Dubai-based developer Emaar Properties is eyeing potential housing projects in Saudi Arabia, riding the wave of the kingdom’s construction boom, according to a report by Bloomberg.
Emaar’s founder, Mohammed Alabbar, revealed that the company is currently in discussions with Saudi Arabia’s housing ministry to create expansive mixed-use developments.
Alabbar noted that if an agreement is reached, Emaar could commence work on a substantial 4,000-unit housing project.
“We’re in serious discussions with the Ministry of Housing on working together,” Alabbar said highlighting the company’s active pursuit of opportunities in the kingdom.
Saudi Arabia has increasingly become a focal point for international developers and construction firms due to the government’s initiatives to bolster homeownership, the report said, adding that since 2016, contracts worth $250 billion have been awarded in the country as part of its efforts to transform into a premier tourism destination and diversify its revenue away from hydrocarbons.
Emaar’s role in Saudi real estate
Emaar has a history of involvement in Saudi Arabia’s real estate ventures, having initiated the King Abdullah Economic City project in 2008 under Emaar Economic City.
Recently, this development was repurposed as a special economic zone to stimulate growth in the area.
The kingdom has ambitious plans on the horizon, aiming to construct 660,000 homes, 289,000 hotel rooms, 6 million square meters of office space, and 5.3 million square meters of retail space, according to real estate consultant Knight Frank.
Despite the flurry of activity, Alabbar called for Saudi Arabia to consider subsidizing returns for developers on projects that fall short of agreed-upon levels.
He highlighted that some projects may require several years to yield a satisfactory return, and government support should be available if developers fall short of their targets.
In contrast to the kingdom’s boom, Dubai’s property market is also thriving, with demand surging due to the emirate’s handling of the pandemic and liberal visa policies.
Emaar is capitalising on Dubai’s robust economy to manage its finances efficiently, with plans to repay a maturing bond in about two years.
Alabbar said the high interest rate on the bond and the company’s strong cash position as key factors driving this strategic decision.
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