UAE Developer Arada Unveils Massive $3.8 Billion Riyadh Housing Project, Plans 100,000 Homes in Saudi Arabia

UAE-based developer Arada is set to launch a significant Dh14 billion ($3.8 billion) residential project in Riyadh, with ambitious plans to construct 100,000 homes across Saudi Arabia within the next three to five years. This expansion into the Saudi market, which is increasingly open to foreign investment, was confirmed by the company's chief executive. Arada also intends to initiate projects in Jeddah and Makkah.

“We have a good pipeline coming, and we will probably announce another project by the end of the year,” stated Ahmed Alkhoshaibi. He further elaborated on the group's broader vision: “As a group we plan to have 200,000 homes in the next three to five years, with half of that coming in Saudi Arabia.”

Arada, a joint venture between Saudi businessman Prince Khaled bin Alwaleed’s KBW Investments and Sharjah-based Basma Group, sees substantial opportunity in the Saudi market. Following this latest Saudi announcement, Arada's total project pipeline is valued at Dh185 billion, spanning the UAE, Saudi Arabia, the UK, Australia, and Syria, and includes over 70,000 homes. To date, the company has completed 17,000 homes.

Saudi Arabia, the largest economy in the Arab world, has been actively reforming its property sector. Recent changes include allowing foreigners to purchase property in designated zones within Riyadh and Jeddah, and introducing specific requirements for home ownership in Makkah and Madinah starting from January. Additionally, new land tax regulations were implemented last year to encourage the development of undeveloped land and stimulate construction activity.

Riyadh Debut

Arada's inaugural project in Riyadh will be situated in the Al Rimal district, located in the city's north-eastern growth corridor. The development will span a 2.5 million square metre plot and will feature 3,500 villas and townhouses, alongside essential community amenities such as a school, retail outlets, a community centre, sporting facilities, and green spaces. This project draws inspiration from Arada's successful Masaar development, a Dh8 billion woodland community in Sharjah.

Units in the Al Rimal project will be priced between 1,000 and 1,400 Saudi riyals ($267 and $373) per square foot. Construction is slated to commence in mid-2027, with completion expected within five years, according to Mr. Alkhoshaibi. Arada KSA, a new entity established in partnership with Saudi property investor Xtopia, will lead Arada's expansion within the kingdom. Mohammed AlDhabaan, chairman of Xtopia, will serve as the new chairman of Arada KSA. Arada KSA benefits from access to a substantial 10 million square metre land bank across Saudi Arabia, valued at Dh49 billion, encompassing key strategic locations including Riyadh, Jeddah, and Makkah.

Meeting Domestic Demand

The demand for housing in Saudi Arabia remains robust, fueled by the government's commitment to increasing home ownership among its citizens. The recent opening of the property sector to foreign buyers is also contributing to market growth. “The real demand is by the Saudis who need a home, and this is driven further by the government, [which is] pushing for higher home ownership for the Saudis,” Alkhoshaibi noted. He added, “The government's initiative, which we're trying to support, is that they want to provide 300,000 homes delivered in the next three years.”

Under the Sakani programme, a joint initiative by the Ministry of Housing and the Real Estate Development Fund, Saudi Arabia aims to raise local home ownership rates to 70 per cent by 2030. As of the end of last year, home ownership among Saudi citizens surpassed 66 per cent, with one million individuals benefiting from government housing support programmes, according to a January report from the Saudi Press Agency citing Minister of Municipalities and Housing Majed Al Hogail.

While Saudi Arabia’s property market experienced a mixed performance in the second quarter, with nationwide residential transaction values decreasing by 26.9 per cent year-on-year to 37.67 billion riyals and deal counts falling by 14.2 per cent, the National Residential Price Index saw an annual growth of 2.6 per cent. This growth was partly supported by a 1.1 per cent rise in apartment prices during the quarter.

The Al Rimal project will be financed through an investment structure regulated by the Capital Market Authority and managed by Al Rajhi Capital. “We have partnered with Al Rajhi, who will provide the fund management and will also provide the funding. So there is obviously certain equity we put in, but [the] majority is through the fund and the bank,” explained Mr. Alkhoshaibi.

In addition to its Saudi ventures, Arada is also expanding into Syria with plans for a $7 billion mixed-use real estate project in Damascus, to be developed in phases over ten years. Despite external uncertainties, such as the Iran war, the company's property sales are reportedly ranging between Dh400 million and Dh700 million per month. Mr. Alkhoshaibi remains optimistic, stating, “The external factors will have an impact, but it will be mitigated or reduced by delivering a great product in a great location at a reasonable price, and that's what we've been doing.”