JEDDAH,7 January 2005 — Real estate was the leading choice for investment in Saudi Arabia last year, according to a study conducted by Arab News.
Businessmen say that real estate investment is the safest as it cannot be affected by sudden price surges, unlike other fields of investment such as the stock market, which was the second choice of investors last year.
A specialized study on Saudi investment abroad conducted by King Saud University showed that investment in real estate is the top choice for Saudis abroad because it is safe and not affected by sudden price changes.
According to the Riyadh Chamber of Commerce and Industry, the total investment in this field is SR900 billion.
The Arab News study showed that Makkah and Madinah have become the most preferred areas for real estate investment. Riyadh came second and Jeddah third followed by Alkhobar, Dammam and Abha. The northern area was at the bottom of the list of preferences.
Many investors and experts agree that the real estate market in Makkah remains the most lucrative and will continue to be the most preferred place for a long time.
A city of 1.5 million people, Makakh has recorded a dramatic increase in the number of inhabitants. According to real estate businessman Mansour Abu-Rayyash, the pace of development in Makkah has increased manifold to accommodate the large number of visitors every year.
Last year alone, four million pilgrims and visitors came to Makkah. According to a study conducted by the Center for Haj Studies, the number of pilgrims will reach 10 million by year 2020.
Mansour said that the real estate boom in Makkah started after the SR10 billion expansion of the holy mosque area. The neighborhoods of the holy mosque witnessed dramatic changes, especially the central area of Makkah where huge projects are under way such as the project of Makkah Company for Construction, Dar Al-Tawheed Intercontinental and King Abdul Aziz project, which will include Zamzam tower of 160 levels making it the tallest building in the area.
Mansour said investment in real estate in Makkah in the last three decades amounted to SR400 billion. Out of the SR15 billion invested every year, 50 percent was channeled to the central area around the holy mosque.
The area outside the grand mosque, where a square meter of land costs SR300,000, is considered the most expensive in the world.
Mansour expects real estate prices to grow in the next five years by 10 percent to 80 percent.
According to him the area that will witness the highest price increase is the prime real estate around the holy mosque where land prices could cross the SR500,000 mark.
Abdulrahman Faqeeh, chairman of Makkah Development Company which has invested more than SR14 billion for projects around Makkah’s central area, explained that on completion of its Jabal Omar project and other projects opened by Crown Prince Abdullah recently the real estate map of Makkah will change dramatically and make the city more modern.
Real estate business in Madinah attracted many investors after the executive committee for developing the central area of Madinah approved establishing 60 new projects including seven, five and four stars hotels, residential units and commercial centers valued at SR60 billion in the next ten years, according to Abdulaziz Al-Husain, Madinah mayor.