Foreign investors lift Saudi realty

There has been an increase in overseas interest in Saudi Arabia's real estate market over the past few years with most of the interest focused on Riyadh and Jeddah, a recent report has said.

"While other real estate markets across the Middle East and North Africa (Mena) have seen a slowdown in both development activity and investment over the past 18 months, interest in Saudi Arabia has remained strong from both local and international investors," said Jones Lang LaSalle (JLL) in a report on 'Holy Cities: Saudi's Unique Real Estate Markets – On Point June 2010'.

According to JLL, Saudi Arabia emerged as the Mena's destination of choice among real estate investors in its most recent Real Estate Investor Sentiment Survey.

Following the unplanned expansion of the real estate markets in the 1980s, Saudi authorities have recognised the need for a more co-ordinated approach to the development of the Holy Cities of Makkah and Madinah. They have therefore embarked on a general overhaul of the planning of the holy cities and in particular, the area around the Holy Mosque in Makkah.

The overall objective of the planning framework currently being developed is to balance the increasing needs and requirements of religious pilgrims with the permanent social and business needs of the local resident populations of Makkah and Madinah in a sustainability driven approach.

After addressing the most urgent priorities of safety for religious pilgrims undertaking the Haj, the Saudi authorities are now turning their attention to improving the comfort standards for pilgrims and building a functioning city for residents of Makkah.

More than 20 masterplans have been submitted for individual large-scale real estate developments in the central part of Makkah in recent years. Several of these have now been approved with the projects progressing to the implementation phase.

Among the major projects in Central Makkah for which master plans have been approved are:

- Jabal Omar, one of the largest of the mega developments which is located on the western side of the Haram. Construction has begun on this project. The project company, Jabal Omar Development Company, was formed as a joint stock company of 5,000 owners of 1,200 real estate parcels covering an area of 232,000 sq m. The project is expected to deliver more than 10,000 hotel rooms as part of the total built-up area (BUA) of around 1.8 million sq m.

- Jabal Khandamah, being built on 600,000 sq m of land to the east of Al Masjid Al Haram in Makkah, aims to replace the old buildings, streets and narrow alleys with high-quality new buildings. Envisaged as a pedestrian-friendly city with the total separation of pedestrians and vehicular traffic, it includes a total of 2.5 million sq m of BUA of various hotel classes, retail facilities and residential units for up to 90,000 residents.

n King Abdul Aziz Road, a 3.5 km development site that starts at the west entrance of Makkah on the intersection of the Jeddah-Makkah highway and the third ring road and ends at the east entrance of the Jabal Omar development. The plan is to re-develop one of the most densely populated areas in Makkah, to provide a mix of high quality hospitality, residential and commercial real estate to serve the local population as well as Haj and Umrah visitors.

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