The world’s tallest tower’s developer, Emaar Properties PJSC, based in Dubai, is looking into prospects to build housing communities in Saudi Arabia, where an oil-fueled construction boom is already under way.
According to Mohamed Alabbar, the founder of Emaar, the developer is in discussions to build sizable mixed-use buildings with the kingdom’s housing ministry. If they come to an agreement, Emaar might begin construction on a housing project with 4,000 units, he said.
In an interview in Abu Dhabi, Alabbar stated, “We’re in serious discussions with the ministry of housing about working together.” “We have stuff we’re looking at,” and “we’re quite active.”
International builders and developers are becoming interested in Saudi Arabia as the government attempts to increase home ownership there. Since 2016, the nation has awarded construction contracts totaling $250 billion as it works to diversify its economy away from hydrocarbons and become a top tourist destination.
Emaar has a long history of working on real estate projects in Saudi Arabia. Through Emaar Economic City, it began construction on the King Abdullah Economic City project in 2008. In an effort to revitalize the neighborhood, the complex has recently been converted as a special economic zone.
According to real estate advisor Knight Frank, the monarchy has revealed plans to develop 660,000 residences — nearly as many as Dubai’s entire housing stock — as well as 289,000 5.3 million square meters of retail space, 6 million square meters of commercial space, and hotel rooms.
Additionally, Saudi Arabia is constructing massive projects, such as the Red Sea project across an area of 28,000 square kilometers (11,000 square miles) at Neom, a new metropolis on the west coast of the kingdom.
Despite the increased activity in the country, Alabbar suggested Saudi Arabia take into account subsidizing developer returns when they fall short of predetermined levels on new projects.
Some of the locations are “green-field,” and a developer may need five to seven years to get, for instance, a decent return of above 8%. If the developer makes 4%, the government must assist him. They will then be forced to pay them an additional sum, let’s say 5%.
The housing boom in Dubai, the home market of Emaar, which is disturbing the real estate tycoon, shows no signs of slowing down.
“Dubai is in the air. The UAE is soaring, but now is the moment to consider what could go wrong, according to Alabbar. He lists “execution” and “the health of the balance sheet of contractors” as two of his top worries.
Due to Dubai’s management of the epidemic and its lenient visa laws, demand for real estate is surging. Due to an influx of Russians trying to preserve their riches following the invasion of Ukraine, as well as the establishment of crypto billionaires and hedge fund executives, home prices and rentals have hit record highs.
On Dubai’s Stalled Palm Island, Buyers Wait in Line for $5 Million Homes.
Emaar intends to pay back a bond that will mature in around two years by taking advantage of the city’s thriving economy.
– End –
© All Rights Reserved, Gulf Property News.