UAE developer Arada is launching a Dh14 billion ($3.8 billion) residential project in Riyadh and plans to build 100,000 homes in Saudi Arabia over the next three to five years as it expands in the kingdom, its chief executive has said.
The company will also launch projects in Jeddah and Makkah as the Saudi market opens for foreign investment.
“We have a good pipeline coming, and we will probably announce another project by the end of the year,” Ahmed Alkhoshaibi said. “As a group we plan to have 200,000 homes in the next three to five years, with half of that coming in Saudi Arabia.”
Arada is jointly owned by Saudi businessman Prince Khaled bin Alwaleed’s KBW Investments and Sharjah-based Basma Group.
Following the Saudi announcement, Arada’s pipeline is valued at Dh185 billion across the UAE, Saudi Arabia, the UK, Australia and Syria, comprising more than 70,000 homes. It has completed 17,000 homes so far.
Saudi Arabia, the Arab world’s largest economy, has overhauled its property sector, allowing foreigners to buy in designated zones in Riyadh and Jeddah, while introducing “special requirements” for home ownership in Makkah and Madinah from January.
It also introduced land tax rules last year to help free up undeveloped land and spur building activity.
Riyadh debut
Arada’s debut project will be built in the Al Rimal district in Riyadh's north-eastern growth corridor on a plot covering 2.5 million square metres.
Apart from 3,500 villas and town houses, it will also have a school, retail outlets and a community centre, as well as sporting facilities and green areas. The project is inspired by Arada's Masaar, a Dh8 billion woodland community development in Sharjah.
Units will be sold for between 1,000 and 1,400 Saudi riyals ($267 and $373) per square foot, with construction starting in mid-2027 and completing in five years time, Mr Alkhoshaibi said.
Arada KSA, set up in partnership with Saudi property investor Xtopia, will spearhead its expansion in the kingdom, with Mohammed AlDhabaan, chairman of Xtopia as the new chairman of Arada KSA.
Arada KSA has access to a significant 10 million square metre land bank across Saudi Arabia with a collective value of Dh49 billion, spanning key strategic locations including Riyadh, Jeddah and Makkah, it said in a separate announcement.
Meeting domestic demand
Demand for housing in Saudi Arabia is strong as the government pushes to increase home ownership among Saudis. Demand from expatriates following the opening of the sector to foreign buyers is also supporting the market, he said.
“The real demand is by the Saudis who need a home, and this is driven further by the government, [which is] pushing for higher home ownership for the Saudis.”
“The government's initiative, which we're trying to support, is that they want to provide 300,000 homes delivered in the next three years.”
Saudi Arabia has set a target of raising home ownership rates among locals to 70 per cent by 2030 under the Sakani programme – a joint initiative between the Ministry of Housing and the Real Estate Development Fund.
By the end of last year, Saudi citizens owning homes exceeded 66 per cent, with one million beneficiaries of government housing support programmes, the Saudi Press Agency reported in January, citing Minister of Municipalities and Housing Majed Al Hogail.
Saudi Arabia’s property market was mixed in the second quarter, with nationwide residential transaction values contracting by 26.9 per cent year-on-year to 37.67 billion riyals and the total deal count falling 14.2 per cent, according to the latest CBRE report.
The National Residential Price Index, however, grew 2.6 per cent on an annual basis, supported by a 1.1 per cent rise in apartment prices during the quarter.
The Al Rimal project will be funded through a Capital Market Authority-regulated investment structure managed by Al Rajhi Capital, an asset-management firm in the kingdom.
“We have partnered with Al Rajhi, who will provide the fund management and will also provide the funding. So there is obviously certain equity we put in, but [the] majority is through the fund and the bank,” Mr Alkhoshaibi said.
The company is also entering Syria with plans to build a $7 billion “UAE-style” mixed-use real estate project in Damascus in phases over 10 years.
The company's property sales are ranging between Dh400 million and Dh700 million a month despite uncertainty over the Iran war, he added.
“The external factors will have an impact, but it will be mitigated or reduced by delivering a great product in a great location at a reasonable price, and that's what we've been doing.”