Opening up real estate ownership in Mecca and Medina to foreign investors could help deliver a boost to investment into Saudi Arabia, after Indonesia’s sovereign fund Danantara completed a 2 billion riyal ($533 million) deal to purchase a hotel and development plots.
That agreement is the first time a foreign state has acquired property in Mecca, one of the holiest sites in Islam, and opens the door for further sales to Muslim-majority states, Faisal Shaker, chief executive of Thakher Development, owner of the development sold to Danantara, told Semafor.
The company is the master developer behind Thakher Mecca, less than a mile from the Grand Mosque in the city. Sales of another Mecca development called Mathabah will also be launched next year, Shaker said. As part of its plan for sales to foreign investors next year “transactions we aspire to close will not be less than the deal we just announced,” Shaker said. “We are in discussion with multiple stakeholders and different parties from different parts of the world.”
Investment into the two cities is “driven by faith and not by cycles,” Shaker said.
Saudi Arabia opened Mecca and Medina real estate to Muslims abroad and selected foreign institutions in January. Saudis are still the majority buyers, but Gulf investors are also pouring money into the two cities, Shaker said. Danantara is also considering investing in Medina, Asharq Bloomberg reported.
A key part of Saudi Crown Prince Mohammed bin Salman’s strategy to grow non-oil income is more than doubling religious visitors to the kingdom to 50 million by 2030 from about 20 million last year.