Saudi Arabia’s Dar Al Arkan plans Abu Dhabi project as property market recovers

The new development is expected to be launched in first quarter 2023, company's vice chairman says

Saudi Arabian property developer Dar Al Arkan plans to start a residential project in Abu Dhabi next year. Bloomberg

Saudi property developer Dar Al Arkan is planning to start a new residential project in Abu Dhabi next year, as the UAE‘s property market bounces back from the coronavirus-induced slowdown.

The project will be the company’s fourth in the UAE and first in Abu Dhabi, vice chairman Ziad El Chaar told The National.

The Tadawul-listed company, with assets worth more than 32 billion Saudi riyals ($8.53bn), is currently building three residential projects in Dubai — Dar Al Arkan Pagani Tower near the Dubai Canal, Urban Oasis by Missoni and W Residences in Downtown Dubai.

“Abu Dhabi is a promising market … we are in discussions with many parties to acquire some key plots to enter the market soon,” Mr El Chaar said.

The new project, which is expected to be launched in the first quarter of next year, will serve “second homebuyers, investors and the end user who is living today in the old areas of Abu Dhabi and would like to move to these highly serviced communities”, he said.

The project will also focus on Saudi citizens as there are “a good number of Saudi nationals who also invest in Abu Dhabi and spend the most of their vacations in Abu Dhabi”.

Mr El Chaar did not disclose the total cost of the project but said the company’s projects are “sizeable”, with each project valuing about “Dh1bn ($272 million)".

The three Dubai projects currently under construction are valued at around Dh4.5bn, he said.

The UAE's property market grew sharply in 2021, as it recovered from the pandemic-induced slowdown. The trend has continued this year as the country’s economy remains on a strong growth trajectory.

Both Dubai and Abu Dhabi registered strong sales transactions this year.

Abu Dhabi recorded 7,474 property transactions worth more than Dh22.51bn in the first six months of the year including 3,568 property purchase and sale transactions worth Dh8.9bn and 3,906 mortgage transactions worth Dh13.6bn, according to data released by the emirate's Department of Municipalities and Transport last month.

Dubai registered 25,972 property transactions in the first quarter of this year, the highest number of quarterly deals since 2010, according to Mo’asher, the emirate’s official sales price index issued by the Dubai Land Department in partnership with Property Finder.

The Dubai market also hit a 12-year high for the month of July, in terms of the number of sales, a report by Property Finder showed.

The UAE’s economy, which expanded by 3.8 per cent in 2021, is forecast to grow by 5.4 per cent and 4.2 per cent in 2022 and 2023, respectively, latest projections from the UAE Central Bank showed.

The International Monetary Fund expects the UAE’s economy to grow by 4.2 per cent this year and 3.8 per cent next year.

Dar Al Arkan is also expanding in Saudi Arabia, its home market, as well as in other GCC countries such as Oman and Qatar.

The company is teaming up with Oman Tourism Development Company, better known as Omran, to develop a mixed-use real estate project named “Aida” in Muscat with a total investment of 6bn riyals.

The project, covering an area of 350 hectares, will be built in three phases, the company said earlier this year.

The developer is also partnering with Qatar’s Qetaifan Projects to develop a premium residential project in Qetaifan Island North.

In Saudi Arabia, the Arab world’s largest economy, the company is collaborating with government entities such as Roshn, King Salman Park and King Abdullah Economic City to unveil new projects, Mr El Chaar said.

Saudi Arabia aims to diversify its economy away from oil as part of its Vision 2030 programme. The country is currently building Neom — a $500bn city of the future — and other developments in Riyadh and other cities.

Mr El Chaar is bullish about the property market in the GCC amid higher economic growth.

“I can see that most of the markets have a positive outlook, given the economic growth of the region, the price of oil and lower inflation compared with many countries globally,” he said.

Saudi Arabia’s economy expanded 11.8 per cent in the second quarter after recording the highest rate of growth in the last 10 years during the first quarter, according to General Authority for Statistics.

Dar Al Arkan will finance new projects through a mix of debt, equity and proceeds from off-plan sales, Mr El Chaar said.

“We closed our 14th round of sukuk two weeks ago and we successfully raised $400m, even during the tough climate of changing interest rates. This is how much the international investors trust the brand,” he said.

The money will be used to “support our continuous funding programme and for several areas in business development and construction”, Mr El Chaar said.