introduction: Changing faces
Changing faces
The mixed use development model promises to give Saudi Arabia a healthy economic future with investments flowing from within the Kingdom and foreign direct investment.
The implementation of the Freehold Property Law and the arrival of a mortgage law in Saudi Arabia are set to revolutionise the Kingdom's real estate market. For the first time ever, non-Saudi nationals will be able to buy and own their own homes, with the market opening up to all residents holding current work visas. While nonresidents are not allowed to buy into the economy, observers expect this ruling will eventually change.
Additionally, Saudi Arabia has offered a host of facilities to investors in a bid to attract more foreign investment to support the national economy, and revive related sectors such as construction.
Aiming high
Some of the most audacious projects under development include the Al-Khobar Lakes and Jeddah Gate projects. The first is a lakefront gated residential community, set amidst 80,000 square-metres of serene water-bodies, and the second is a US$700 million investment to build 5,000 homes on the 464,515 squaremetre old Jeddah airport site.
Dubai's Damac properties is building Al Jawharah, a 40-storey tower block development on Jeddah's corniche, and Limitless is behind the US$12 billion Al Wasl community near Riyadh. Once finished, the 1,400 hectare Al Wasl community will have 50,000 homes, schools, mosques, sports facilities, civic buildings, public centres and commercial offices. It will also feature landscaped greenery and parks for families and residents to enjoy.
Arguably most ambitious of all is Kingdom Holding's plan to build the world's tallest tower in Jeddah. The tower, expected to be at least 1,000 metres high, will be part of the US$26.7 billion Kingdom City project in Jeddah, which will be one of the largest and most comprehensive real estate projects in Saudi Arabia. Located on a prime site in Obhur, north of the creek of Jeddah and the mountains to the east, the Kingdom City master plan covers 23 million square metres and includes residential, entertainment, retail and hospitality units. Kingdom City is expected to house 80,000 residents and accommodate 250,000 visitors.
The Jeddah Mayoralty has prepared a list of 100 projects in the city's 20-year development programme. These include the City Center at the Old Airport site, the Jeddah Centre project including Balad and parts of the water front, and several projects on the Corniche.
Another major city development is the Knowledge Economic City (KEC) in Al Madinah, which will cost US$7 billion to build. Established by the King Abdullah Foundation, KEC is being positioned as a landmark and national icon for knowledge-based industry development in the country. It has been granted special economic zone status by the Saudi Arabian General Investment Authority (SAGIA) in order to attract foreign investment.
In addition to the 600,000 square metres dedicated to IT-focused knowledge-based industries, which will form the hub of the city, there is an equal level of commitment to the cultural aspect of Al Madinah.
Another major development is the King Abdullah Financial District in Riyadh, which is located close to the capital city's business district. The hub - a 1.6 million square metre site with three million square metres of floor space - was designed as a state-of-the-art centre for doing business and facilitating investment and enterprise in the Kingdom. It was also built to bring regulatory and technological standards of the world's major global financial centres to the Middle East, and to and strengthen the Kingdom's financial sector as part of plans to diversity away from oil.
Speaking shortly after the project was announced, His Excellency, Ibrahim Abdulaziz Al-Assaf, Minister of Finance, said: "Our common goal in establishing a new financial district is to provide an attractive working environment for the growing number of Saudis working in the financial sector."
Several respected financial institutes have relocated to the financial district, such as the Capital Market Authority (CMA) and the Stock Exchange (Tadawul). Service providers such as accountants, auditors, lawyers, analysts, rating agencies, consultants, and IT providers, are also based in the development.
Tourist trail
As part of its efforts to further strengthen Saudi's tourism industry, the Saudi Commission for Tourism and Antiquities is developing 52 new tourism destinations across the Kingdom this year through the Al Ogair Development Company.
The new tourism projects will help promote the industry, create jobs and contribute to the Kingdom's economy, according to SCTA chairman Prince Sultan bin Salman bin Abdul Aziz.
"The SCTA will make these tourist destinations more attractive for investment. Now the work is under way to complete the steps to announce the development of other sites during the next phase," he said.
Prince Sultan added that the commission was committed to developing domestic tourism. "We are constantly working to prepare the local market to meet the growing demand of citizens for domestic tourism through the provision of high quality services and programs."
Cityscapes
Although no plans have been confirmed, it is envisaged that the new city being developed on the western coast will include meetings facilities. The King Abdullah Economic City will be built near al-Rabegh industrial city, north of Jeddah. Extending along a coastline of 35 kilometres, the city will also include petrochemical, pharmaceutical, tourism, finance and education, and research areas.
Several gated communities across Saudi Arabia are being developed by Al Akaria, the development arm of the Saudi Real Estate Co. These gated communities will be built outside major cities, in line with Saudi government planning, to ease the congestion in built up conurbations.
Plans for the company's first gated community, on the outskirts of Riyadh, have been drafted, and Al Akaria is also working on a final blueprint for its Riyadh Techno Valley project. The latter will be a complex for research facilities that are backed by the government, private research institutions and King Saud University.
More rooms
On the hospitality front, Starwood Hotels & Resorts Worldwide, Inc. has signed a longterm management agreement with the Al Hokair Group to open Four Points by Sheraton Mall of Arabia in Jeddah, Four Points by Sheraton Dhahran and Aloft Riyadh. The addition of these three new properties increases Starwood's portfolio to 13 hotels in Saudi Arabia.
Scheduled to open in mid-2012, Four Points by Sheraton Mall of Arabia is in a prime location in Jeddah, less than three miles from the King Abdul Aziz International Airport and just five miles from the old city. It will offer 300 spacious rooms, a business centre and more than 900 square metres of state-ofthe- art meeting space for events and conferences.
Four Points by Sheraton Dhahran, situated between the King Fahd International Airport and the Kingdom of Bahrain, was expected to open in early 2011. With 236 comfortable rooms and suites the hotel will offer more than 1,100 square metres of meeting space for meetings and conferences.
Marriott International revealed three years ago that it would manage nine new properties in the Kingdom. The locations for the hotels that represent various Marriot International brands are Riyadh, Jeddah, Dammam and Jubail. The Ritz-Carlton Hotels, The Ritz-Carlton Residences, Marriott Hotels & Resorts, Marriott Executive Apartments and Courtyard by Marriott are the brands featuring in the Kingdom. When all properties are open, they will substantially increase Marriott International's presence in the Kingdom from three to 12 properties.
The new hotels include the 250-room The Ritz-Carlton, Riyadh and the 80-unit The Ritz-Carlton Residences, Riyadh, located on King Fahad Road. The Dammam Marriott Hotel and Marriott Executive Apartments Damman are also expected to open in 2011.
Other developments include the 311-room Courtyard by Marriott and 85-unit Marriott Executive Apartments Mall of Arabia Jeddah. The latter is located on Al Madinah Road, the main thoroughfare connecting Jeddah International Airport to Jeddah's central business district and downtown area. Further extending the Marriott portfolio in the Kingdom is The Courtyard by Marriott Jeddah King Abdullah Street, the Courtyard by Marriott Olaya Street Riyadh and the Courtyard by Marriott Jubail.
Hilton Hotels Corporation has entered into a non-exclusive Strategic Development Agreement (SDA) with the Abdulmohsen Al-Hokair Group for Tourism and Development, with the potential to deliver 13 Hilton Garden Inn properties, in key locations across Saudi Arabia. By 2014, Hilton and Al Hokair plan to have Hilton Garden Inn hotels in Riyadh, Al Khobar, Dammam, Jubail, King Abdullah Economic City, Taif, Abha, Tabuk, Hail/Buraydah and Yanbu.
Hilton Garden Inn is a focused service brand offering affordable rates for the mid-market traveller. The hotels will also feature small meeting rooms.
Hilton Hotels currently operates five properties in Saudi Arabia; four Hilton hotels in Jeddah, Makkah and Madinah, in addition to The Waldorf-Astoria Collection property, 'Qasr Al Sharq' or 'Palace of the Orient' in Jeddah.
Shop talk
Saudi Arabia is the largest retail market, and one of the fastest growing markets for consumer products, in the Middle East.
The Al Hokair Group is in charge of one of the biggest mall networks as well as being a leader in the fashion retail market. Its mall management arm, Arabian Centres, has a network of 11 operational malls, managing almost one million square metres of prime retail real estate.
The malls have a combined gross lettable area (GLA) in excess of 700,000 square metres, about 30 percent of the total mall GLA in Saudi Arabia. Fawaz Al Hokair plans to develop 12 additional malls by 2014, adding more shopping complexes to Saudi's most developed cities. The company also wants to open 100 stores on average per year until 2014, through which they expect revenues to grow by 12.7 percent annually.
Dubai-based MAF Shopping Malls has taken its City Centre shopping mall brand into Saudi Arabia through a joint venture with Al Ghazzawi Group. Among the projects is a US$29 million shopping centre called Jeddah Riviera Mall. The 93,000-square-metre complex will host more than 300 retail outlets, including a Carrefour.
The planned economic cities will include further retail investments. The Savola Group, which currently administers 14 Saudi shopping malls, signed a memorandum of understanding for the first phase of retail development at Medina's Knowledge Economic City. This will cover more than 100,000 square metres, in a deal worth US$133 million, and will include a hypermarket and more than 300 stores. Furthermore, there are plans for a second phase to expand the city's retail space by an additional 300,000 square metres.
Infrastructure
In terms of infrastructure, Emaar the Economic City (EEC) and DP World have signed a memorandum of understanding to develop King Abdullah Economic City (KAEC) Sea Port in Jeddah. The Sea Port is one of the six key components of the 168-million-square-metre KAEC, and it will be the largest port in the Red Sea and one of the top 10 ports in the world. A multipurpose cargo terminal was scheduled to be operational by end of 2010 and a 1.6 million TEU container terminal by mid-2011, after which the capacity of the port will be increased in several phases. Currently, there are sea ports at Jeddah, Dammam, Jubail Industrial, Yanbu, Jizan and Dhiba.
Saudi Arabia also has three international airports: King Khalid International Airport in Riyadh; King Abdul-Aziz International Airport in Jeddah; and King Fahd International Airport in Dhahran. Other major regional developments include Saudi Arabia's King Abdul Aziz airports in Madinah and Tabuk, which will total US$11.3 billion in investment.
Further transport investments include a high-speed rail link, which will run between Islam's holy cities of Makkah and Madinah via the commercial hub of Jeddah.
The new rail link aims to transport an estimated 10 million Umrah and Hajj pilgrims every year. It includes the construction of approximately 500 km of high-speed electric railway lines between the three cities.
The network is part of a massive Kingdom-wide railway project, which also involves the construction of 950 kilometres of new track between Riyadh and Jeddah, and another 115 km of track between Dammam and Jubail.
So far there is little dedicated meetings space but there are plans to build several new facilities. Today's key facilities are in Riyadh, Jeddah and Dammam. New units include Al-Qassim University, which has plans in place to build a major conference centre. This centre would include a 2,500-seat auditorium and 5,000 square metres of exhibition space, making it a centrepiece of the university.
The Jeddah International Exhibition Centre was announced as part of an intended redevelopment of the airport, but there are no fixed plans as yet. Furthermore, the Dhahran International Exhibition Centre has plans for a new 5,000-square-metre exhibition hall.
