A rendering of Downtown Khobar's shopping boulevard. (Downtown Saudi)
Saudi Arabia's sovereign wealth fund has officially launched a new waterfront district in Khobar. A listed developer has already signed on, a sign that private money may follow the fund to a part of the kingdom that has trailed Riyadh and the holy cities in the property race.
Downtown Saudi, a Public Investment Fund company, launched Downtown Khobar on Sunday, chief executive Fahad Al-Hammad said. The project covers more than 829,000 square meters on the seafront.
It will hold more than 4,000 homes and 500 hotel rooms. There will also be about 40,000 square meters of offices and nearly 140,000 square meters of shops and restaurants.
Not brand new: the launch makes official a project that's already moving. The fund awarded the district's infrastructure works in July. A month earlier, mall operator Cenomi Centers gave a SR1.3 billion ($354 million) contract to build the district's mall and boulevard.
Private money arrives: on the same day, Riyadh-listed Sumou Real Estate signed three agreements with the fund's developer to build homes there. They cover about 61,500 square meters, including a residential tower and mid-rise buildings on both sides of the boulevard.
How the deal works: the fund puts in the land. Sumou designs, builds and sells the homes, funding most of the work from sales made before construction is finished. In return, Sumou takes fees plus 32% of the net profit.
Why it matters: Riyadh led the last property boom. Now the holy cities, newly open to foreign buyers, are getting much of the big money, with Makkah land selling for twice its value. The east, long the kingdom's trading hub, is trying to win a bigger share.
A second bet on the coast: in September, the fund set up Gulf Coast Development to build a resort and housing area on the Khafji coast. It plans more than 16,000 homes, with the first phase due in 2030.
What to watch: no total cost or completion date was given. The real test is whether buyers follow the developers east.
