UAE developer Arada enters Saudi market with Riyadh project

• Master-planned Riyadh community
• 3,500 villas and townhouses
• ‘Good land deals’ during weak market

UAE developer Arada is entering Saudi Arabia for the first time, launching a joint venture with local developer Xtopia to build a master-planned community in Riyadh.

Arada is co-owned by princes from the Sharjah and Saudi royal families. Prince Khaled bin Alwaleed bin Talal, a member of the Saudi royal family and Arada’s executive vice chairman, said the venture would be “the first of many projects in the kingdom”.

The joint venture will be known as Arada KSA and chaired by Xtopia’s chairman, Mohammed AlDhabaan. Arada KSA has access to a 10 million square metre land bank worth AED49 billion ($13 billion), in locations including Riyadh, Jeddah and Mecca.

The first project is in Riyadh’s north-eastern region, near the main airport. It spans 2.5 million square metres, slightly larger than the principality of Monaco, with a gross development value of AED13.7 billion.

The plan includes 3,500 villas and townhouses, surrounded by 100,000 trees. Sales start next year, construction begins in mid-2027, and handover follows about five years later.

The entry lifts Arada’s pipeline to AED185 billion across five markets: the UAE, the UK, Australia, Syria and now Saudi Arabia.

The joint venture will be funded through a Capital Market Authority-regulated investment structure managed by Al Rajhi Capital, a subsidiary of the major local bank.

Arada deliberately entered the market while it was weak, group CEO Ahmed Alkhoshaibi told AGBI.

“We always try to enter when it’s the unexpected time [referring to prices], because that’s when you can structure good deals on land,” he said. “When the market is down, you can negotiate very good terms.”

That downturn traces to Saudi Arabia’s so-called white land tax, as well as the Iran war. Last August, authorities raised the levy on undeveloped plots from 2.5 percent to as much as 10 percent, and land prices have since fallen.

Building material costs remain elevated, Alkhoshaibi said, but that is not why sales precede construction – the gap reflects design, tendering and permitting timelines on Arada’s first Saudi project.

Further reading:

• Arada reports revenue rise but blames war for building delays
• Local buyers helping Sharjah property resilience
• Saudi real estate funds emerge as financing tool for developers

“I’m convinced [material] prices won’t stay at the same rates [as today]. We’re being more proactive with centralised procurement, pulling economies of scale across our markets for stronger buying power with factories. That should have a positive impact,” he said.

For delivery, Arada is bringing its own contractor. It bought Australian company Roberts Co last year, and will use it as construction manager rather than builder.

“There are a lot of good contractors in Saudi,” Alkhoshaibi said. “But they might not have the buying power or the sophisticated supervision.”

Roberts Co will subcontract to local companies while overseeing time, quality and budget. Alkhoshaibi does not see Arada as competing with state-backed developers, calling the venture “complementary” to a nearby public-sector master plan.

“The majority will be Saudi buyers,” Alkhoshaibi said, “but we expect a reasonable percentage of expats,” citing new freehold rules.

Arada’s entry comes as Saudi’s housing market cools. Transaction volumes halved in the first quarter, and sales value fell 57 percent to SAR22 billion ($5.9 billion), according to Knight Frank Mena. Riyadh was hit hardest, with volumes and sales prices down 82 percent, even as apartment values rose 6 percent year on year.

Knight Frank’s Faisal Durrani linked the slowdown to the Iran war, saying it “added to the weight of factors” already at play.

The push comes as Arada’s own numbers show strain. Group revenue rose 21 percent to AED3 billion in the first half of the year, but EBITDA fell 29 percent to AED480 million on war-linked supply-chain disruption. Alkhoshaibi said Arada has “recovery plans in place”.

AGBI’s interview with Arada took place before the recent Yemeni Houthi militia attacks in Saudi Arabia.