Text size:

  • Small
  • Normal
  • Large

Saudi project to welcome home buyers from abroad

The Emaar Properties project King Abdullah Economic City in Saudi Arabia is expected to be the kingdom's first to welcome foreign buyers without restriction, as it seeks to bring in more foreign investment and ease its dependence on oil.

The Emaar Properties project King Abdullah Economic City in Saudi Arabia is expected to be the kingdom's first to welcome foreign buyers without restriction, as it seeks to bring in more foreign investment and ease its dependence on oil. But analysts say Emaar, which owns a third of the project's developer Emaar Economic City (EEC), will have to be patient. Few homes within the development, which was valued at US$80 billion (Dh293.83bn) when it was launched in 2006, have been delivered as the construction schedule spans 20 years.

Sales to local buyers are also subdued while foreign buyers might be deterred by a conservative lifestyle and laws restricting re-sales, analysts say. The project, which is located close to Jeddah, could house an anticipated 2 million people. The Dubai-based Emaar, the region's biggest developer, was invited to participate in the development by the Saudi government in 2005. This led to the creation of EEC with Dayim Modern Real Estate Management, MI Royal Capital Company, MI Strategic Investments and MI Holdings Company - all Saudi firms - among others.

"This is the first freehold city in Saudi Arabia ? a lot of people want to invest in the Saudi market and see it as a frontier for real estate investment because of the population explosion here," Fahd al Rasheed, the chief executive of EEC, told Bloomberg yesterday. The company is expected to receive a Dh4.89bn loan this year from the Saudi government to continue construction of the project, which is about 10 per cent complete.

"The freehold move will not have an immediate impact on Emaar or help it weather the crisis better," said Majed Azzam, a property analyst at Al Futtaim HC Securities. "They're not going to see any revenues coming through because deliveries have so far been very limited." While foreigners have been allowed to buy property in most of the kingdom with certain restrictions since about 2005, King Abdullah Economic City is the first freehold city available for foreign purchase.

Mr Azzam added that off-plan sales in Saudi are unpopular, and most developers have to sell properties once they are complete. "In terms of immediate demand from foreign buyers, I'm sceptical this will get things going unless we see projects turning into a reality." An analyst at Deutsche Bank, who asked not to be identified, said a law stipulating that buyers must live in the property for five years before they sell it might also deter foreign investors. "Who is going to invest there when you have freer options in other countries?" he asked.

A number of economic cities are planned for the kingdom and are expected to contribute Dh550bn to the country's GDP by 2020, according to figures from the Saudi Arabian General Investment Authority. King Abdullah is the largest, while others in the pipeline include Knowledge Economic City in Medina, Prince Abdulaziz bin Mousaed Economic City in Hail, and the Jazan Economic City south of Jeddah. Contractors have also submitted bids for the first stage of Sudair City, a Dh146.92bn development close to Riyadh.

Saudi Arabia's population has more than doubled since 1986 to about 25.5 million, according to IMF data, and is expected to reach 30 million by 2020. @Email:agiuffrida@thenational.ae

Back to the top

More articles


Editor's Picks

 Would you like it in blue? An Afghan shopkeeper shows a burqa to a customer at a bazaar in Herat. (Aref Karimi / AFP /  April 13, 2014)

In pictures: Best business images for the week to April 24, 2014

Here are some of the best business images for the week to April 24, 2014.

 That's asking a lot: this four-bedroom duplex penthouse apartment  at Marina Residence in Dubai is for sale with an asking price of Dh15.7 million. (Courtesy Better Homes / April 2014)

In pictures: Palm Jumeirah penthouse listed for Dh15.7 million

A four-bedroom duplex penthouse in Marina Residence 3 on Dubai's Palm Jumeirah is on the market for Dh15.7 million.

 Room with a view from one of the 21 duplex penthouses located in the Gate Towers sky-bridge. The sports courts and swimming pools can be seen below. Courtesy Alda

In pictures: Aldar’s Gate Towers Penthouse Collection on Reem Island

Aldar launched its Gate Towers Penthouse Collection at Cityscape Abu Dhabi. The launch features 21 penthouses spanning the skybridge, with each having a private indoor pool and incredible views.

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National