8 Al Khobar Lakes 9 King Abdullah Economic City, Jeddah
complex by Al Oula Development Company, which will have the capacity to accommodate 250,000 people and is to be developed over a 10-year period; as well as the high profile Abraj Al-Bait project, which is offering the country’s first timeshare component. This has already had a significant impact on land prices with the price per square metre reportedly reaching as much as US$133,000. SCTA has also revealed plans to develop a US$13 billion tourist city
on the East Coast at Al-Oqair, just south of Al Khobar, with the first phase valued at US$27 million. On the Red Sea coast, the government has also earmarked sites
for development in Tabuk, Yanbu, Makah, Asir and Jizan provinces. According to SCTA, the planned resorts would add a total of 557,000 hotel rooms to the country’s existing portfolio and attract US$40 billion in investment. And, emulating its neighbour Dubai, a new shopping mall in Makkah
is planning to launch its own version of Ski Dubai, scheduled to open at the end of 2011.
OFFICE OUTLOOK
In the commercial sector, activity and pricing has been somewhat subdued, according to Jones Lang LaSalle, with vacancy rates increasing in all three major centres on the back of increased supply at the upper end of the market. As at year end 2009, local Grade A office space had vacancy rates
of almost 20 percent, while Jeddah and the Eastern Province held off further declines with vacancy rates of just under 10 percent. The resulting impact has been to put rental rates under considerable
pressure, particularly in Riyadh where in excess of 500,000 square metres of leasable space is scheduled to come on-stream over the next two years. Meanwhile, in Jeddah there is around 250,000 square metres of leasable space with just 25,000 square metres in the Eastern Province.
On the Red Sea coast, the government has also earmarked sites for deve- lopment in Tabuk, Yanbu, Makah, Asir and Jizan provinces
ASSET INVESTMENT
Meanwhile, investment in the Kingdom is also receiving a boost. Al Rajhi Capital, the investment arm of Saudi Arabia’s Al Rajhi Bank and Bahrain’s Arcapita Bank, launched a US$500 million Gulf property income fund in February 2010. The fund’s focus is on logistics warehouses, healthcare and education-related assets in Saudi Arabia and the wider Gulf region. Dubai-based investment bank Rasmala Investments was also quoted at the tail end of 2009 saying
that it was establishing a US$133.3 property fund to pursue opportunities in middle-income housing in the Kingdom. And Shuaa Capital’s Saudi Arabia division has reported that its hospitality fund has bought a parcel of
land in Jeddah worth more than US$130 million for future development. The company is also looking at a second plot of land in Jeddah as well as other opportunities in Riyadh and Al Khobar. The firm’s hospitality fund is also eyeing further acquisitions in the Kingdom and is looking to raise around US$533 million through a second closing in October 2010. Shuaa originally launched its private equity hospitality fund with the objective of acquiring hotel properties to be managed by Rotana Hotel Management Corporation but, due to difficult market conditions, only one transaction was completed in 2009.
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