Surfing in Saudi


Noticeable by their near absence are announcements of new international real estate acquisitions by Middle Eastern investors. Judging by the headlines, the vast majority of new money for property purchases is staying in the region and particularly Saudi Arabia.

Readers will be familiar with Saudi Arabia’s Vision 2030, and the mega projects that are part of it, but what struck me on visits to the Kingdom this year was not so much the crane count, but the optimism that this government program is generating in its people.

Everyone I spoke to was positive about the transformation that Vision 2030 will deliver and it seems that real estate investors are wanting to ride that wave, perhaps one of sand rather than water, for at least the next six years or so. Surf’s up.

Recent data supports this, with the profits of Saudi real estate companies jumping more than 150% in the first nine months of 2023 compared with 2022. This is not going unnoticed, with plenty wanting part of the action.

Domestic activity includes Areeb Capital acquiring a development plot in Makkah for SAR521 million (US$138.78 million) with designation for the construction of a 59,668 square metres (642,000 square feet) multi-use tower — a substantial individual property, with the press release directly referencing the initiative’s “aims to contribute to the realization of the goals of Vision 2030”.

Sticking with the development theme, Knowledge Economic City recently announced the signing of a framework agreement to raise the equity needed for the first phase of its Islamic World District in Madinah. Not lacking ambition, the first phase will include a chain of hotels providing more than 5,000 rooms, as well as close to 750 apartments and associated amenities.

And with Riyadh certainly not being left out, Aljazira Capital has launched a fund with a target to invest more than SAR1.7 billion (US$452.84 million) in multi purpose development projects in the northern region of the city, including residential, hotel, office and commercial properties.

The announcements are almost endless, but also include capital from outside the Kingdom, with Bahrain’s GFH Partners recently announcing the acquisition of a logistics and industrial portfolio in Saudi Arabia, as well as the UAE.

Appetite appears to be for all property sectors in all locations, with no sign of the Saudi swell showing any sign of subsiding soon. Time to grab the board?

Written by Philip Churchill, first published in Islamic Finance news Volume 20, Issue 49 dated 6th December 2023.