Construction continues on a massive scale as the two holy cities expand their infrastructure and facilities to cope with the growing influx of pilgrims year on year.

01 December 2005

The burgeoning numbers of Muslims – close to four million per year from around 70 countries around the world – who visit Makkah and Madinah to perform the annual Haj pilgrimage, continues to create a demand for accommodation that is becoming more intense with each passing year.

The demand is such that new hotels, apartments and services are badly needed as the infrastructure at the moment cannot cope, according to an industry source.
Given this market scenario and with visitor numbers set to rise more steeply with the easing of entry restrictions on pilgrims, real estate developers are now reported to be spending around $13 billion on projects in Makkah alone. Already, a number of gigantic developments have been launched or are in the pipeline – the largest among which are the King Abdul Aziz Endowment Project (KAEEP) and the Jebel Omar scheme.
The KAEEP – the core development of which is the Bait Al Abraj Towers and Mall – is under construction on the 40,000 sq m site adjacent to the King Abdul Aziz Gate of the Holy Mosque. It is being developed as an endowment property, with proceeds to go towards the upkeep and development of the Holy Mosque.  Under development are six residential towers, a five-star hotel, and a central podium housing convention and conference facilities and the Abraj Al Bait Mall.
The Jebel Omar project involves the construction of 11 high-rise towers, which will include two five-star hotels, three four-star hotels and six three-star hotels, residences for about 100,000 people, car parking for more than 10,000 vehicles, among a host of other facilities. Jebel Omar Development Company, the joint stock company which is is develop the mountainside overlooking the Grand Mosque, is in negotiations with international specialist firms to manage the $2.7 billion seven-year project.
Another massive development estimated to cost $3.73 billion involves the construction of153 residential towers. Designs for the project, which aims to accommodate 350,000 pilgrims over an area of 1.2 million sq m, have been completed. 
Prime Saudi developers active in Makkah and Madinah include Makkah Construction and Development Company, Jebel Omar Development Company, Al Oula Group, Dar Al Arkan Real Estate Development Company, Saudi Taibah Investment and Real Estate Company (Taibah) and Aqar Holding Company.
However, such is the attraction of market – where land prices are amongst the highest in the world – that a number of Kuwaiti and UAE developers have jumped on the bandwagon to spearhead real estate developments. For instance, Emaar International Development, part of the Dubai-based Emaar Properties, has recently joined hands with the Al Oula Group to develop a $2.6 billion scheme to construct residential, retail and related facilities, while Munshaat Real Estate Projects Company (MREPC) of Kuwait is developing the Zamzam Tower which forms part of the Abraj Al Bait project. The SR1.46 billion Zamzam Tower – which has 31 floors containing 1,240 luxurious residential suites – is now receiving its internal finishes.
The boom has accelerated in recent months with the Saudi government approving a raft of projects worth some $8 billion to develop the holy cities. Hand in hand with these real estate developments is the expansion of the infrastructure and the utilities services. 
Last August, the Custodian of the Two Holy Mosques King Abdullah allocated $1.25 billion for the expansion work at the Prophet's Mosque in Madinah. The work includes the construction of courtyards, roads, car parks and tunnels. Saudi Arabia spent more than $27 billion on expanding and upgrading the holy sites in these cities under the late King Fahd.
In the power and water sector, the Kingdom recently gave the go-ahead to the Shuaiba 3, which is designed to supply 194 million gallons of water daily as well as 900 MW of electricity. Work on the project – the kingdom’s first independent water and  power project – will start next month and its first unit will begin production in October, 2008 (see page 9).
The main gateway to these holy cities Jeddah International Airport has also come under increasing pressure to serve the growing numbers of travellers. A major expansion is planned for the airport, design work on which is currently under way (see page 4).
Saudi Arabia is also expanding its roads network to facilitate the overland journey to Makkah and Madinah. Among the most important roads completed recently are the Makkah-Madinah Road (421 km) and the Jeddah-Makkah Road (60 km).
One thing seems certain: with recent estimates putting pilgrim numbers to as high as 20 million per year, the real estate developers cannot go wrong in investing in Makkah and Madinah.

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