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Wadi Hanifa valley is central to Riyadh’s new property boom

Saudi Arabia: Monday, July 14 - 2008 @ 10:35

And unlike the UAE, which is building as much (if not more) for the majority expat community living and working in the country, Saudi Arabia is interested mainly in one target group – Saudis.

Riyadh in particular is seeing housing growth, with ground work already underway in several masterplan communities.

Drive about 20km out of Riaydh, along King Khaled Road, look to the left and you can see a hive of building activity, with Dar Al-Arkan, Limitless, The Land and Tameer Holding all having developments under way.

All are connected by the 120km long Wadi Hanifa valley, which also cuts through Riyadh.

Another 15 or so minutes drive across takes you to Dallah Albaraka’s Durat Al-Riyadh masterplan community, aimed at those working in Riyadh itself and, once built, the new King Abdullah Financial District, also close to the Wadi Hanifa developments.

While the Hanifa communities are still at a very early stage of development, many properties in Durat Al-Riyadh are taking shape and a big show home is already open for potential customers.

Closer to the city, and just a few minutes outside Riyadh, other, smaller developments are also underway, including Noura, being built by Memar.

The development is made up of two facing rows of 115 duplex and single level apartments, one strip is three storeys high, the other four, with a communal area in the middle.

Changing building regulations

Saudi Arabia has tight laws on how high buildings can be built, because of privacy concerns, hence the reason most of the country is made up of low-level housing, with the odd high-rise here and there.

But even that is changing, with the government relaxing laws on high rises that will see more built within designated areas over the coming years.

Noura’s design is very ‘un-Saudi’ in its looks, going against the typical design in a country where properties have high walls and plenty of privacy.

These apartments, says Memar CEO Naif Saleh Al Rajhi, are aimed at young Saudis, who have perhaps lived abroad and want a high quality living space, but do not necessarily need the traditional levels of privacy.

He believes Saudi Arabia is on the cusp of its property boom. ‘We are a year away from the boom. Once financing laws [are in place] it opens the door to more customers. There are hundreds of potential customers but they want finance and it’s hard to get from the bank.’

He has signed a deal with Al Rahji Bank, one of the largest in the kingdom, to provide mortgages for Memar developments. (He is a member of the bank’s founding family, so the choice of bank is no surprise.)

Real estate market to be ‘transformed’

Karim Jabbou, CEO of The Land KSA, holds a similar view to Al Rajhi: ‘The Saudi Arabian real estate market will be completely transformed within the coming three years,’ he says.

Newer developments tend to be mixed use, integrated communities, meaning that they will provide much of what people – especially families – need for their lives, such as entertainment, schooling, shopping and work. And they will offer properties across a range of price bands, important considering the number of under 30s in the country.

Abdul Salam, Regional Director GCC for Limitless in Saudi Arabia, said the kingdom needs the many development projects that are underway or have been announced: ‘Saudi Arabia has great potential. People are looking to buy, but the question is what are they looking for.’

As well as its Al Wasl development just outside Riyadh, Limitless plans more developments in the country. The next will be a waterfront project, says Salam. ‘We have a long-term commitment to Saudi Arabia and are being selective about location.’

With so much planned activity, Saudi Arabia is likely to suffer some of the same problems Dubai and Abu Dhabi have faced – so many real estate projects that it becomes difficult to find enough people to build them. And as more projects are announced, and confidence rises, so will prices, making it important that low income families are not left behind.

But with revenues predicted to hit $13.5bn a week from oil alone if the price hits $200 a barrel, the money is there to invest in the country’s infrastructure.

Add to that the low ownership levels in the country, the young population (around 70% under 30 years old) and a growing desire to own, and it is easy to see that for real estate developers, the boom is going to be huge.

Wadi Hanifa developments
  • Ajmakan (roughly translated, it means wonderful place) is a mixed use development some 1.84 million square metres in size that is being developed by different companies. For its part, The Land is building 11 palaces, 500 villas of differing sizes, apartments, a shopping centre, schools, a 97-room boutique hotel and offices. The ‘anchor’ of the project will be Wadi Hanifa. With work expected to start in October, it will house about 12,000 people once completed.
  • Another area of Ajmakan is being jointly developed by Tameer Holding, AlShuala Holding and AlArd Real Estate Development. Across 1.75 million square metres, it includes a shopping centre, hotels and houses. The first phase is scheduled to be completed in 2010.
  • Limitless is building Al Wasl, a 14 million square metre, SR45bn development that will house around 200,000 people. Split over five phases, each phase will take two years to complete. Each phase will include the facilities residents need. It will include universities and schools, a large shopping mall, offices and 55,000 different types of residential unit.
  • Dar Al-Arkan’s Shams ArRiyadh is a five million square metre area. It will include 3,189 villas, five hyper malls, six shopping centres, commercial space and 13 schools. Forty-two percent of the development is residential, 9% is commercial with the rest for other activities or left untouched. Like Ajmakan, the Wadi Hanifa runs through its valley.

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Monday, July 14- 2008 @ 10:35 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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