a lack of interest in branding which many do not fully understand anyway. And so most companies shun spending on a 'name' or crafting a media plan and continue to push their projects rather than the company itself.

Branding is necessary

The Saudi real estate sector needs to get more into branding. It is a natural progression towards the maturity of the industry. A growing business requires better differentiation; branding enables a company to set itself apart from its field, concretize its value proposition, and attract specific audiences.