A rendering of Masar Destination, on the road leading to the Grand Mosque. (Umm Al Qura)
Land near Makkah's Grand Mosque is selling for twice what it's worth on paper. Pilgrim numbers are rising, foreigners can now buy, and plots close to the mosque are scarce.
Umm Al Qura, the developer behind Masar Destination, a hotel, housing and shopping district along a new road leading to the Grand Mosque, sold three plots there for about SR440 million ($118 million), it said in a filing. They were on its books at around SR214 million, or roughly SR60,000 per square meter.
That makes the holy city a rare bright spot. Flights are down, travel businesses are hurting and the kingdom has pushed its flagship investment summit to 2027. Property near the Grand Mosque keeps moving.
Demand in Makkah is "driven by faith and not by cycles," Faisal Shaker, chief executive of Makkah developer Thakher Development, told Bloomberg in an interview last month.
Why prices are rising: every pilgrim needs a bed near the Grand Mosque, and land there is limited. The kingdom wants 50 million religious visitors a year by 2030, up from about 20 million last year.
Foreign money arrives: since January, foreigners can buy in the holy city too. Indonesia's sovereign wealth fund paid SR2 billion last month for a hotel and land nearby, the first time a foreign state has bought property in Makkah. It plans another 6,000 rooms.
Who's buying here: a Saudi real estate fund bought the three plots and plans residential towers on them.
Profits follow: land sales lifted the developer's third-quarter profit 29% to nearly SR670 million, triple what it made the quarter before.
A shifting map: Riyadh led the last property boom. Now the holy cities are drawing the biggest money, while the Eastern Province is playing catch-up. The Public Investment Fund launched a waterfront district in Khobar on Sunday.
