ISC DLL Study - Final Report - July 2012

The Investor for Securities
FINANCIAL FEASIBILITY REPORT

JULY, 2012
PREPARED BY: COLLIERS

INTERNATIONAL
PREPARED FOR: THE INVESTOR FOR

SECURITIES.
Ref Code: HBU/ISC/11.06.2012
FINAL
COLLIERS INTERNATIONAL KSA

[1] Almas Tower
King Fahad Road
PO Box 5678
Riyadh 11432
Tel: +966 (1) 4661517
[2] Jameel Square Tower
Prince Mohammed bin Abdulaziz St (Tahlia)
Tel: +966 (2) 6105900
www.colliers-me.com
Version Control
COLLIERS INTERNATIONAL
Financial Feasibility Report
Status
Final
Project ID
HBU/ISC/11.06.2012
Filename/Document ID
ISC.DLL Study - Final Report - July 2012
Last Saved
24 July 2012
Owner
Bilal Siddiqui / Mohammad Al Aqqad
Director
Ibrahim Al Rashed / Sari Anabtawi
Approved by
Imad Damrah
Date Approved
24 July 2012
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TABLE OF CONTENTS
1
Project Introduction
Executive Summary
Site Location Analysis
3.1
Macro Location
3.2
Micro Location
3.3
Site Accessibility
10
3.4
Proximity to Demand Generators
13
3.5
SWOT Analysis
16
Competitive Review
17
4.1
Laban 7
18
4.2
Dharat Laban 4
19
4.3
Laban 6
20
4.4
Laban 5
21
4.5
Summary of Comparable Land Subdivision
22
4.6
Market Research Key Findings
23
Development Concept
25
5.1
Rationale for the Concept
25
5.2
Parcel A
27
5.3
Parcel B
30
5.4
Parcel C
32
5.5
Land Subdivision Pricing Strategy
40
Financial Analysis
44
6.1
Scenario A
44
6.2
Scenario B
47
6.3
Conclusion
50
Summary Conclusion
51
Limitations of This Report
52
APPENDICES
1
Saudi Arabia Macroeconomic Overview
55
Microeconomic Analysis
67
2.1
Location and Area
67
2.2
Demographic overview
67
2.3
Riyadh city Expansion
72
3
3.1
Residential Segment
76
Overview
76
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3.2
Characteristics
77
3.3
Residential Supply
81
3.4
Performance
82
3.5
Demand Supply Analysis
91
3.6
Large Scale Developments
95
3.7
Outlook
108
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PROJECT INTRODUCTION
Colliers International has been appointed by The Investor for Securities. (Client
orISC) to assess the financial viability of the development concept on a parcel of
land (the Subject Site) measuring a total of approximately 1.36 mn sqm. The
Subject Site is located in west Riyadh, at the intersection of Western Ring Road
and Makkah Road.
Based on Colliers understanding of the Clients requirements, the principal
purpose of the study is summarized as follows:
1 Investigate the market and site potential for land development (i.e. land
subdivision development options) through market research (e.g. demand,
supply and comparable/best practice case studies)
2 Determine critical success factors or key ingredients for success (including
typical plot size, road width and innovative suggestions to differentiate the
Subject Site from competing developments)
3 Test the financial viability of the land subdivision development concept on the
Subject Site
This report details Colliers market findings, site assessment and development
recommendations for the Subject Site. The report also includes financial viability
assessments on the proposed development recommendations.
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EXECUTIVE SUMMARY
Colliers International is committed to assess the financial viability of a land
subdivision development concept for the Subject Site which measures
approximately 1.36mn sqm.
The Subject Site is located in west Riyadh at the intersection of Western Ring
Road and Makkah/Jeddah Road.
The Subject Site shows good potential for land subdivision, while varying parcel
sizes could be allocated to different land uses:
Parcel A: Land to be used primarily for residential purposes, while a large land
provision is to be used for a retail development.

Parcel B: Similar to its immediate surrounding area, Parcel B could be
developed through conventional land subdivision.

Parcel C: Given its large land size and excellent location, parcel C could
include:
A Semi Gated Community
A Gated Community (Residential Compound)
Large Superblock for Mixed Use Development (Retail and Residential)
Conventional Land Parcels for Commercial and Residential
The following exhibit summarizes the financial viability assessment of the

development concept. The results indicate that the land subdivision concept is
able to achieve an IRR of 20% (rounded IRR) under Scenario A and an IRR of
17% (rounded IRR) in Scenario B:
Exhibit 1: Project Cash flows and IRR Summary
In SAR
Scenario A
Total Revenue
1,599,556,891
1,613,701,538
Total Land Cost
(1,116,762,920)
(1,116,762,920)
(71,723,749)
(72,483,080)
(1,188,486,669)
(1,189,246,000)
411,070,222
424,455,538
Q9
Q11
c.20%
c.17%
Total Infrastructure Cost

Total Capital Expenditure
Net Cash Flow
Payback Period
IRR
Source:
Note:
Scenario B
Colliers Analysis, 2012,

IRR computed using quarterly results, some rounding error may occur.
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SITE LOCATION ANALYSIS

This section of the report describes the nature, location and accessibility of the
Subject Site. In this section, Colliers analysed the areas surrounding the Subject
Site and the potential demand generators to determine appropriate land
subdivision development options.
3.1
MACRO LOCATION
Riyadh is located in the centre of Saudi Arabia, is the capital of the country and its
largest city. The subject site is located in west Riyadh. The following exhibit shows
the location of the Subject Site within Riyadh:
Exhibit 2: Macro Location of Subject Site
Subject Sites
Sources: Google Maps, 2012

Colliers Research, 2012
The Subject Site is located at the junction of Makkah Road and Western Ring
Road, two of Riyadhs major thoroughfares. The land parcel is irregularly shaped
and measures approximately 1.36 mn sqm.
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MICRO LOCATION
3.2
For ease of reference, Colliers divided the Subject Site into three parcels: Parcel A
(250,922 sqm), Parcel B (200,058 sqm) and Parcel C (910,925 sqm). The Subject
Site is located in close proximity to Dhahrat Laban, Tuwaiq and Uraija Al Gharbi
Districts. The following exhibit depicts the distance between the Subject Site and
nearby thoroughfares:
Exhibit 3: Micro Location of Subject Site
Area: c.250,922 Sqm
Parcel A
Parcel B
Area: c. 910,925Sqm
Parcel C
Area: c. 200,058 Sqm

The Subject Site is a raw land parcel that requires minor levelling which will result
in additional excavation work. This will lead to increased infrastructure spending.
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The Subject Site enjoys excellent visibility due to its presence at the junction of
Makkah Road and Western Ring Road. The site has good overall accessibility;
however, certain sections of the land are currently difficult to access due to its
significant size. This is due to the relatively undeveloped infrastructure in the
surrounding area, apart from the major thoroughfares. The following exhibit
illustrates the surrounding land use of the Subject Site:
Exhibit 4: Surrounding Land Use of the Subject Site
King Saud University
King Khalid Eye

Specialist Hospital
Diplomatic Quarters
GCC Council
Courtyard by Marriott
King Abdulaziz
Conference Centre
Yamamah Palace
Police
Station
The Ritz Carlton

Hijrat Laban
Dhahrat Laban
Large
Palace
Wadi Hanifa
Subject Site
Tuwaiq
Uraija Al Gharbi
Residential
Hospitality
Uraija Al Awsat
Government
Other
Sources: Colliers Research, 2012

Google Maps, 2012
Note:
The site boundaries illustrated in the above exhibit are indicative only.
The residential areas surrounding the Subject Site comprise primarily low to mid
income districts (e.g. Tuwaiq and Dhahrat Laban). The eastern section of the
Subject Site is within close proximity to the Diplomatic Quarter and offers high end
residential areas (including palaces). A number of palaces are also located on the
western side of Al Wadi Road, which adds increased security to the area. Other
land uses surrounding the Subject Site include:
Hospitality developments: The Ritz Carlton
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Governmental institutions: King Abdulaziz Conference Centre
Other developments: Wadi Hanifah and Diplomatic Quarters
The residential areas surrounding the Subject Site have a shortage of commercial
developments with only minor street retail presence on Al Wadi Road.
The following exhibit illustrates the Subject Site and its parcel shapes:
Exhibit 5: Parcel Shapes and Various Snapshots
Parcel A
Parcel B
Parcel C
Source:
Notes:
3.3

The parcel sizes are not drawn to scale.
Additional pictures of Parcel C are not available due to high security of the area.
SITE ACCESSIBILITY
The Subject Site has good overall accessibility due to its prominent location on the
junction of Makkah Road and Western Ring Road. The three land parcels are all
corner plots with road frontages which allows for improved accessibility. However,
certain parts of the parcels are currently inaccessible due to the significant size of
the Subject Site and the undeveloped nature of the land.
The following exhibit illustrates the access points to the Subject Site:
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Parcel A
Parcel B
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Exhibit 6: Subject Site Accessibility
B
A
Access from Western Ring Road
Access from Makkah Road
Parcel C
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Riyadhs upcoming public transport works will further improve access to the
Subject Site through its east to west Mono Rail on King Abdullah Road and its
major Bus Route, which passes by Parcel C.
The project is divided into two phases:
Phase 1 measures 25 km and will operate between Olaya Road and Batha
Road, connecting North Ring Road to South Ring Road
Phase 2 is expected to connect Sheikh Jaber Al Ahmed Al Sabah Road to West

Ring Road through King Abdullah Road
The citys public transport project is expected to commence in the near term and
has an expected completion date of late 2016/early 2017. The Subject Sites
proximity to the nearest bus station will be beneficial to future users of the
envisaged development. The following exhibit illustrates the location of the Subject
Site in relation to Riyadhs planned major and minor public transportation works:
Exhibit 7: Major and Minor Public Transport Links
Proposed Metro
Major Bus Route
Peripheral Bus Route
Minor Bus Route
Subject Site
Sources: ArRiyadh Development Authority, 2012

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3.4
PROXIMITY TO DEMAND GENERATORS
3.4.1
KING KHALID INTERNATIONAL AIRPORT

The Subject Site is located approximately 39 km (radial distance) from King Khalid
International Airport. The airport can be accessed in 45 60 minutes through two
primary routes:
Prince Salman Road: 48 km
Northern Ring Road: 45 km
The following map illustrates the aforementioned routes between the Subject Site
and the airport:
Exhibit 8: Proximity to King Khalid International Airport
King Khalid International Airport
Western Ring Road
Subject Site
3.4.2
PROXIMITY TO OTHER DEMAND GENERATORS

A number of major demand generators of the Subject Site are located east of the
site while west of the Subject Site houses primarily new and upcoming residential
areas. The following exhibit depicts the land use of the area surrounding the
Subject Site and its demand generators:
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Exhibit 9: Area Surrounding the Subject Site and its Key Demand Generators
KAFD
ITCC Complex
King Saud University
Diplomatic Quarters
The Ritz Carlton

Wadi Hanifa
Legend
King Abdulaziz
Conference Centre
Completed
Under Construction
c.10 Km
Subject Site
Demand
Generator
Description
KSU - Riyadh
Techno Valley
King Saud University is seeking to develop a 1.7 million sqm science

and technology park known as the Riyadh Techno Valley on its
Riyadh campus. Main research & development areas of interest are
bio-technologies, pharmaceuticals, water, chemicals,
petrochemicals, energy, ICT, and information security.
KSU - King
Saud University
Endowment
The King Saud University and its endowment projects comprise 11

separate buildings and are major demand generators in the area.
The project will include a convention centre, a retail mall, a medical
building, 50 floors of a seven star hotel tower, a 250 key five star
hotel, 2 serviced apartment buildings and 5 office buildings. Amongst
expansion projects underway is a five star hotel and serviced
apartment under contract by Hilton Hotels and Resorts.
King Abdullah
Financial District
Upon Completion, King Abdullah Financial District will become a

major Central Business District (CBD) and will house properties for
the financial sector and related industries. Buildings as a part of King
Abdullah Financial District include the headquarters of Capital Market
Authority, Stock Exchange, financial institutions, rating agencies,
consultants, and IT providers. King Abdullah Financial Business
Districts can be easily accessed via the Western/Northern Ring Road
from the Subject Site, and its effect on the sites will be less marked
than that of other demand generators.
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Demand
Generator
Description
Information
Technology and
Communications
Centre
The Information Technology and Communications Centre is

expected to be completed in Q3 2013 and will include a mix of
residential and commercial buildings. The project will span 776,000
sqm and will primarily contain buildings for IT companies, technical
business centres, and buildings for research, training and
development, as well as software production companies. Support
buildings under the project include hotels, restaurants, a convention
centre, residential apartments, a technical college and government
service buildings.
Ritz Carlton
Upon completion in 2011, The Ritz Carlton became one of the most
popular hotels in Riyadh due to the hotels prestigious style and
unique decor. The hotel features 493 rooms, 3 restaurants and over
5,800 sqm of conference space. Similar to the Intercontinental Hotel,
Ritz Carlton benefits from a high number of government and foreign
embassy functions mostly due to its location. The hotel is situated
immediately across from the diplomatic quarter and the neighbouring
King Abdulaziz International Conference Centre.
Source: Colliers Research, 2012
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3.5
SWOT ANALYSIS
Strengths
Weaknesses
Given the significant size of the land parcels, the site The sites typography comprises levelled and
could be developed into a major urban site.
unlevelled fields.
Located in low density / upcoming area, apart from the The Subject Site is located far from Riyadhs major
city centre traffic congestions.
CBDs.
Bordered by major thoroughfares, Makkah Road and

Site attractiveness is relatively weak (compared to
Western Ring Road.
North and Northeast Riyadh) as the surrounding area
Good accessibility due to the Subject Sites corner
is mostly upcoming, hence it will take considerable
location at the intersection of Makkah Road and
time to be considered as an established
Western Ring Road.
neighbourhood.
The Subject Site (Parcel C) is adjacent to Wadi Hanfia,
which is considered as an attractive area for residential
developments due to its attractive typography.
Opportunities
Threats
Due to location and size of the Subject Site, potential The areas shortage of relevant activity for residential
land subdivision could offer major urban generation
developments such as schools, hospitals and retail
opportunities (releasing significant amounts of
creates challenge for the development of an attractive
commercial and residential units), which could further
residential development.
North and northwest Riyadh are becoming the prime
extend Riyadhs economic activity towards the west.
The area surrounding the Subject Site is characterised
focus of many developers and landowners, thus quick
by mostly low population density neighbourhoods
development of the site will increase future potential
which may induce demand for a potential commercial
demand opportunities.
The envisaged development should seek to increase
development.
The proximity of Wadi Hanifa and the excellent
footfall in the surrounding area as the natural (i.e.
connectivity of the Subject Site provide opportunities
population and urban) growth of the city is primarily
for suburban community developments such as
concentrated in the north.
residential compounds and semi gated communities.
Source:
Colliers Analysis, 2012
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COMPETITIVE REVIEW
The purpose of this section is to provide an in-depth assessment of west Riyadhs
Urban Land Development. This includes master planned communities (under
development and completed) and land subdivision (traditionally subdivided land).
Exhibit 10: Location of Sampled Masterplans
2
4
3
2
3
4
Number
Masterplan Name
Total Area (Sqm)
Masterplan 7
1,290,000
Masterplan 4
6,200,000
Masterplan No. 6
1,230,000
Masterplan No. 5
4,280,500

Google Maps, 2012
To further understand the nature and success factors of each of the above
mentioned masterplans, Colliers evaluated the masterplans separately through the
following case studies:
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4.1
LABAN 7
Masterplan No. 7 is located in Al
Ahmadiyah District of west Riyadh. The
masterplan consists of primarily
residential developments (villas and
apartments) while a limited number of
commercial developments (mostly line
shops) are situated on the major roads.
Masterplan No. 7 is located
approximately 1.7 km south of the
Subject Site.
The following exhibit summarizes the features of Masterplan No. 7:
Exhibit 11: Masterplan Configuration
Land Subdivision Configuration
Land Size (Sqm)
c.1,290,000
Target Segment
Mid Income
Sellable Land (% of Total Land)

Masterplan No. 7 has been
traditionally subdivided with the

essential infrastructure and
requisite civic facilities.
The masterplan is 80%
developed.
61.5
Sellable Land (Sqm)
793,350
No. of Superblocks
81
Max. Size of Block (Sqm)
32,850
Min. Size of Block (Sqm)
5,750
Typical Size of Block (Sqm)
9,750
Typical Road Width (M)
20
Built-Up Area / Plot Characteristics

Typical Residential Plot Size (Sqm)
400
Typical Commercial Plot Size (Sqm)
900
Maximum Building Height
G+3
Average Residential Land Price (SAR/Sqm)
1,850
Average Commercial Land Price (SAR/Sqm)
2,200
Average Sale Price of Apartment (SAR/ Sqm)
3,350
Average Sale Price for Villa (SAR)
2,700

Note: * due to large variation between the block and land parcel sizes, Colliers
assumed typical block sizes based on an estimated average.
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4.2
DHARAT LABAN 4
Masterplan No. 4 is located in the Dharat
Laban District of west Riyadh and is
situated adjacently to parcels A and B of
the Subject Site. The masterplan is one of
the largest in Dharat Laban and comprise
a variety of residential and commercial
developments. The typical residential
developments within the masterplan are
villas targeting the middle and upper mid
income classes. Western Ring Road passes through the masterplan.
The following exhibit summarizes the features of Masterplan No. 4:
Land Size (Sqm)
6,200,000
Target Segment
Middle Income t
60
No. of Superblocks
310
Sellable Land (Sqm)
3,720,000
38,800
3,200
10,250
20

600
900
N/A
1,000
1.500

2,250

Note: * due to large variation block and land parcel sizes, Colliers assumed typical
block sizes based on an estimated average.
N/A
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4.3
LABAN 6
Masterplan No.6 is located in Al Ahmadiyah
District of west Riyadh and is situated
adjacently to parcel C of the Subject Site.
The masterplan comprise a variety of villas
and apartments alongside commercial
developments (primarily line shops) along
30m wide roads.
The following exhibit summarizes the
features of Masterplan No. 6:
Land Size (Sqm)
1,230,000
Target Segment
Middle Income
62.2
No. of Superblocks
65
Sellable Land (Sqm)
765,060
28,000
2,800
8,600
20

400
900
G+3
1,850
2,200
3,350
2,700

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4.4
LABAN 5
Masterplan No. 5 is located in the Dharat
Laban District of west Riyadh, and is
adjacently situated to Masterplan No. 4. The
masterplan mostly constitute of villas that
target the middle and upper mid income
classes. Al Riyadh Football Club is known as
Masterplan No. 5s unique development.
The following exhibit summarizes the features
of Masterplan No. 5:
Land Size (Sqm)
4,280,500
Target Segment
Upper Mid
61
No. of Superblocks
163
Sellable Land (Sqm)
2,611,105
39,900
4,100
7,800
20

600
900
N/A
1,000
1.500

2,250

N/A
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4.5
SUMMARY OF COMPARABLE LAND SUBDIVISION

For the purpose of our analysis, Colliers assessed each of the previously outlined
land subdivisions based on their accessibility and location relative to Riyadh, and
their level of competition with the Subject Site:
Exhibit 15: Competitive Masterplans Rating
Masterplan
Location
Accessibility
Level of Competition
Masterplan No. 7
Masterplan No. 4
Masterplan No. 6
Masterplan No. 5
Legend
Above
Average
Below
Average
Average
Source: Colliers Assessment, 2012
Exhibit 16: Snapshot of Research Masterplans

Category
Masterplan No. 7
Masterplan No. 4
Masterplan No. 6
Masterplan No. 5
Land Size (Sqm)
1,290,000
6,200,000
1,230,000
4,280,500
Target Segment
Upper Mid
Low Income
Upper Mid
Low Income
61.5
60
62.2
61
Non Sellable Land (% of Total Land)
38.5
40
37.8
39
81
310
65
163
9,750
10,250
8,600
7,800
20
20
20
20
793,350
3,720,000
765,060
2,611,105
400
600
400
600
900
900
900
900
Average Residential Land Price

(SAR/Sqm)
1,850
1,000
1,850
1,000
Average Commercial Land Price

(SAR/Sqm)
2,200
1,500
2,200
1,500
Average Sale Price of Apartment (SAR/

Sqm)
3,350
N/A
3,350
N/A
Average Sale Price for Villa (SAR/Sqm)
2,700
2,250
2,700
2,250
No. Blocks
Sellable Land (Sqm)
The above mentioned masterplans follow the regulations determined by the

Ministry of Municipal and Rural Affairs (MOMRA);
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According to the researched sample, the percentage of sellable land/total land

area is between 60% and 63%.
Nearly 43% of the total land area is designated for civic facilities and amenities
such as roads, pedestrian walkways, mosques and public gardens.
Based on results from the research sample, plot sizes of villa residential offerings
in west Riyadh are significantly larger than those in north Riyadh and range from
400 to 600 sqm per plot.
Land prices are much lower in west Riyadh than in north Riyadh. Masterplans 4
and 5 have an average residential land price of SAR 1,000/Sqm while
Masterplan 6 and 7 show an average price of SAR 1,850/Sqm.
4.6
MARKET RESEARCH KEY FINDINGS

Riyadh has observed an undersupply of housing due to a rising population and
declining household sizes. Although the soaring demand in the citys residential
market has provided great opportunities for landowners and investors, excessive
land trading and speculations have resulted in overcrowding with high occupancy
rates and residential density.
The unsatisfactory housing situation is further reflected by the sharp increase in
residential units sale and rental prices as well as the sale prices for serviced
plots/blocks. Colliers key findings and observations are listed below:
Riyadh is experiencing sustained growth in residential demand; however

residential supply is mostly limited and are widely driven by small, mid and infill
developers without the financial capacity to fulfil the overall demand.
Riyadh has a limited amount of large-scale residential master planned

communities, most of which are either at early stages of planning and/or are
currently on hold. Block and infill residential developers are taking the lead in
driving the residential supply of finished/completed homes in Riyadh.
Riyadhs low to mid-income population drives a large proportion of the citys

demand for residential housing, particularly in the southern and western districts.
Demand for upper mid and high-end residential units is high in the northern and
north-western parts of Riyadh where more of the recent/upcoming masterplan
communities and land subdivision are located.
North and north-west Riyadh have observed an increase of traditionally

subdivided lands (land-subdivision) developed by infill and block developers as a
result of improved road networks. Land prices (raw and serviced) in these areas
have also taken a major hike in recent years due to the announcement and
completion of the new Ring Road and Prince Salman Bin Abdulaziz Road.
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West Riyadh has seen slower growth when compared to north Riyadh. North
Riyadhs success in attracting high real estate activity is primarily due to the
good road network that links the area to central, west and east Riyadh and major
upcoming developments within the area (such as Rafal Tower, KAFD etc.)
Large-scale master planned residential communities (e.g. Ajmakan by the Land

Holding and Durrat Al Riyadh by Dallah Al Baraka Group) are progressing slowly
with a few stopping completely (i.e. Al Juwan by Ewaan stopped work completely
and has sold the land under development while Nassamat Arriyadh by Thabat
Company has been cancelled). On the contrary, land-subdivision is rapidly
expanding towards northern and western peripheries of Riyadh, and the delivery
of residential supply is mostly driven by mid scale and infill developers. The
following summarizes the status of master planned communities in Riyadh:
Some of the announced master planned communities failed to obtain
approvals due to their inability to comply with the municipalitys development

guidelines.
Some of the master planned residential communities are on hold until the
Mortgage Law is effectively implemented, as affordability remains a key barrier

for potential homeowners. A high proportion of Riyadhs households are highly
exposed to car and other personal loans which exceeds 35% to 40% of their
monthly income. This has disqualified many from obtaining mortgages from
banks and/or home financing companies.
Another major factor affecting the progress of master planned residential
communities is the continuous increases in land prices. Zoning policies are not
very clear and can indirectly generate land price increases; hence fewer
margins can be achieved by master-developers.
Demand momentum on housing units within master planned communities
situated at the outskirts of Riyadh is limited. This is primarily attributed to the

lack of functioning public facilities and services in the area which are the
responsibility of the municipalities. These facilities/services are highly effective
in the inducement of demand and include schools, mosques, civil defense
facilities, police stations, postal services, and health facilities. Consequently,
many of the previously announced master planned communities in areas
without these facilities/services are either on hold or are still in their planning
stages.
Financial institutions and banks are reluctant to offer full financing resources to
these projects due to landowners/master-developers inflated land prices, low
equity contributions, and excessive reliance on off-plan sales.
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DEVELOPMENT CONCEPT
5.1
RATIONALE FOR THE CONCEPT

Colliers research show that master planned communities customized plans have
allowed the developments to gain competitive advantage over conventional land
subdivision. However, master planned communities are more cost prohibitive and
require extensive capital for planning and execution. Potential revenue is often
realized after a holding period of greater than 5 years.
On the contrary, the land-subdivision approach is more cost effective for large
scale urban land and is limited only to the development of infrastructure. The
following exhibit details the differences between conventional land subdivisions
and master planned communities:
Exhibit 17: Conventional Land-Subdivision vs. Master planned Communities

Conventional Land Subdivision
Master planned Communities

Creates a development pattern that is distinguished from its
Follows similar patterns of surrounding land-uses

Consists of varying land-uses and housing subdivisions,
with no clear discernible centres

Dwelling types are limited to low density single and
multi-family dwellings. Low density housing tends to

spread out over larger land areas
surrounding land-uses
Consists of commercial and residential land-uses with clear
and discernible centres

Majority of residential dwellings are within a 5 minute walk (i.e.
c600m) from the developments commercial/mixed-use centre

Dwelling types ranging from single family to multi-family
Keeps all land-uses separated rather than integrated
homes (high dense community), located within clustered
Maintains a gridiron rather than interconnected street
neighbourhoods that are supported by green space and civic
pattern
Does not comprise a district centre, and is less compact
and non-conducive to the use of public transportation
services
Children's play grounds are conveniently located throughout
the neighbourhood
Interconnected road network designed for efficiency
Source: Colliers Analysis, 2012
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The following exhibit indicates the development concept for each of the Subject
Sites land parcels on a macro level:
Exhibit 18: Development Recommendations and Rationale
Parcel
Development Recommendation
Rationale
Parcel A
Part of Parcel A could be sold to

developers/sub developers for retail
use. The remaining land can be
developed with the requisite primary
infrastructure (e.g. electricity, water,
sewerage and roads), and then
offered as commercial & residential
plots (primarily apartment buildings).
Colliers envisages this parcel to serve the retail needs of the surrounding
districts due to its excellent accessibility compared to the other parcels.
The retail component envisaged is in the form of neighbourhood box stores
which will serve the households in the surrounding area as it is an
upcoming location. These households will require a neighbourhood store in
the foreseeable future as the resident population grows. Since the land
size of Parcel A will not be able to completely cater to retail components
(land size greater than 250,000 Sqm) the remaining land can be developed
with relevant apartment block infrastructure and sold as blocks and/or
superblocks, consistent with the surrounding area.
Parcel B
Parcel B could be developed with the

requisite primary infrastructure (e.g.
electricity, water, sewerage and
roads). The land could then be
offered as serviced residential parcels
(i.e. blocks and superblocks) to
individual investors, mid-scale and
infill developers to be developed into
developments that are consistent with
the surrounding land use.
This option is primarily attributed to the characteristics of the surrounding

area which is purely residential with a large supply of commercial land
alongside major roads (i.e. Al Wadi Road).
Parcel C
Parcel C could be developed into

multiple offerings including a fully
integrated semi-gated/ gated
community, and residential land (i.e.
blocks and superblocks).
Primarily attributed to the large size of the site (approximately 900,000

sqm) as well as the profile/character of the neighbouring district (upper
mid-income residential district as opposed to the lower mid income districts
surrounding of Parcel A and B).
Parcel C is located adjacent to Wadi Hanifah and is a suitable location for a
gated/semi gated community.
The remaining land near Western Ring Road can be developed into
traditional land subdivisions with blocks/superblocks/individual land parcels
for sale.
It should be noted that in conventional land subdivision, commercial land within a

residential neighbourhood is positioned only alongside roads that are a minimum of
30 m in width. These lands are typically developed into apartment buildings by sub
developers, with some offering retail line shops on the ground floor.
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5.2
PARCEL A
Parcel A could serve the retail needs of the surrounding districts given its excellent
accessibility, size, and shape. Parcel A is located within close proximity to exits of
Makkah Road and Western Ring Road. The following exhibit provides a depiction
of the indicative land use strategy of Parcel A:
Exhibit 19: Indicative Land Use Strategy for Different Options
Typical Land Subdivison

Area: c.170,000-190,000
Exit/Entry Point
Exit/Entry Point
Retail Use
Area: c.60,000-80,000
The retail use of Parcel A can vary depending upon the choice of the developer but
Colliers envisages the following retail developments to have good market potential
within Parcel A:
Exhibit 20: Exemplary Retail Developments for Parcel A
Retail Use
Example
Typical Land Area (Sqm)
Euromarche
40,000-60,000
Dubai Outlet Mall
40,000-60,000
Global Village in Dubai
100,000-350,000
Centrepoint/Hyper Panda
30,000-50,000
Retail Souq
Souk Al-Mubarakiya in Kuwait
40,000-60,000
Wholesale Market
Fruit, Vegetable, Fish, Poultry
50,000-70,000
Indoor Amusement Park
Rides, Bumper Cars, Video

Arcade, Go Karting
20,000-40,000
Stand-alone Showrooms
Toyota, Kia, Home Centre
15,000-60,000
Neighbourhood Centre
Outlet Mall
Cultural Fair Grounds
Big Box Stores
An attractive retail offering on Parcel A could be a hybrid concept of a

neighbourhood centre (such as Euromarche and Hyper Panda on Thakasussi
Street) with supporting anchor stores and shared parking:
Anchor stores could include names such as Centrepoint, Furniture Stores, and
Extra.
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Large grocery stores could include names such as Hyper Panda, Euromarche,
Othaim, and Lulu Hypermarket.
The neighbourhood centre could offer small F&B outlets such as Baskin
Robbins, Dunkin Donuts, KFC, Mc Donalds, and Kudu.
It is recommended that the Client secure a buyer for the retail component in the
early stage of the project development. This will allow the Client to better
understand the area size requirement of the developer and whether raw land is
preferred over developed land. Given the large size of the retail component, it is
believed that raw land will be more attractive to a developer. Raw land also allows
added flexibility while subdividing the land according to the retail concept and
design.
Since the land size of Parcel A will not be able to completely cater to retail
components (land size greater than 250,000 Sqm) the remaining land can be
developed with relevant infrastructure and sold as blocks and/or superblocks. The
end product for these land parcels would be apartment blocks, which is consistent
with the land use of the surrounding area and the recommended retail use. The
following exhibit provides snapshots of apartment developments in Dhahrat Laban:
Exhibit 21: Apartment Developments in Dhahrat Laban

Google Images, 2012
Villa developments on Parcel A will not be in demand given the parcels closeness
to retail developments. Given the heavy traffic and high footfall of areas with retail
developments, a mid to high density final dwelling product is more suitable for the
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parcel. The commercial component will also be limited as most of the commercial
needs of the surrounding area (immediate, and to a certain extent, west Riyadh)
would be met by the retail component. The following exhibit provides an indicative
land use strategy for Parcel A:
Exhibit 22: Indicative Land Use Strategy for Parcel A
Factor
Description
Land Size
250,922
Retail Use
70,000
Net land for Subdivision (Sqm)
180,922
Road and services (%)
37
Net Sellable Area
113,981
Residential
Residential Area (%)
70
Residential Area (Sqm)
79,787
Residential Product
Apartments
Target Segment
Low Income
Plot Size Residential (Sqm)
750
No. of Plots
106
Building Height
G+2-3F
Residential and/or Commercial
Commercial Area (%)
30
Commercial Area (Sqm)
34,194
Plot Size Commercial (Sqm)
900
Building Height
G+3F
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5.3
PARCEL B
Parcel B can be developed by taking the surrounding area into consideration. This
has been the case with Masterplan No. 4 and Masterplan No. 5 as identified in the
Competitive Review Section. The following exhibit illustrates an indicative land use
strategy for Parcel B:
Exhibit 23: Indicative Land Use Strategy for Parcel B
Typical Land Subdivison

Parcel Bs surrounding area mostly comprises apartment developments (with and

without retail line shops) alongside commercial streets and villa developments on
internal roads. The following exhibit provides a snapshot of villa developments in
Dhahrat Laban:
Exhibit 24: Villa Developments in Dhahrat Laban
Source:
Residential plots in Dhahrat Laban (Masterplan No. 4 and Masterplan No. 5) are
one of the largest in Riyadh. This is due to the low cost of land in the area and its
targeted segments affordability and preferences. The area has attracted buyers
who are willing to compromise on location (instead of north and northwest Riyadh)
in exchange for larger sized residential plots. The following exhibit illustrates the
residential characteristics of Dhahrat Laban:
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Exhibit 25: Dhahrat Laban Residential Characteristics
Factor
Value
Average Villa Sales Price (SAR/Sqm)
2,230
1,000
Building Height Villa
G+1.5F
Building Height Apartments
G+2-3F
Source:
It is important for the development on Parcel B to suit the needs of the surrounding
area and its targeted segment of low to mid income households. The following
exhibit illustrates Colliers land use strategy for Parcel B:
Exhibit 26: Indicative Land Use Strategy for Parcel B
Factor
Description
Land Size
200,059
Road and services (%)
35
Net Sellable Area
130,038
Residential
Residential Area (%)
60
Residential Area (Sqm)
78,023
Residential Product
Villas
Target Segment
Low & Mid Income
Plot Size Residential (Sqm)
600
No. of Plots
130
Building Height
G+1.5F
Commercial Area (%)
40
Commercial Area (Sqm)
52,015
Plot Size Commercial (Sqm)
900
Building Height
G+2-3F
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5.4
PARCEL C
Due to the large land size of Parcel C and its attractive location, a mix of residential
concepts could be developed on the land. Colliers recommendations are:
1 Typical serviced plots for sale
2 Large mixed use superblock for coherent development
3 Semi gated community
4 Gated community
5.4.1
SERVICED RESIDENTIAL PLOTS

Residential serviced plots surrounding parcel C (within Masterplan No. 6 and
Masterplan No. 7) are larger in size than those in north Riyadh. This is primarily
attributed to the targeted segment of the area.
Potential tenants surrounding the Subject Site prefer larger plot sizes, however
Colliers has observed that the finishing quality of the end product is average. On
the other hand, tenants in north Riyadh opt for smaller plot sizes but the quality of
finishing of the end product is much higher.
The following exhibit illustrates a comparison between north Riyadhs typical
residential plots and those in Masterplan No. 7:
Exhibit 27: Difference in Plot Sizes in North & West Riyadh
20 m
25 m
12 m
20 m
Masterplan No. 7
Typical Plot Size: 400 Sqm
North Riyadh
Typical Plot Size: 300 Sqm
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The following exhibit illustrates the development concept for the serviced plots
within Parcel C:
Exhibit 28: Typical Land Subdivision Characteristics
Factor
Surrounding Area
Subject Development
Residential
Type
Villas
Villas
Road Width
15 M
18 M
400 Sqm
400 Sqm
G+1.5F
G+1.5F
Average Plot Size

Building Height

Type
Apartments + Ground Floor Retail
Apartments + Ground Floor Retail
30 M
30 M
900 Sqm
600 Sqm
G+2-3F
G+2-3F
Road Width
Average Plot Size
Building Height
Colliers Recommendation, 2012
The following should be noted:
Parcel C should be developed to create synergy with its surrounding area.
Wider roads with internal green spaces could be offered by the subject
development to differentiate the development from the surrounding area. The
large plot sizes recommended for the subject development also require wider
roads to be used as parking for visitors and residents extra vehicles.
Small commercial plots may aid in absorption, while two adjacent small size plots
can be combined into a sizable commercial plot (i.e. 1,200 sqm).
5.4.2
LARGE MIXED USE SUPERBLOCK

The parcel adjacent to the palace and Al Wadi Road offers an attractive
development potential for a coherent mixed use development. The mixed use
development is envisaged as mid rise apartment buildings offering apartment units
for sale and ground floor retail line shops for lease. The development concept is
the same as typical land subdivisions, however, the commercial nature of the
concept require the plots to be separated by 30 m wide roads.
5.4.3
SEMI GATED COMMUNITY

A semi-gated community is expected to be an attractive offering on Parcel C given
its large land size, location suitability, attractive topography and surrounding views
of Wadi Hanifah. A semi-gated community offers typical freehold villas in a
masterplan setting with gated entrance(s). The differentiating feature of a semi-
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gated community is its security provisions which help to foster a greater sense of
community.
Semi-gated communities are rare in the Kingdom, with merely two such
communities in Riyadh, both of which are developed by Rafal. Blncyay was the first
semi-gated community in Riyadh, which was completed and sold out by 2010. Al
Rabia Community is the second, which is expected to be completed by the second
quarter of 2013. The following exhibit provides snapshots of Blncyah and Al Rabia:
Exhibit 29: Snapshots of Blncyah and Al Rabia Communities
Blncyah
Al Rabia

Rafal
Blncyah has a limited number of large units with an average sale price between
SAR 3 mn - SAR 3.5 mn, whilst the remaining are sold at an average of SAR 1.5
mn - SAR 1.8 mn.
The more affordable units were sold during the projects shell and core phase,
while the more expensive units were sold post-completion, at largely discounted
rates.
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Blncyah project by Rafal is the first community to introduce a professional Facility

Management Program through the creation of a Home Owners Association
where homeowners are registered in the Ministry of Social Affairs. Rafal is also
incorporating the same strategy into its other projects (Rafal Tower and Al Rabia
Community).
Owners of properties in Blncyah pay an average of SAR 6,000/annum towards

the maintenance of facilities and amenities (security, upkeep of gardens, etc.).
The maintenance charge is dependent upon the size of each unit. Al Rabia
Community is currently under construction but is expected to command similar
maintenance charges.
Blncyah and Al Rabia are expected to have an average of 2 cars per unit and
their buyers have an estimated age of 41 years.
The following exhibit illustrates the Blncyah and Al Rabia communities:

Exhibit 30: Blncyah and Al Rabia Community
Blncyah
Status: Completed
Land Area: 85,956 Sqm
No. of Units: 144
Average Plot Size: c.300 Sqm
Typical Road Width: 20 m
Blncyah
Source:
Al Rabia Community
Status: Under Construction
Land Area: 120,000 Sqm
No. of Units: 224
Average Plot Size: c.300 Sqm
Typical Road Width: 15 m
Al Rabia Community
Roads within the communities are wider than that of typical masterplans.
Blncyahs side roads and internal roads are 20m and 15m wide, respectively.
Whereas Al Rabia side roads and internal roads are 15m and 12 m wide,
respectively.
Both communities have one single entrance, which has 24/7 security.
Both communities have provision for civic facilities such as mosque and
community centres, while Al Rabia also offers a liner garden.
The following exhibit illustrates a semi-gated community concept for parcel C:
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Exhibit 31: Semi Gated Community Characteristics
Factor
Typical Semi Gated Community
Subject Development
Villas
Villas
Road Width
15 20 M
15 - 20 M
Average Plot Size
300 Sqm
300 Sqm
G+1.5F
G+1.5F
Type
Building Height

Colliers Recommendation, 2012
5.4.4
GATED COMMUNITY (RESIDENTIAL COMPOUND)

The development of a gated community for high income expatriate households on
parcel C is expected to be incurring high demand due to its location. The parcels
main attractive location features are:
close to the major highway intersection of Makkah Road and Western Ring Road
surrounding land use comprise high end palaces which gives the area a high
level of security
frontage on Wadi Hanifa which secludes one side of the site, thereby resulting in
higher security
Residential compounds require large land areas capable of offering green spaces
and community facilities (swimming pools, banquet halls, gym, etc.). The following
exhibit lists the number of units within Riyadhs high end compounds along with
their land area and density:
Exhibit 32: Riyadh Compounds Land Area and Densities
Compound Name
Total No. of
Units
210
403,200
Arizona Golf Resort Compound
168
270,000
Kingdom City Compound
427
227,000
19
Sedar Village
250
220,800
11
Hamra Compound
404
220,000
18
Eid Compound
315
200,000
16
Cordoba Oasis Compound
271
164,000
17
Arabian Home Village
316
108,000
29
Al Waha Garden Village
185
73,100
25
98
40,330
24
264
192,643
17
Average
Density
(Du/Ha)
Al Yamamah Village - 2
Al Wadi Compound -1
Total Land Area

(Sqm)
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High end compounds in Riyadh have large land areas with a high portion of space
dedicated towards greenery and community facilities. Out of the 29 facilities and
amenities within the compound sample, 13 widely used featured are considered
basic compound offerings that is necessary for the premium that is placed on
compounds over regular residential developments. The most common facilities and
amenities found in the research sample are full/Olympic size swimming pools and
recreation centres with basic lounges and facilities such as gyms and sports courts.
The least common facilities are golf courses, boutique stores, theatres and
housekeeping services.
Exhibit 33: Most Common Compound Facilities & Amenities
120%
100% 100%
100%
82%
73%
64%
45%
45%
45%
45%
45%
Library, Video Library, Quiet

Room
Bowling
Arcade Centre
Playgrounds
55%
Sauna, Jacuzzi, Steam

Room
60%
82%
73%
80%
40%
Restaurant
Supermarket
Tennis court
Basketball Court
Squash Court
Gym / Recreation
Transport Services
0%
Swimming Pool
20%
The following chart details the extra facilities and amenities found in the researched
comparable sample. These facilities are not necessary to the success of a
compound but provide the development with a competitive edge.
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Exhibit 34: Extra Compound Facilities & Amenities
100%
80%
60%
40%
36%
36%
27%
36% 36%
27%
27%
18%
20%
27%
18%
18%
9%
9%
18%
9%
9%
Horseback Riding / Petting

Zoo
Housekeeping Maid Service
BBQ Area
Medical Clinic
Theatre
Soccer
Coffee Shop
Golf Course
Volleyball Court
Travel Agency
Boutique
Gift shop
Hairdressers / Barber
Laundry
Function Hall
Pre-School / Nursery
0%
The following exhibit portrays snapshots of facilities in residential compounds:

Exhibit 35: Typical Compound Snapshots
Source: Zamil Real Estate, 2012
Colliers extended experience in conducting feasibility studies for gated

communities indicate that a financially attractive compound must have a land price
at or below SAR 650/sqm. The Client may have difficulty attracting potential
developers given its land price of SAR 800/sqm. However, potential developers
may be willing to purchase a portion of the Subject Site at a premium for the
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development of a residential compound due to its attractive location. The sale
could increase the absorption rate of Parcel C, thereby resulting in a higher return
for the overall development.
5.4.5
CONCLUSION
Parcel C can be subdivided into three major development offerings:
5 conventional/typical land subdivision
6 mixed use superblock
7 a portion of parcel C could be sold to a developer for the development of a
semi-gated community
8 a portion of parcel C could be sold to a developer for the development of a
gated community
The following exhibit illustrates the land use strategy of parcel C:
Exhibit 36: Indicative Land Use Strategy for Different Options
Semi Gated Community

Area: c.100,000 Sqm
Mixed Use Superblock

Area: c.60,000 Sqm
Typical Land Subdivision

Area: c.540,000 Sqm
Gated Community
Source:
Note:
Colliers Assessment, 2012

The above boundaries in the above exhibit are indicative only.
Colliers conducted a financial analysis on the above mentioned options and found
no major difference (i.e. gain or loss) between the recommended options and that
of typical land subdivision for the whole parcel. Nevertheless, the provision of gated
and semi-gated community will lower the financial risk of the development. The
following exhibit provides an indicative land use strategy for Parcel C:
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Exhibit 37: Indicative Land Use Strategy for Parcel C
Factor
Description
Land Size
910,925
Road and services
40%
Net Sellable Area
546,555
Commercial Area
109,311
Residential Area
437,244
Target Segment
Upper Mid Income
Plot Size Residential
400
No. of Plots
1,093
Plot Size Commercial
900
5.5
LAND SUBDIVISION PRICING STRATEGY

Competitive masterplans in the areas surrounding the Subject Site have been
analysed and compared to variables important to potential occupiers of the Subject
Site. The pricing comparable adjustment matrix displays a weighting for key
variables as illustrated by the exhibit below:
Exhibit 38: Pricing Matrix
EXISTING COMPARABLE DEVELOPMENTS

Comparable Criteria
Location to Riyadh City
Boundaries
Location in Relation to City
Centre & CBDS
The Subject
Weighting
100%
100%
Location in Relation to Social/

Civic Services
100%
Surrounding Neighborhood Profile
100%
Total
Current Average Price (SAR/m2)
100%
100%
The likhood %
Estimated Rate
PROPOSED DEVELOPMENT
100%
Site Accessibility
PROPOSED
DEVELOPMENT
(Must be 100%)
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1 Comparable criteria forming the basis of the sale prices are:
Proximity of Subject Site to Riyadh City Boundaries: Location is
considered one of the most important factors in assessing the comparative set
as it is a primary determinant for prospective tenants.
Proximity of Subject Site to City Centre & CBDs: Proximity to the city
centre and major CBDs is essential for a residential

community/neighbourhood.
Site Accessibility: Ease of access to major thoroughfares is critical for
residential tenants.
Proximity of Subject Site to Social/Civic Services: Proximity to restaurants,
retail areas, and neighbourhood supporting facilities is highly recommended

for a residential neighbourhood.
Surrounding Neighbourhood Profile: Rents and sale prices of residential
areas depend on the locations level of development.

Active Footfall in the Surrounding Area: Rents and sale prices within a
commercial area are highly dependent on the level of footfall surrounding the
Subject Site. Active foot within the surrounding area of the site is extremely
important for commercial developments.
2 Weighting for each comparable criterion is derived from local and international
real estate pricing strategies, and differs by asset class (e.g. land, office tower
and retail mall).
3 Weighting is allocated to each assessment criteria by comparable development.
4 The subject development is given a score of 100% and is compared to each
competing developments based on the designated criteria. For example, if the
location of comparable 1 is better than that of the subject development, then the
score for comparable 1 would be less than 100%.
5 Current asking/bidding price for comparable developments.
6 The sale price of the proposed development is derived in two stages: Stage 1
involves multiplying the overall score of a comparable by its sale prices in order
to arrive at the market value of the comparable. Stage 2 (likelihood) involves
allocating a weight to the competitiveness of the subject development with the
relative comparable. The sale price is then derived by multiplying the outputs of
stage 1 and stage 2.
Colliers pricing strategy for the development concept of parcels A, B and C are
illustrated below:
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PARCEL A & B
Exhibit 39: Residential Plots Pricing Strategy (A & B)
Exhibit 40: Commercial Plots Pricing Strategy (A & B)
Weighting
No. 4
No. 5
Subject
Development
Weighting
No. 4
No. 5
Subject
Development

Boundaries
30%
120.0%
125.0%
100%

Boundaries
30%
105.0%
115.0%
100%
Location in Relation to
City Centre & CBDs
10%
120.0%
125.0%
100%
City Centre & CBDs
10%
105.0%
115.0%
100%
Site Accessibility
20%
120.0%
130.0%
100%
Site Accessibility
20%
105.0%
115.0%
100%
Social/ Civic Services
15%
110.0%
125.0%
100%
15%
105.0%
120.0%
100%
Surrounding
Neighborhood Profile
25%
100.0%
100.0%
100%
Active Footfall in the

area
25%
100.0%
100.0%
100%
100.0%
113.5%
119.8%
Estimated Rate
100.0%
103.8%
112.0%
Estimated Rate
Current Average Price

(SAR/Sqm)
1,000
1,000

(SAR/Sqm)
1,500
1,500
Proposed development
1,135
1,198
1,556
1,680
50.0%
50.0%
50.0%
50.0%
Comparable Criteria
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Total
The likelihood %
1,166
Comparable Criteria
Total
The likelihood %
1,618
FINAL
PARCEL C
Exhibit 41: Residential Plots Pricing Strategy (C)
Comparable Criteria
Weighting
Exhibit 42: Commercial Plots Pricing Strategy (C)
No. 6
No. 7
Subject
Development
Comparable Criteria
Weighting
No. 6
No. 7
Subject
Development
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Boundaries
30%
105.0%
115.0%
100%

Boundaries
30%
100.0%
105.0%
100%
City Centre & CBDs
10%
105.0%
115.0%
100%
City Centre & CBDs
10%
100.0%
105.0%
100%
Site Accessibility
20%
110.0%
120.0%
100%
Site Accessibility
20%
100.0%
105.0%
100%
15%
100.0%
100.0%
100%
15%
100.0%
100.0%
100%
Surrounding
Neighborhood Profile
25%
100.0%
100.0%
100%
Active Footfall in the

area
25%
100.0%
100.0%
100%
100.0%
104.0%
110.0%
Estimated Rate
100.0%
100.0%
103.0%
Estimated Rate

(SAR/Sqm)
1,850
1,850

(SAR/Sqm)
2,200
2,200
1,924
2,035
2,200
2,266
50.0%
50.0%
50.0%
50.0%
Total
The likelihood %
1,980
Total
The likelihood %
2,233
FINAL
FINANCIAL ANALYSIS
Colliers developed a comprehensive financial model based on quarterly results to

assess the financial viability of the subject development. The major differentiating
factor of the two scenarios tested by Colliers is the construction timeline
assumption.
SCENARIO A
6.1
Scenario A assumes that the Client will develop the infrastructure of parcels A, B,
and C together in year 1. Colliers believes that sellable plots within this option will
likely be sold over a project life of 13 quarters.
6.1.1
LAND AND INFRASTRUCTURE COST

According to the Client, the Subject Site has total land area of 1,361,906 sqm and
an estimated land cost of SAR 800/sqm. The Client will incur a 2.5% commission in
addition to land cost for the acquisition of the land and a basic infrastructure cost of
SAR 55/sqm. Colliers assumed an annual inflation cost of 2.5% for the
infrastructural development of the land. The following exhibit illustrates the phasing
of the land and the cost of infrastructure:
Exhibit 43: Phasing of Land and Infrastructure Cost

Description
Land Cost
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
100%
25%
25%
25%
25%
Infrastructure Cost
6.1.2
AREA SCHEDULES
The following exhibit provides the area schedule for the entire development:
Exhibit 44: Area Schedule by Parcel
Description
Total Area (Sqm)
6.1.3
Parcel A
Parcel B
Parcel C
250,922
200,059
910,925
Facilities and Amenities (%)
37
35
40
Sellable Area (%)
63
65
60
REVENUE ASSUMPTIONS
Colliers undertook detailed demand/supply estimation for Riyadhs serviced
residential plots. Based on the results of this analysis, Colliers proposes the
following absorption for the serviced residential plots within the subject
development:
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Exhibit 45: Absorption of Serviced Residential Plots by Type
No. Of Plots
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
3,951
3,979
4,007
4,035
4,063
4,092
4,120
4,149
4,178
4,207
4,237
4,266
4,296
30
31
31
14
106
106
106
106
76
45
14
3,951
3,979
4,007
4,035
4,063
4,092
4,120
4,149
4,178
4,207
4,237
4,266
4,296
30
31
31
31
130
130
130
130
100
69
38
1,021
1,028
1,035
1,042
1,050
1,057
1,064
1,072
1,079
1,087
1,095
1,102
1,110
126
127
128
129
130
130
131
132
60
1,093
1,093
1,093
1,093
967
840
713
584
454
324
193
60
Parcel A
City Demand
Expected
Absorption
Balance Plots
Parcel B
City Demand
Expected
Absorption
Balance Plots
Parcel C
City Demand
Expected
Absorption
Balance Plots
Source:
Notes:

Market share for low and mid-end plots is estimated at 0.75%.
Market share for upper mid end plots is estimated at 12%.
Absorption computed using quarterly results; some rounding errors may occur.
The following exhibit illustrates the absorption rate of serviced commercial plots
within the subject development:
Exhibit 46: Absorption of Serviced Commercial Plots by Type
Type
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
Parcel A Internal
Commercial
30%
30%
30%
10%
Parcel A Retail
Area
100%
Parcel B
30%
30%
30%
10%
Parcel C
30%
30%
30%
10%
Colliers assumed an annual revenue escalation rate of 3.5% for the sale price of
serviced plots (residential and commercial).
Parcel As retail block is expected to be sold in Q8. The large size of the land will
require appropriate marketing to achieve a financially attractive sale price. Colliers
estimates the block to achieve an estimated sale price of SAR 1,360/sqm, if sold
as raw land.
45 of 109
FINAL
Based on these assumptions and the pricing strategy detailed in the previous
section of this report, the result of Collierss financial viability assessment on the
subject development are as follows:
Exhibit 47: Project Cash Flow and IRR Calculation (Consolidated)
In SAR (Millions)
Q1
Total Cash In
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
268
271
273
278
115
112
114
115
53
(1117)
(18)
(18)
(18)
(18)
Total Cash Out
(1135)
(18)
(18)
(18)
Net Cash Flow
(1135)
(18)
(18)
(18)
268
271
273
278
115
112
114
115
53
Land
Infrastructure
Payback Period
IRR
Source:
Note:
Q9
19.51%

IRR computed based on quarterly results; some rounding errors may occur.
The project is estimated to achieve an IRR of 19.51% through the sale of serviced
plots over a project life of 13 quarters. The table below shows the impact on IRR by
changes in infrastructure cost and revenue (-20% to 20% in increments of 5%).
Exhibit 48 Sensitivity Analysis
Infrastructure Cost
Revenue from Sale of Serviced

Plots
% Change in
Variable
Source:
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
-20%
5.22%
5.03%
4.85%
4.66%
4.48%
4.29%
4.11%
3.93%
3.74%
-15%
9.10%
8.90%
8.71%
8.52%
8.33%
8.14%
7.95%
7.76%
7.57%
-10%
12.90%
12.71%
12.51%
12.31%
12.11%
11.92%
11.72%
11.53%
11.34%
-5%
16.65%
16.45%
16.25%
16.04%
15.84%
15.64%
15.44%
15.24%
15.04%
0%
20.35%
20.14%
19.93%
19.72%
19.51%
19.31%
19.10%
18.90%
18.69%
5%
23.99%
23.77%
23.56%
23.35%
23.13%
22.92%
22.71%
22.50%
22.29%
10%
27.58%
27.36%
27.14%
26.92%
26.71%
26.49%
26.27%
26.06%
25.84%
15%
31.13%
30.91%
30.68%
30.46%
30.24%
30.01%
29.79%
29.57%
29.35%
20%
34.64%
34.41%
34.18%
33.95%
33.72%
33.50%
33.27%
33.05%
32.82%
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SCENARIO B
6.2
Scenario B assumes the infrastructure of parcels A and B will be developed

simultaneously while for parcel C will be developed at a later stage. The sellable
plots within this option will likely be sold over a project life of 15 quarters.
6.2.1
LAND AND INFRASTRUCTURE COST

Scenario B and A follows the same assumptions on land area, land cost, land cost
acquisition charges, infrastructure cost and infrastructure cost inflation. The
following exhibit details the phasing of land and infrastructure cost of Scenario B:
Exhibit 49: Phasing of Land and Infrastructure Cost

Description
Land Cost
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
Q14
Q15
100%
Infrastructure
Cost (Parcel A)
33%
33%
33%
Infrastructure
Cost (Parcel B)
33%
33%
33%
Infrastructure
Cost (Parcel C)
30%
30%
40%
6.2.2
AREA SCHEDULES
The following exhibit provides the area schedule for the entire development (similar
to Scenario A):
Exhibit 50: Area Schedule by Parcel
Description
Total Area (Sqm)
6.2.3
Parcel A
Parcel B
Parcel C
250,922
200,059
910,925
Facilities and Amenities (%)
37
35
40
Sellable Area (%)
63
65
60
REVENUE ASSUMPTIONS
Based on detailed demand/supply analysis, Colliers proposes the following
absorption for the serviced residential plots within the subject development:
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Exhibit 51: Absorption of Serviced Residential Plots
No. Of
Plots
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
Q14
Q15
3,951
3,979
4,007
4,035
4,063
4,092
4,120
4,149
4,178
4,207
4,237
4,266
4,296
4,326
4,357
30
30
31
15
106
106
106
76
46
15
3,951
3,979
4,007
4,035
4,063
4,092
4,120
4,149
4,178
4,207
4,237
4,266
4,296
4,326
4,357
30
30
31
31
130
130
130
100
69
39
1,021
1,028
1,035
1,042
1,050
1,057
1,064
1,072
1,079
1,087
1,095
1,102
1,110
1,118
1,125
128
129
130
130
131
132
133
134
46
1,093
1,093
1,093
1,093
1,093
1,093
965
837
707
577
445
313
180
46
Parcel A
City
Demand
Expected
Absorption
Balance
Plots
Parcel B
City
Demand
Expected
Absorption
Balance
Plots
Parcel C
City
Demand
Expected
Absorption
Balance
Plots
Source:
Notes:

Market share for low & mid-end plots is estimated at 0.75%.
Market share for upper mid end plots is estimated at 12%.
Absorption computed using quarterly results; some rounding errors may occur.
The following exhibit illustrates the absorption rate of serviced commercial plots
within the subject development:
Exhibit 52: Absorption of Serviced Commercial Plots by Type
Type
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
Parcel A Internal
Commercial
50%
50%
Parcel A Retail
Area
100%
Parcel B
30%
30%
40%
Parcel C
30%
30%
30%
10%
Source:
Colliers assumed an annual revenue escalation rate of 3.5% for the sale price of
serviced plots (residential and commercial).
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Parcel As retail block is expected to be sold as raw land in Q6 with an estimated
sale price of SAR 1,360/sqm.
Based on these assumptions and the pricing strategy detailed in the previous
section of this report, the result of Collierss financial viability assessment on the
subject development are as follows:
Exhibit 53: Project Cash flows and IRR Calculation (Consolidated)
Q1
Total Cash In
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
Q14
Q15
102
103
180
216
187
183
136
114
115
117
119
41
(1117)
(7)
(7)
(7)
(15)
(15)
(21)
Total Cash Out
(1124)
(7)
(7)
(15)
(15)
(21)
Net Cash Flow
(1124)
(7)
(7)
87
87
159
216
187
183
136
114
115
117
119
41
Land
Infrastructure
Payback Period
IRR
Source:
Note:
Q11
17.43%

IRR computed based on quarterly results; some rounding errors may occur.
The project is estimated to achieve an IRR of 17.43% through the sale of serviced
plots over a project life of 15 quarters. The table below shows the impact on IRR
changes in infrastructure cost and revenue (-20% to 20% in increments of 5%).
Exhibit 54 Sensitivity Analysis
Infrastructure Cost
Revenue from Sale of Serviced

Plots
% Change in
Variable
Source:
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
-20%
4.99%
4.83%
4.66%
4.50%
4.34%
4.18%
4.02%
3.86%
3.70%
-15%
8.36%
8.20%
8.03%
7.87%
7.70%
7.54%
7.38%
7.22%
7.06%
-10%
11.67%
11.50%
11.34%
11.17%
11.00%
10.84%
10.67%
10.51%
10.34%
-5%
14.92%
14.75%
14.58%
14.41%
14.24%
14.07%
13.91%
13.74%
13.57%
0%
18.11%
17.94%
17.77%
17.60%
17.43%
17.26%
17.09%
16.92%
16.75%
5%
21.26%
21.08%
20.91%
20.74%
20.56%
20.39%
20.22%
20.04%
19.87%
10%
24.36%
24.18%
24.00%
23.83%
23.65%
23.48%
23.30%
23.13%
22.95%
15%
27.42%
27.24%
27.06%
26.88%
26.70%
26.52%
26.34%
26.17%
25.99%
20%
30.43%
30.25%
30.07%
29.89%
29.71%
29.53%
29.35%
29.17%
28.99%
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FINAL
CONCLUSION
6.3
The following exhibit summarises the differences between Scenario A and B:

Exhibit 55: Differences between Scenario A & B
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q12
Q13
Q14
Q15
Scenario A 13 Quarters
Revenue
Cost
Equity Required SAR 87 Million
Scenario B 15 Quarters
Revenue
Cost
Equity Required SAR 42 Million
Source:
The difference between the two scenarios is the amount of equity the client has
to inject during the course of the project. Scenario A would require a higher
equity contribution as the infrastructure of the parcels is developed
simultaneously until Q4 after which the project revenues are realised.
For Scenario B, the infrastructure of Parcel A and B are developed together,

while for Parcel C it is developed at a later stage. The revenue from the sale of
serviced plots of Parcel A and B start at Q4 which can be used to finance the
infrastructure cost of Parcel C in Q5 & Q6, thereby reducing equity required in
Scenario B.
The following table provides the consolidated financial analysis conclusion for both
scenarios:
Exhibit 56: Scenario A vs. Scenario B (Consolidated)
In SAR
Scenario A
Total Revenue
1,599,556,891
1,613,701,538
Total Land Cost
(1,116,762,920)
(1,116,762,920)
(71,723,749)
(72,483,080)
(1,188,486,669)
(1,189,246,000)
411,070,222
424,455,538
Q9
Q11
19.51%
17.43%
Total Infrastructure Cost

Total Capital Expenditure
Net Cash Flow
Payback Period
IRR
Source:
Note:
Scenario B

IRR computed using quarterly results, some rounding error may exist
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FINAL
SUMMARY CONCLUSION
SITE OUTLOOK
The Subject Site is well located at the intersection of Western Ring Road and
Makkah Road.
West of the Subject Site is mostly undeveloped while the east of the site is home
to a number of the citys important demand generators. This will induce demand
for the residential and commercial components of the subject development.
The Subject Sites direct frontage and visibility on two of Riyadhs major
thoroughfares will positively affect the residential and commercial components of
the subject development.
RECOMMENDATIONS
Traditional land subdivision concepts could be exercised on the parcels.
Parcels A and B can cater to the low-mid income class while parcel C can cater
to the upper mid income.
Colliers tested the financial viability of both the semi-gated/gated and traditional
subdivision concepts on parcel C and found no difference in financial returns.
However, the gated/semi-gated concept could lead to lower development risks
and higher attractiveness for the remaining subdivided plots.
The recommended land subdivision under scenarios A and B are financially

viable with a consolidated IRR of 19.51% and 17.43% for Scenario A and
Scenario B, respectively.
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LIMITATIONS OF THIS
REPORT
This Report has been prepared in accordance with the terms of contract (the
Contract) signed between Colliers International and The Investor for Securities
Co. (the Client).
This Report is provided solely for use by the Client in accordance with the terms
of reference set out in the Contract, and should be used for this purpose only.
This Report may not be copied, reproduced or distributed (in whole or in part)
nor may its contents be divulged by the Client other than in confidence to the
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You may disclose the whole or part of the report to your legal and other
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Nothing in this Report is or should be relied on as a promise or representation as

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52 of 109
FINAL
Nothing in this report constitutes a valuation or legal advice. This Report is not a
prospectus and does not constitute or form any part of an offer or invitation to
subscribe for, underwrite or purchase securities or any of the assets, business or
undertaking described herein, nor shall it or any part of it form the basis of, or be
relied upon, in any way in connection with any contract or investment decision
relating to any securities, assets, business or undertaking. Accordingly,
interested parties are advised to carry out their own due diligence, investigations
and analysis of any information contained or referred to herein or made available
to them at any stage.
53 of 109
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APPENDICES
Supplemental Information
54 of 109
FINAL
SAUDI ARABIA
MACROECONOMIC
OVERVIEW
This section of the study presents a brief yet informative macroeconomic overview
of the Kingdom of Saudi Arabia (KSA or the Kingdom) with critical analysis on
its geographical significance, key economic performance indicators, and
demographics. This analysis is important as the historical trends of major
macroeconomic variables provide insights to the future performance of the
economy. We have concluded the analysis by looking at the macro economic
impacts on the residential and home financing market as a whole.
1.1.1
GEOGRAPHY
With a land area of
approximately 2.15 million
square kilometres, Saudi
Arabia is the largest country
in the Middle East. The
country occupies nearly
80% of the Arabian
Peninsula and is the 14
th
largest state in the world by

land area. It is bordered by
Iraq and Kuwait in the
north, Jordan in the
northwest, Qatar, Bahrain and United Arab Emirates in the east, Oman in the
southeast, Yemen in the south, and the Red Sea in the west. The KSAs strategic
location allows the country great accessibility and trade logistic potential with the
GCC (Gulf Cooperation Council) and Northeast Africa.
The countrys population centres are mainly located along the eastern and western
coasts (Jeddah and Dammam/Al-Khobar, respectively) and the densely populated
interior oases including Hofuf and Buraydah. The biggest inland population centre
is the capital city of Riyadh which is also the largest city in the country.
1.1.2
ECONOMIC SNAPSHOT
The Kingdoms economy has historically been dominated by the oil-sector which is
a major source of government revenue, contributing on average nearly 51% of the
countrys GDP over the past five years. Saudi Arabia maintains 25% of the world's
proven petroleum reserves, leading it to rank as the largest exporter of petroleum
in the world.
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In recent years, the Kingdom started to place considerable emphasis on the
diversification of its revenue mix to reduce the countrys exposure to international
oil price fluctuations.
The economic growth of the Kingdom received a substantial boost in the wake of a
public spending plan worth USD 130 billion (30% of the KSAs 2010 GDP)
announced by King Abdullah bin Abdulaziz in early 2011. The plan largely
benefitted the Kingdoms lower income population and included a significant pickup in social spending which drove increases in wages and unemployment benefits,
leading to a boost in private consumption. The plan also included a sizable housing
program that is expected to stimulate the construction sector.
The countrys economic growth increased further recently due to a raise in
domestic oil production, implemented to compensate for the supply interruptions in
Libya.
1.1.3
KEY ECONOMIC INDICATORS AND FORECASTS

The exhibit below summarises the key economic indicators for Saudi Arabia with
emphasis on GDP, inflation, oil economy and trade balance:
Exhibit 57: Key Economic Indicators
Indicators
2011(E)
2012(F)
2013(F)
2014(F)
2,162.5
2,128.5
2,274.2
2,442.6
Real GDP (% Change)
7.0
4.5
4.9
5.1
Oil Real GDP (% Change)
8.2
0.5
1.7
3.6
Non-Oil Private Sector Real GDP (%

Change)
5.9
5.8
6.2
6.4
Current Account Balance (% of GDP)
24.8
15.4
13.9
11.6
Interest Rates on SAR Deposits (%, 3

Month)
1.2
1.2
1.4
2.2
Inflation (%, Year-end)
4.5
4.0
3.0
3.0
Oil Production (Million / Barrel / Day)
9.2
9.2
9.3
9.4
Oil Exports (USD Billion)
316.7
271.2
275.8
275.2
Total Export Revenues (USD Billion)
364.4
323.1
332.8
337.5
Imports (USD Billion)
205.0
217.4
228.7
241.2
Trade Balance (USD Billion)
159.4
105.7
104.1
94.3
Nominal GDP (SAR Billion)
Source:
Notes:
EIU Country Brief for Saudi Arabia, January 2012

EIU Estimates
EIU Forecasts
GROSS DOMESTIC PRODUCT

The oil and gas sector is expected to continue to drive the countrys fiscal income;
however, substantial savings made by the government in recent years have
allowed the country to allocate significant amounts of capital to the development of
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infrastructure and industrial projects. The Kingdoms long term strategy is to ease
the countrys dependency on oil and gas revenues.
Exhibit 58: KSAs Real GDP Performance and Forecast (SAR Billions)
1500
1000
837
872
2009
2010
975
933
1023
1126
1075
1184
500
Source:
Notes:
2011E 1 2012F2 2013F2 2014F2 2015F2 2016F2

EIU Estimates
EIU Forecasts
Exhibit 59: KSA and World GDP Growth Rate (Percentage)

10%
KSA expects higher GDP growth compared

to the world average
5%
0%
2009
2010
2011E1
2013F2
2012F2
2014F2
2015F 2
-5%
KSA Real GDP Growth Rate
Source:
Notes:
World Real GDP Growth Rate

EIU Estimates
EIU Forecasts
According to EIU estimates, the KSA economy is expected to significantly

outperform the world economy over the next 5 years due to the following reasons:
Private consumption will continue to expand, underpinned by robust national

population growth and expansionary fiscal and monetary policies.
Government consumption will accelerate as the fiscal expansion continues.
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The political unrest in Libya with the consequent damage to the countrys daily
crude oil production has resulted in further growth and oil export for the KSA.
This economic advantage will likely drive GDP growth; boost investor
confidence, and increase foreign direct investments in the Kingdom.
FISCAL BALANCE
In 2009, the KSA's fiscal balance slipped into deficit (SAR 87 billion, approximately
10% of the countrys GDP) for the first time since 2004 as a result of the turbulence
in the global oil market and higher than budgeted government expenditure. Despite
the 2009 fiscal deficit, the Saudi government continued to commit to its
development of the countrys infrastructure.
Year 2010 witnessed a sharp increase in oil prices which contributed to a 45%
increase in government revenues from 2009 to 2010. This trend continued through
2011, resulting in a budget surplus of approximately SAR 331 billion. In the coming
years, government spending will primarily focus on education, healthcare and
infrastructure, thus continuing the existing trends which bode well for the real
estate and construction sectors. These stimulatory budgets ensure that
government spending will continue to play a highly supportive role in the economy.
Exhibit 60: Government Revenue and Expenditure (SAR Billions)
1600
1252
1243
1200
1105
1014 996
981
1111
10531082
1166
902
794
740
800
596
626
510
400
0
2009
2010
2011E
2012F
Government Revenues
Source:
Notes:
2013F
2014F
2015F
2016F
Government Expenditures

EIU Estimates
EIU Forecasts
GROSS FIXED INVESTMENTS

The KSAs foreign reserves build up is being used internally for gross fixed
investments across all economic sectors. The government allocated sizable
amounts of capital to construct and equip new facilities for healthcare, water
desalination, power generation and distribution, waste water disposal, and
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FINAL
infrastructure developments related to education and transportation. A large
number of existing infrastructure facilities is also being upgraded.
Exhibit 61: Gross Fixed Investment in Saudi Arabia (SAR Billions)
800
713
639
578
600
517
472
400
360
384
2009
2010
427
200
Source:
Notes:
2011E 1 2012F2 2013F 2 2014F2 2015F
2016F 2

EIU Estimates
EIU Forecasts
INTERBANK RATE TRENDS

SIBOR (Saudi Arabia Interbank Offered Rate) fell by approximately 5 bps to reach
an average rate of 0.69% in 2011 from an average rate of 0.74% in 2010. The drop
was mainly attributed to SAMAs strategy to keep pace with international financial
market interest rate trends (mainly the Federal Funds Rate, standing at an average
of 0.299% in 2011). The following exhibit depicts SIBOR and the Federal Funds
Rate trends from 2007 till 2011.
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FINAL
Exhibit 62: SIBOR & Federal Funds Rate
6.00%
5.00%
5.22%
4.91%
4.00%
3.00%
2.99%
3.28%
2.00%
0.91%
1.00%
0.74%
0.74%
0.69%
0.36%
0.00%
2007
2008
Monthly Avg 3M SIBOR

Source:
2009
2010
0.30%
2011
Monthly Avg 3M Federal Funds Rate
SAMA, 2011
The SIBOR is relatively lower than the EIBOR (Emirates Interbank Offered Rate),
with a difference of approximately 90 bps in June 2011 (SIBOR was 0.66% and
EIBOR was 1.56%). To a certain extent, this justifies the low APR (Average
Percentage Rate) of home financing in Saudi Arabia compared with the APR of
home financing in the United Arab Emirates, standing at an average of 3.49% and
5.49% respectively. Additionally, the APR for home financing in Saudi Arabia is
comparatively lower than those found in Egypt and Turkey, standing at 3.49%,
8.70% and 4.20% respectively.
THE BANKING SECTORS CONTRIBUTION TO THE CONSTRUCTION AND
REAL ESTATE SECTOR
A preliminary estimate of the Saudi Arabian Monetary Agency (SAMA) in 2011
indicates that the banking sectors contribution of corporate and consumer loans to
the real estate and construction sectors comprise approximately 4.0% of the
countrys GDP in 2010.
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Exhibit 63: Banks Loans to Private sector for Buildings and Construction
7.6%
60
7.3%
7.3%
7.0%
8.0%
7.2%
7.0%
6.1%
50
6.0%
40
2007
44.74
4.0%
3.0%
23.01
14.13
2006
17.86
13.69
2005
14.91
43.43
37.85
13.65
10
31.72
20
54.37
30
55.64
5.0%
2.0%
1.0%
0.0%
Real Estate Consumer Loans
2008
2009
2010
Building and Construction Loans
% of bank Loans Granted
Source: Saudi Arabian Monetary Agency 47th Annual Report 2011
It should be noted that there is an apparent growth within the real estate consumer
loan segment. However, as compared to overall loans towards real estate, this
percentage is still very low. Based on the capitalization calculation of private sector
loan value/nominal GDP, KSA is ranked as one of the least leveraged countries in
the GCC. This situation tends to improve with the passing of the mortgage law
which is expected to remove these impediments.
DEMOGRAPHIC ANALYSIS
The KSA has the largest and fastest growing population amongst the GCC
countries. The Central Department of Statistics and Information (CDSI) estimates
the KSAs total population to reach 31.9 million by 2016, of which 22.8 million will
be Saudi nationals. The growing population, coupled with rising average income,
will continue to feed demand for infrastructure and services, particularly in energy,
water, telecom and information technology, housing, health, education, and
financial services.
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Exhibit 64: Saudi Arabia Population Growth and Forecast (Millions)
36
9.1
27
8.1
8.5
7.9
8.3
7.6
18.7
19.2
19.8
20.3
20.8
2009
2010
8.7
8.9
21.7
22.2
18
22.8
0
2011E 1
2012F
2013F 2
Saudi Nationals
Source:
Notes:
2014F 2
2015F
2016F 2
Non Saudis

Saudi Arabia Population Census, 2010
EIU Estimates
EIU Forecasts
The increasing young population is a key driver of local real estate demand and will
be a major force driving the change in KSAs average household size. The
expatriate population is also a key determinant of aggregate demand in the KSA.
However, expatriates tend to remit a substantial portion of their earnings back to
their countries of origin, putting pressure on the KSAs current account balance.
SAMA reported that expatriate workers remittance increased by 84% from 2005 to
2009, reaching SAR 4.5 billion annually. Despite their propensity to remit, the
expatriate population will continue to contribute to demand across all economic
sectors over the coming years.
Expatriate contribution to the KSA may be influenced by the recent introduction of
the Saudization program, an initiative that obliges foreign companies operating in
Saudi Arabia to employ more Saudi nationals.
INCOME AND HOUSEHOLD SIZE
As population growth is one of
the most important
determinants of demand, its
growth patterns are essential to
the future trends of housing
demand.
According to the latest available statistics, the population in Saudi Arabia has
1
increased with a CAGR of 3.04% from 2004 till 2010 . This growth, coupled with a
reduced household size, led to an increase in the number of households, which is
expected to drive demand for both housing units and home financing options.
CDSI
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The following exhibit provides the estimated population of Saudi Arabia, alongside
the estimated households and household sizes that will form the basis of the
analysis in later sections of the report:
Exhibit 65: Population and No. Of Households Estimate (Kingdom wide)
2012
Population
2014
2015
2016
2017
28,811,062
29,686,918
30,589,401
31,519,318
32,477,506
33,464,822
5.85
5.80
5.75
5.70
5.65
5.60
4,924,968
5,118,434
5,319,896
5,529,705
5,748,231
5,975,861
Household Size
No. of Households
2013
Source: Colliers Estimates, 2012
Another important aspect is the household income for both Saudi and Non Saudi
residents. Keeping in view the current practices of the home financing market,
household income is a primary factor considered by banks and other financial
companies while granting a loan. This is due to the fact that household income is
currently the only guarantee available for banks (until the passage of the mortgage
law). The following exhibit depicts household income of Saudis and Non Saudis
(Kingdom wide):
Exhibit 66: Monthly Household Income (Kingdom wide)
Income (SAR/Month)
Income Distribution
Saudis
15,000 and Above
Non Saudis
13.02%
1.59%
12,000 - 15,000
9.44%
2.13%
9,000 - 12,000
15.09%
3.94%
6,000 - 9,000
26.98%
14.98%
1,501 - 6,000
34.67%
72.9%
0.8%
4.46%
1,500 and below

Source:
HSS, 2011
Colliers, 2012
The SAR 1,501 SAR 6,000 (34.67%) and the SAR 6,000 SAR 9,000 (26.98%)
monthly income groups are dominant for both Saudis and non Saudis.
LABOUR FORCE AND EMPLOYMENT
Since 2009, the majority of the labour force in Saudi Arabia has consisted in nonSaudis, with Saudi nationals forming only 47% of the countrys labour force.
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Exhibit 67: KSA Labour Force by Nationality and Gender - 2009
Employed
Male
Nationality
Unemployed
Female
Male
Female
Labour Force
Saudis
3,332,628
505,340
248,162
200,385
4,286,515
Non-Saudis
3,736,810
573,214
10,380
4,082
4,324,486
Total
7,069,438
1,078,554
258,542
204,467
8,611,001
Source:
SAMA Annual Report, 2010
The employment composition of Saudi Arabia will be greatly influenced by the

multiplier effect of the Saudization program. The number of employed Saudi
nationals could be further improved by enhancing the skills and education
backgrounds of the Kingdoms citizens, bringing forth decreased reliance on skilled
expatriate labour.
1.1.4
CONCLUSION (PESTLE ANALYSIS)

The overall macroeconomic environment summarised in the PESTLE analysis
below comprises key factors that contribute to the economic performance and
outlook of Saudi Arabia:
Exhibit 68: Saudi Arabia PESTLE Analysis
Political
5.0
4.0
Enviornmental
3.0
Economical
2.0
1.0
-
Legal
Social
Technological
PESTLE Score (out of 5)
The PESTLE Analysis for Saudi Arabia accounts for the following factors:
Political
Stable government.
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Strategic location in the Middle East and within the GCC.
Political density in the region due to religious significance and oil wealth.
Strong ties with Western powers and active foreign policies focussed on
promoting regional stability.
Economics
The largest economy in the Middle East with a focus on diversifying the revenue
base of the country.
Gradual openness to the flow of foreign direct investments with a focus on

private Investments.
The Saudi Riyals peg to the US Dollar provides the KSA with relative monetary
stability.
Additional investments amounting to USD 30 billion were recently announced by

the government.
Social
A fast growing population which fuels aggregate consumer demand and

constitutes additional labour force.
Large increases in salaries and benefits for Saudi citizens announced by the
government have a direct effect on consumers spending power.
Technological
Encouragement and establishment of technological projects specialising in

telecom, research and development, education and IT infrastructure.
Large foreign direct investments in the telecom sector provide the country with
greater connectivity and growth of social media.
Legal and Enviornmental
The KSAs primary source of law, the Islamic Sharia, is derived from the
teachings of the Quran and Sunnah.
Royal decrees are other main sources of law but are referred to as regulations
rather than laws because they are subordinates to the Sharia.
Changing job requirements, awareness amongst the local population, pressing

unemployment rates and governmental support for womens education have all
translated into sustained and heavy demand for educational institutions.
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1.1.5
WHAT DOES IT MEAN - IMPACT OF MACROECONOMICS ON THE

RESIDENTIAL MARKET
Below are the key macroeconomic factors that impact the residential market of the
Kingdom:
Macroeconomic indicators imply a potentially lucrative investment environment,

leading to growth in both oil and non oil related sectors;
Foreign direct investments in the Kingdoms infrastructure projects will drive

the growth of non oil sectors.
The growing population implies rising demand for residential real estate within
the Kingdom.
The inflation rate was sustained over the latest fiscal year and will remain within
the same levels as per governmental estimates. These marginal fluctuations in
inflation rates are unlikely to adversely affect the residential and home financing
markets.
The improving employment rate will likely impact purchasing power positively,
and consequently create higher demand for the residential market.
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MICROECONOMIC ANALYSIS
Riyadh is one of the most important administrative areas in the Kingdom of Saudi
Arabia, with a land area of approximately 1,000 sq kmequivalent to 17% of
Kingdoms total land. The city is the political and economic capital of the Kingdom,
and is home to most of the countrys government departments, embassies, banks
and major companies. Three integrated industrial estates are located in Riyadh:
Riyadh First Industrial Estates, Riyadh Second Industrial Estates and Sudair
Industrial Estates.
2.1
LOCATION AND AREA

Riyadh lies in the centre of a plateau in the Arabian Peninsulalocated on latitude
38.24 North and longitude
43.46 East and about
600m above sea level.
Riyadh covers a land mass
of almost 1,000 km
encompassing 15
municipalities, in addition to
the Diplomatic Quarter. The
North-Western outskirts of
Riyadh comprise the ruins
of the former Saudi capital,
Duryea. Riyadh is the
second largest province in
terms of area after the
Eastern Province.
2.2
High population growth rates
fuel demand for housing units,
which in turn raise demand for
home finance.
DEMOGRAPHIC OVERVIEW
According to demographic statistics, Riyadh had a population of 4,138,329 in 2004,
with 65% Saudis and 35% non-Saudis. Statistics released by the Central
Department of Statistics and Information (CDSI) in 2010 showed a population of
5,254,560 in Riyadh, which was expected to reach 5,467,913 by 2011. Riyadh has
one of the highest Cumulative Annual Growth Rates (CAGR) in the Kingdom
standing at 4.06% between 2004 and 2010.
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Exhibit 69: Riyadh City Population Growth
3,500,000
3,000,000
500,000
2,188,754
3,279,159
2,103,351
1,391,787
1,000,000
3,032,632
1,500,000
1,447,495
2,690,834
2,000,000
3,151,209
2,500,000
0
2004
2007 *(e)
Saudis
Source:
Note:
2.2.1
2010
2011 *(e)
Non Saudis
CDSI, 2204, 2007 & 2010

Colliers Estimate, 2012
*(e): Estimate
POPULATION BY NATIONALITY AND GENDER

According to the 2004 demographic survey, Saudi nationals represented 65% of
the citys total population, with males slightly outnumbering females. Colliers 2007
estimates indicated that Saudi nationals represented 65.3% of the citys total
population. Meanwhile, IPSOS data indicated that Saudis represented 66.4% of
the total city population in 2009.
In 2004 males represented 57.7% of the total population according to Government
statistics. Colliers 2007 estimates indicated that males represented 57.2% of the
citys total population whilst IPSOS data indicated that males represented 52.2% of
the total population. This shows the proportion of females within Riyadh is on the
rise.
The following table shows the breakdown of Riyadhs population as estimated by
Colliers:
Exhibit 70: Riyadh city Population by Nationality & Gender

2004
Males
Saudis
Non-Saudis
Total
2007*(e)
Females
Males
2010
Females
Males
2011*(e)
Females
Males
Females
1,393,080
1,297,754
1,538,639
1,493,992
1,645,060
1,506,149
1,711,855
1,567,304
994,793
452,702
970,170
421,618
1,460,578
642,773
1,519,882
668,872
2,387,873
1,750,456
2,508,809
1,915,610
3,105,638
2,148,922
3,231,737
2,236,175
Source(s): CDSI, 2004, 2007 & 2010

Note:
*(e): Estimate
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2.2.2
POPULATION BY AGE GROUP, GENDER AND NATIONALITY

The following table indicates Riyadhs population by age group and nationality.
Exhibit 71: Riyadh City Population by Age Group and Nationality
Age Groups
Saudis
Males
Females
Males
Total
% of Total
Females
0-14
631,672
582,995
205,876
198,983
1,619,526
29.6%
15-34
652,202
599,113
584,689
273,218
2,109,222
38.6%
35-64
380,177
342,098
721,699
192,997
1,636,971
29.9%
47,804
43,099
7,619
3,673
102,195
1.9%
1,711,855
1,567,304
1,519,882
668,872
5,467,914
100%
65+
Total
Source:
2.2.3
Non-Saudis
IPSOS, 2009
Colliers Estimates, 2012
POPULATION BY DISTRICT, SOCIAL GRADE & HOUSEHOLD

According to IPSOS, an international consumer market survey company, a survey
was conducted on the districts that recorded the highest population tallies in 2009.
Colliers has modelled these figures for 2011 based on the 2009 figures which is
the most recent district wide census available.
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Exhibit 72: Riyadh Population Distribution by District, Social Grade & Households
Name
Population *(e)
% of Distribution
Social Grade
Total No. of Households
Al Andalos
41,581
0.76%
6,788
Al Worod
40,158
0.73%
6,556
Al Aqeeq
27,873
0.51%
4,550
Al Mohamdeyah
21,315
0.39%
3,479
Al Taeawen
19,861
0.36%
3,242
Ishbeleyah
17,088
0.31%
2,789
Al Rahmaneyah
16,315
0.30%
2,663
Al Nafel
15,745
0.29%
2,570
Al Nakheel
15,517
0.28%
2,533
Al Khozamah
12,959
0.24%
2,115
Al Waha
12,142
0.22%
1,982
Olaya & Al Sulimaniyah
175,837
3.22%
28,704
Al Rowdah
117,941
2.16%
19,253
Al Nahda
99,324
1.82%
16,214
Al Malaz
88,908
1.63%
14,514
Al Nadeem
85,175
1.56%
13,904
Al Rabwah
84,130
1.54%
13,733
Al Naseem
373,742
6.84%
61,010
Al Orija
212,161
3.88%
34,634
Al Swedi
170,592
3.12%
27,848
Towaeq
141,868
2.59%
23,159
Manfoha
127,519
2.33%
20,816
Al Orija Al Garbi
123,486
2.26%
20,158
Bader
110,198
2.02%
17,989
Al Khaleej
101,030
1.85%
16,492
Al Zahraa
99,981
1.83%
16,321
Al Wazarat
94,465
1.73%
15,421
Others
3,021,003
55.25%
493,154
Total
5,467,914
Source:
Notes:
892,591
IPSOS, 2009
Colliers Estimates, 2012
*(e); Estimate
A is MHI of SR16,000 and above
B is MHI of SR8,000 to SR15,999
C is MHI of lower than SR8,000
2.2.4
HOUSEHOLD BY INCOME BRACKET

The following table categorizes Riyadh households by income bracket:
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Exhibit 73: Household by Monthly Income
Social Classes
Income (SAR/month)
High-Income
Riyadh
16,001 and above
11.98%
12,001-16,000
12.21%
8,001-12,000
20.58%
Lower Mid-Income
5,001-8000
18.20%
Low-Income
2,001-5000
31.80%
Low-Income
2,000 and below
5.23%
Upper Mid-Income
Mid-Income
Source: IPSOS, 2009
According to surveys conducted by IPSOS, Riyadhs households with a monthly

salary range of SAR 2,001 to SAR 5,000 represent the largest income category at
31.80% followed by the SAR 8,001 to SAR 12,000 income bracket.
The majority of Riyadhs population comes from the working class income group
with a salary range of SAR 2,001 to SAR 5,000. This income group is
characterized by semi-professionals and craftsmen with an average standard of
living and who may be equipped with limited to full college education.
2.2.5
LABOUR FORCE
The attractive business climate brought about by sustained high oil prices has
increased the presence of expatriates in Riyadh. A number of the countrys
nationals based in other cities came to Riyadh to find work, thus increasing the
citys available manpower.
Exhibit 74: Riyadh City Available Manpower
Ratio to
Labour
Force
Year
2007*(e)
2,275,023
2,190,334
96.30%
84,689
3.70%
2011*(e)
2,311,642
2,226,112
96.30%
85,531
3.70%
Source:
Note:
Employed
NonEmployed
Ratio to
Labour
force
Labour
Force
CDSI, 2008
*(e): estimate
Statistical information from the Ministry of Economy and Planning in 2008 indicates
that Riyadh has the largest share of the total available labour force in the Kingdom,
standing at 27.6% or 2.27 million labourers. Using historical data, the CAGR of
Riyadhs labour force stands at 0.4%. This rate was used in our forecast assuming
the growth of the citys economy remains stable.
Although current statistics do not indicate a tally of blue collar and white collar
workers in the city, the Ministry of Economy and Planning has reported a growing
number of highly qualified white-collar workers in the city. These workers and
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subsequently the firms they are working for will inevitably demand better office
accommodations and facilities.
2.3
RIYADH CITY EXPANSION

Riyadhs expansion has been one of the highest in the Gulf region, both in terms of
population and urban footprint. The Ar Riyadh Development Authority (ADA)
estimates that the population of the city will reach over 10.4 million inhabitants by
2020. The following exhibit provides the growth Riyadh city has undergone since
1980:
Exhibit 75: Riyadh City Growth (1980-2011)
Wadi Hanifa
Heritage Land
Riyadh City
Boundaries in 1980
Riyadh City
Boundaries in 2011
City Urban
Footprint
Source: Riyadh Municipality
The following should be noted:
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Although Riyadh has expanded in all directions, most of the expansion is

attributed to areas in the North and East.
Areas to the West are mostly in Wadi Hanifa. Wadi Hanifa is a heritage site, on
which developments are subject to strict municipality approvals.
Considerable expansions are to take place within North, North East and North
West Riyadh, which are expected to house approximately 36.5% of Riyadhs
2
inhabitants in 2020 .
According to Ar Riyadh Development Authority (ADA), the organisation has drawn
up plans for updating the road network of Riyadh. This will be done through
rehabilitation and upgrading of road networks to meet the necessary requirements.
The expected completion date for this plan is 2016. Upon completion, these
capillaries and roads are expected to handle over one million cars per day.
Numerous roads in Riyadh will be constructed, repaired and upgraded to reduce
traffic congestion, and improve the effects of flood drainage. The following Exhibit
shows the expanded planned road network of Riyadh:
Exhibit 76: Riyadh Road Network
2nd Ring Road
1st Ring Road
3rd Ring Road
Many elements of the road network were implemented during the first five years of
the Eighth Development Plan at a total cost of SAR 2.6 billion through 2006. The
second five-year plan, which is currently in progress, will include the
implementation and improvement of 28 main roads between years 2007-2012. The
2nd Ring Road is a major project of this development plan which is near
2
Ar Riyadh Development Authority
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completion and which will greatly facilitate the expansion of the city, especially in
North, North East and North West Riyadh.
Riyadh City Metro is a planned public transport network that is aimed to ease the
traffic congestion by providing an alternative to private transport which is a
prevailing mode of transport in Riyadh. Along with a metro, the ADA has planned a
substantive network of bus routes that will also facilitate making the new public
transport of Riyadh a success. The intersection of King Abdullah Road and Olaya
Road is expected to become the major junction of Riyadh City Metro. The project
has been divided into two phases. Phase 1 which measures 25 km, will operate
between Olaya Road and Batha Road connecting the northern side of the Ring
Road to the southern side. Phase 2 measuring 14 km, will connect the East Ring
Road to the West Ring Road through King Abdullah Road. The following Exhibit
depicts the routes of the planned metro and bus networks routes in Riyadh:
Exhibit 77: Planned Metro and Bus Network Routes
Train Network
Major Bus Network
Circular Bus Network
Arterial Bus Network
Upon completion, the Riyadh Metro will connect around 30 districts serving an
approximate 1,500 passengers per hour per track initially which then is expected to
gradually increase to 8,000 passengers per hour per track.
Certain height restrictions are imposed by the municipality along all the major
roads and thoroughfares across Riyadh. As of now, only King Fahd Road in Riyadh
has no height restrictions, while most other major roads are limited to six floors
only. It should be noted that despite height restrictions, the height of a building is
also determined by the Floor Area Ratio (FAR) of the plot, which can vary
significantly across different plots along the same road. The purpose of imposing
height restriction is to limit the height of buildings regardless of what height the
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2 Floors
3 Floors
FINAL
FAR allows. The following exhibit provides height restrictions that are applicable
along major roads in Riyadh:
4 Floors
Exhibit 78: Height Restrictions along Major Roads in Riyadh
5 Floors
6 Floors
8 Floors
10 Floors
12 Floors
18 Floors
No Restrictions
2 Floors
5 Floors
10 Floors
3 Floors
6 Floors
12 Floors
4 Floors
8 Floors
18 Floors
No Restrictions
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RESIDENTIAL SEGMENT
3.1
OVERVIEW
The strong economy in tandem with a growing population has increased consumer
confidence in the Saudi residential property market. The government is taking keen
initiatives to address the shortage in housing units , reaching one million units. The
government has increased its budget allocation for housing construction by nearly
53% over the previous plans. The Ministry of Housing has been established to
take on the responsibilities of the General Housing Authority. The stimulus
package issued by the government is especially directed towards the housing
segment, with a primary focus on building 500,000 additional housing units for
Saudi families. To reach this target, the loan limit of the Real Estate Development
Fund has been increased from SAR 300,000 to SAR 500,000. It is expected that
the continued efforts of the government, coupled with the introduction of seasoned
real estate developers, will address this shortage in the years to come.
The following exhibit provides an overview of the residential segment of KSA,
including its fundamentals and drivers:
Exhibit 79: Residential Segment Overview in KSA

Economic growth drives employment creation which in turn attracts both local and foreign labour to
move towards urban centres creating demand for housing and accommodation in the cities
Economic growth
Increasing
financing
facilities from specialized
institutions
such
as
REDF and the private
sector eases availability
of housing finance in the
KSA and will further
boost the demand. With
greater economic activity
and real estate financing
options, the demand for
residential sector will only
increase further in KSA
Economic growth Growth

in industry sectors
Employment Growth in
labour force (local and
foreign) Need for housing
units
Affordability level
Availability of mortgage
finance Rising
affordability levels
Increase demand for
housing units
Gradual
shift
towards
smaller
families will lead to the decline in
average family size, which, in turn,
increases the demand for housing.
The average household size in KSA,
was over 5+ in 2000 which is
expected to become <5 by 2015
Overall population growth
Residential
Segment
Large population base +

High population growth rate
Increased new and
replacement demand for
housing units
Small family size
Demographic profile
Gradual shift towards

nuclear families Reduced
family size Increased
number of households
increased demand for
housing units
Large proportion of young

population (2030 yrs)
Family formation Increase
number of households
Increase demand for
housing units
76 of 109
Population grew in KSA

at a CAGR of 3% (20002007) fuelling increasing
demand for residential
units
A growing and large proportion of

young population supports the
rising demand for housing in the
region.
Having
around
60%
population in the working age
group of 15-64 years indicates a
strong
demand
across
all
residential real estate segments
FINAL
3.1.1
KINGS RECENT AFFORDABLE HOUSING ANNOUNCEMENT

King Abdullahs recent announcement included building 500,000 affordable houses
with a budget of SAR 250 billion, and raising mortgage extensions from SAR
300,000 to SAR 500,000. To construct affordable housing, state-owned land will be
prioritized and private sector partnerships pursued where no state-owned land is
available. However, it is expected that most developments will be located in the
outskirts of the cities as land costs in the cities are too high relative to the budgeted
SAR 500,000 per house, particularly within the main cites i.e. Riyadh, Jeddah and
the Eastern Province.
Based on population distribution statistics, Colliers allocated a supply of 500,000
housing units over the main regions of Saudi Arabia
Exhibit 80: Government Affordable housing distribution estimates
Others, 90,000 ,
18%
Riyadh, 115,000 ,
23%
Jizan, 30,000 , 6%
Madinah, 35,000 ,
7%
Makkah, 110,000 ,
22%
Assir, 45,000 , 9%
Eastern Province,
75,000 , 15%
Riyadh
Makkah
Eastern Province
Assir
Madinah
Jizan
Others
3.2
CHARACTERISTICS
Riyadhs residential sector has witnessed a period of sustained price growth,
driven by the fast growing demand. Currently, the most popular locations for midto high-end residential developments are in North and Northeast Riyadh. Low to
mid-end residential developments are primarily concentrated in the south and
southwest of the city. A number of master plan developments to be erected in
North West Riyadh are currently on hold.
The supply of residential units has been mainly handled by medium-size residential
developers. The role of large-scale professional developers and subject matter
expert builders is still not widely found in the city. Generally, the supply of recent
residential units by professional developers such as Dar Al Arkan, Al Arjan,
Maskan Arabia, and Rafal accounts for less than 10% of the total injected supply
over the last two years.
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3.2.1
SPATIAL ANALYSIS
Residential developments in Riyadh follow distinctive patterns in the various zones
of the city. However, most new districts have a good balance of apartment units
and villas, which shows that apartments are becoming more acceptable due to
their affordability. Riyadh is divided into five zones without clearly indicated
boundaries. These zones are popular in the real estate sector and have prevailed
due to the differences they exhibit, making it easier to categorise the residential
market in Riyadh.
The following exhibit provides an indicative view of developments in the various
zones of Riyadh:
Exhibit 81: High Level Overview of Current Residential Developments in Riyadh
East Riyadh
Quality: Mostly mid-end
Forthcoming Supply: Above average
North Riyadh
Quality: Upper mid to high-end
Forthcoming Supply: Above Average
North
West Riyadh
Quality: Low & high-end
Forthcoming Supply: Average
East
Central Riyadh
Quality: Mix
Forthcoming Supply: Minimum
Central
Riyadh
South Riyadh
Quality: Low to mid-end
Forthcoming Supply: Average
West
South
Current construction activities of residential units are dispersed throughout the

different zones as the city expands in all four directions. In comparison to the other
cities of the Kingdom, Riyadh has the highest construction activity in the residential
segment and is supported by better planned infrastructure.
Central Riyadh is the primary centre of activity in the city. It houses government
ministries, hospitals, residential developments (low, mid and high-end) and
commercial developments such as retail malls and offices. Residential sales
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prices are the highest in Central Riyadh towards the northwest. Forthcoming
supply is minimal as the area is mostly developed
North Riyadh is the most popular zone for the upcoming residential and
commercial developments, which is mainly due to developments like King
Abdullah Financial District, Rafal Tower, and Tamkeen Tower. These
developments and many others to come are slowly shifting Riyadhs city centre
towards the north. Developments in the north are mostly upper mid to high end.
East Riyadh is mostly characterised by residential developments, both villas and

apartments alike, with villas being the more prominent. East Riyadh is mostly
characterised by mid end developments, most of which are delivered by mid
scale and small scale developers. Manazel Qurtoba is an exception, offering
400 villas in its first phase and getting ready for phase two which is expected to
offer 1,000 apartment units along with the commercial components of the master
plan
South Riyadh is one of the most popular areas for low to mid-end residential
developments. Al Aziziyah and Ad Dar Al Bayda districts are both suitable
districts which offer a healthy mix of apartments and villas alike. A disadvantage
of south Riyadh is its distance and limited thorough fares to the city centre
(currently only King Fahd Road). It is however quite close to both Riyadh
industrial areas 1 and 2
West Riyadh is characterised by both extremely high-end palaces in districts like

Al Khozama, and low-end housing units in districts like Dhahrat Laban & Tuwaiq.
Low end districts are located in the western side of west Riyadh, while high end
districts are located on the eastern side of west Riyadh. Forthcoming major
developments in west Riyadh include the mixed-use KSU endowment project
that is expected to offer hotels, offices, retail and limited high-end residential
3.2.2
MARKET CHARACTERISTICS
The following exhibit shows Riyadhs current housing characteristics from different
perspectives including the housing market by unit categories and number of bedrooms.
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Exhibit 82: Residential Supply Characteristics
Housing Stock Distribution Estimate (2011)
Housing Stock by Number of Bedrooms (Province)
Other, 6.07%
6-Bedroom
5%
Traditional
House, 6.82%
5-Bedroom
10%
A Floor in a Villa
or Traditional
House, 16.44%
Apartment,
45.63%
Villa Stock by Tenant Profile
2-Bedroom
26%
1-Bedroom
14%
4-Bedroom
16%
Villa, 25.04%
3-Bedroom
26%
Apartment Stock by Tenant Profile

Other
1%
Other
0.3%
Housed
Employees
5%
Housed
Employees
4.9%
Owner
Occupiers
83.5%
Tenants
11.3%
Source:
7-Bedroom
4%
Tenants
77%
Owner
Occupiers
17%
CDSI, 2004 &, 2007

The majority of the citys housing stock consists of residential apartments at 46%
of the total housing units stock. Even though villas are the most preferable
accommodation type, they have fallen behind apartments at 25% due to
affordability.
The majority of the provinces villa stock is owner occupied, representing 83.5%
of the villa stock in 2007. 11.3% of these villas are leased
As of 2007, 77% of the apartment stock has been occupied by tenants based on
annual or bi-annual rental contracts, due to the fact that apartments tend to be
offered on leasehold rather than freehold. The trend is expected to change as an
increasing number of apartment units outside Central Riyadh is being offered on
freehold basis
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The apartments relatively smaller size compared to the villas commands a more
affordable pricing structure for low to mid-income users
Although Riyadhs household size is larger than that of other GCC cities, the
majority of the citys residential stock lies in the 2 and 3-bedroom category.
The most popular villa type in Riyadh province is the four and five bedroom size
villas. In rare instances however, two bedroom villas or duplex components can
also be found
Four bedroom properties are reasonably common, and form a strong sales
market. Villas with more than five bedrooms are less common, and the market
for properties of this size is smaller in volume
3.3
RESIDENTIAL SUPPLY
Considering the average household size (5.7) and preference for privacy, villas and
traditional houses are currently the most commonly chosen mode of
accommodation, accounting together for 39% of Riyadhs total residential stock
whilst the apartment submarket accounts for 36% of Riyadhs total supply,
according to the latest published government statistics.
The total number of Riyadhs housing units is currently challenging to quantify as
the most recent government statistics are dated 2004 (i.e. City Population Census
by Housing). Therefore, Colliers forecasted Riyadhs current housing supply based
on historical growth between the number of occupied houses in 2004 (based on
City Population Census by Housing) and occupied housed in 2007 (based on
Province Population Census by Housing). The following exhibits Colliers estimates
of Riyadhs current housing market.
Exhibit 83: Riyadhs Housing Supply by Unit Type
Unit Type
2004
2007 *(e)
2011 *(e)
Apartment
299,218
333,920
404,729
Villa
188,106
197,978
222,131
A Floor in a Villa or Traditional House
132,859
135,505
145,868
Traditional House
53,919
55,520
60,523
Other
50,728
50,977
53,815
726,834
773,900
887,066
Total
Source:
Note:
CDSI, 2004 & 2007

*(e): Estimate
Due to the progressive expansion of the City, the upcoming areas in the north,
northeast and northwest are expected to house 36% of Riyadhs population by
2020 as opposed to 28% in 1996. The eastern periphery of Riyadhs urban area is
also expected to house 8.5% of Riyadhs population by 2020. The residential
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density in the central areas is expected to decline by half. The exhibit below
portrays the expected distribution of Riyadhs population among the different zones
within the urban area followed by another exhibit that depicts the characteristics of
supply:
50%
46%
Exhibit 84: Population Distribution by Geographical Areas in Riyadh
45%
40%
8.5%
14%
11.5%
9%
10%
12.5%
15%
6%
7.5%
13%
20%
5.5%
10%
25%
21%
14.5%
30%
21%
35%
5%
0%
Central
Northwest
Northeast
Southeast
1996
South
West
New
Northern
Areas
New
Eastern
Areas
2020
Source: Ar-Riyadh Development Authority
According to Colliers estimates, Riyadh has approximately 887,000 housing units

spread over all categories (Villas, Apartments, etc.).
3.4
PERFORMANCE
3.4.1
RESIDENTIAL VILLAS
The villa submarket has always been a popular choice of housing type in Saudi
Arabia and particularly in Riyadh. Considering the average size of Saudi families in
addition to cultural and traditional values, villas are by far the most preferred mode
of residences.
Many of the citys most attractive residential areas are located in North Riyadh
which is currently the focus of the majority of residential development projects
under construction. The quality of villas found in the north is generally the highest
in the city and attracts the highest rental and sales prices. Colliers has conducted
extensive research on Riyadh to gain insight into the sales prices of freehold villas
and their characteristics in the different districts. The following exhibit details the
map of researched districts followed by a table that provides a summary of the
villas in these districts:
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Exhibit 85: Typical Residential Villa and Researched Districts
Qurtubah
Al Munsiyah Al Yarmuk
Al Qadsiyah
Al Falah
Al Yasmin
Al Nada
Ishbiliyyah
Al Hamra
Al Tawun
Al Naseem
King Faisal District

Al Nakhil
Al Jazirah
Dhahrat Laban
Al Mansurah
Al Uraija
Hijrat Laban
Al Aziziyah
Al Shifa
Tuwaiq
Ad Dar Al Bayda
North
East
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Average Plot
Size (Sqm)
District
Average BUA
(Sqm)
Average Sales
Price (SAR/Sqm)
Average Sales
Price (SAR
Million)
Average Land
Value (SAR/Sqm)
North Riyadh
Al Yasmin
535
606
3,518
2.13
1,700
Al Tawun
600
433
2,870
1.24
1,800
Al Falah
398
416
4,010
1.67
1,600
Al Nada
435
567
3,632
2.06
1,600
Al Hamra
950
850
3,500
2.98
2,300
Ishbiliyyah
450
480
3,170
1.52
1,600
Al Jazirah
484
536
2,470
1.32
1,400
Al Munsiyah
345
435
3,055
1.33
1,500
Al Qadsiyah
486
570
2,460
1.40
1,300
Al Yarmuk
403
546
2,991
1.63
1,400
Qurtubah
332
442
3,542
1.57
1,600
King Faisal
603
458
1,960
0.90
1,200
Al Aziziyah
433
489
2,157
1.05
1,000
Al Shifa
357
443
2,400
1.06
1,000
Ad Dar Al Bayda
375
420
2,158
0.91
1,100
Al Uraija
398
511
1,995
1.02
950
Al Nakheel
381
450
3,500
1.58
2,200
Al Tuwaiq
472
575
1,737
1.00
1,000
Dhahrat Laban
482
549
2,170
1.19
1,000
Hijrat Laban
450
502
2,100
1.05
1,000
Sample Average
477
511
2,655
1.37
1,380
East Riyadh
South Riyadh
West Riyadh
Source:
Note:
Colliers Research, Q4 2011

Prices above are exclusive of internal fittings e.g. A/C, Kitchen etc.
Prices are as expected to continue rising as demand grows and forthcoming supply
enters the market, especially supply that is part of the master planned
developments. Rent and sales prices of residential units located in the citys prime
residential areas remained stable due to location and high demand during the
same period.
Current occupancy levels and sales prices differ in the various districts, with
districts in North Riyadh exhibiting the highest occupancies and sales absorption
rates. This shows that developments in the north are the most sought after and
are in the final development stages offering the most necessities
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Other new researched districts (for e.g. Dhahrat Laban, Hijrat Laban) had low
occupancy rates and sales prices due to the lack of public necessities including:
Schools
Hospitals
Civic Services (Police, Fire Departments etc,)
Retail Support
The high prices in North Riyadh are not suitable for attracting low and lower mid
income households, which would find West and South Riyadh more suitable.
East Riyadh, on the other hand, primarily caters to the mid income category of
the city
Most mid scale developers build small developments with an average of 10-15
units mainly due to the lack of flexible financing options
Interviews with developers suggest that they prefer to accept full upfront
payment upon the completion of each unit. However, during the construction
phase of a project, the customer has the option of making a down payment of
around 40% 60% of the unit price. The remaining payments can be settled on
a quarterly or bi annual basis until completion of the villa or before it is handed
over to the customer
Villa developments in our sampled projects typically have 4 5 bedrooms, and

the majority of these developments offers separate quarters for both drivers and
maids
The quality of finishing is between below average and average. Some villas are
built with swimming pools which increases the sales price of the units
Central air conditioners are not typically offered by developers and kitchens are
offered unfitted which is the standard practice in the Kingdom. People typically
prefer a customized kitchen set up according to individual taste and preferences
VILLA RENTAL MARKET

With respect to villa rental market, the following table shows the average rental
prices within various zones of Riyadh:
Exhibit 86: Sampled Villa Rentals (Per unit per annum)
Villa
2 Bedroom
3 Bedroom
North
30,000-35,000
35,000-40,000
50,000-60,000
Centre
40,000-50,000
45,000-60,000
60,000-70,000
East
33,000-37,000
35,000-40,000
45,000-50,000
West
N/A
35,000-45,000
50,000-65,000
Source: Colliers Research, Q4 2011
4 Bedroom
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3.4.2
RESIDENTIAL APARTMENTS
Riyadhs residential apartment segment has been growing robustly in recent years.
Historically, apartments were not favoured by Saudi nationals. However, in the light
of rapid price increases in villa rental and sales prices in addition to declining
household sizes, low to middle income groups have increasingly been forced to
consider apartments due to their relative affordability.
Colliers research analysts have considered in the analysis the primary and
secondary grade apartments that are typically found in Riyadh city. Analysis has
been made on a selected number of residential districts including Dar Al Bayda,
Dhahrat Laban, Hammra, Ishbiliyyah, Qurtubah, Tuwaiq and Al Yasmeen North of
the city, especially on districts which are in close proximity to the primary CBD
areas and the north Ring Road, thus attracting the highest residential rental and
sale prices in the apartment segment.
Residential apartments located south and west of the City command the lowest
rental/sales prices in the market. These districts suffer from bad location,
mediocre connectivity to city centre and low quality of supply.
The north of the city, especially near the primary CBD areas and the north Ring
Road, attracts the highest residential rental and sale prices in the apartment
segment.
The following exhibit gives a snapshot of typical apartments in Riyadh and their
prices:
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Exhibit 87: Typical Residential Apartments (Riyadh)
North
East
South
Al Yasmin
West
Qurtubah
Ishbiliyyah
Al Hamra
Dhahrat Laban
Tuwaiq
District
Average BUA (Sqm)
Ad Dar Al
Bayda
Avg. Sales Price (SAR/Sqm)
Avg. Sales Price (SAR/Unit)
Dar Al Bayda
153
2,213
338,589
Dhahrat Laban
136
2,501
340,136
Hammra
208
2,060
428,480
Ishbiliyyah
156
2,700
421,200
Qurtubah
128
2,588
331,264
Tuwaiq
138
1,964
271,032
Yasmeen
211
2,859
603,249
Average
161
2,412
390,564
Duplex apartment units are an upcoming trend in the market, in which the unit
resembles a villa rather than an apartment, and is therefore expected to continue
performing well
Most apartment buildings have between 8-12 units, and are typically low rise
structures of G + 3 floors
APARTMENT RENTAL MARKET

Colliers estimates the absorption rate to reach 90% to 95% of net residential
supply offered on rental basis. This is primarily attributed to the continuous
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increase in unit sales prices which have reached beyond the financial capabilities
of many of Riyadhs households. Although home financing companies and banks
offer financing solutions, however, many of Riyadh households are exposed to
other credit terms exceeding 30% of their monthly income, which leads to failure in
qualifying for loans from the available home financing institution. As a result, the
rental market is performing robustly, and this is further reflected in the continuous
increase in rental reviews all over Riyadhs residential districts. The following table
depicts the average rental prices for various apartments in Riyadhs key residential
zones:
Exhibit 88: Residential Apartments Rental Rates
Apartment
1 Bedroom
2 Bedroom
3 Bedroom
North
18,000-20,000
25,000-33,000
40,000-45,000
Centre
20,000-25,000
28,500-33,000
37,000-45,000
East
12,000-17,000
20,000-25,000
27,000-30,000
West
N/A
20,000-23,000
27,000-33,000
3.4.3
PRICE DETERMINANTS
Typical Villa and Apartment developments in Riyadh and the Kingdom in general
have three main components that determine the final selling price of the housing
unit. These three components are:
Land Price
Construction Cost
Developer Margins
Land Price
Land prices in Riyadh have been increasing. However, the price increase in Riyadh
was less substantial than the one observed in Jeddah. Apart from a couple of
districts in the northern and eastern parts of Riyadh, prices have increased by a
CAGR of approximately 2.5%. Major fluctuation in price was recorded in upcoming
districts in the north and east, with prices rising as much as 19% per year (e.g.
Qurtubah District).
The following exhibit provides the CAGR of residential land prices in various parts
of Riyadh over the last two years (2009-2011):
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Exhibit 89: Residential Land Price (SAR/Sqm) CAGR 2009-2011
North Riyadh
Average : 1,975*
Low:
2.60%
Average:
7.79%
High:
14.0%
East Riyadh
Average :
Low:
Average:
High:
North
East
West Riyadh
Average : 1,772*
Low:
-2.60%
Average:
3.12%
High:
7.40%
Central
Riyadh
West
South
Source:
Note:
1,324*
-4.40%
5.25%
19.00%
South Riyadh
Average : 894*
Low:
-4.40%
Average:
0.92%
High:
5.80%
Google Maps, 2011

Saudi Fransi, 2011
*: Average Price in SAR/Sqm for 2011
One of the major reasons why prices have generally been stable, unlike Jeddah, is
due to the large supply of undeveloped land available in the city. Riyadh
municipality and the ArRiyadh Development Authority have made considerable
efforts to increase land supply in order to control prices.
Construction Costs
Construction costs remain relatively stable in Riyadh and the Kingdom in general
as compared to other GCC states. The following table provides broad benchmarks
of construction costs (SAR/Sqm) according to different unity types:
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Exhibit 90: Indicative Construction Costs (SAR/Sqm)
Development
From
To
Villa
Low End
1,000
1,500
Mid End
1,500
2,000
High End
2,000
3,000
Low Rise
2,600
3,600
Medium Rise
3,200
4,800
High Rise
4,800
6,100
Apartment
Construction costs provided in the table above are absolute averages that should
be taken only as indicative values. Furthermore, they are limited to finishing only
and do not constitute other costs such as architectural design fees, furniture (if
furnished) etc. Costs vary per type of development and location in the city.
The land cost of typical Villa developments in Jeddah ranges from 35% to 45% of
total sales price, leaving room for construction costs and developer margins.
Recent hikes in land prices however, have increased this ratio to as much as 60%,
with the average being approximately close to 50%. The following exhibit provides
typical average sales prices of villa units and lands in different districts in Riyadh:
Exhibit 91: Sales Prices and Land Price Comparison
Average Sales
Price (SAR/Sqm)
Average
BUA/Unit (sqm)
Sales Price
(SAR/Unit)
Land Price
(SAR/Sqm)
Eshbelya
3,170
480
1,521,600
1,183
Al Yarmook
2,991
546
1,633,086
1,083
Qortuba
3,542
442
1,565,564
1,242
Al Hamra
3,500
588
2,058,000
1,317
According to Colliers Research, interviews with developers revealed that the

minimum acceptable return from a development is 20%, with some developers
keeping the lower benchmark of 15% without which the project is normally not
feasible. Land Prices and construction costs in Riyadh typically allow developers to
achieve this benchmark and in some instances even surpass returns of 25%. This
is more prominent in the outskirts of Riyadh city, where the infrastructure has
recently been developed.
Yields
An interesting trend is observed with respect to yields for typical Villa and
Apartment developments. Compared to apartments, villa developments are largely
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affected by land prices , which results in declining yield trends for villas. According
to the database of one of the research companies and to Colliers analysis, yields
for typical villa developments within various regions of Riyadh dropped marginally
from 5.38 % to 5.09% during 2008 to 2011, which is mainly due to land prices.
Similarly, the yields for apartment developments showed a consistent trend during
the same period, where yields dropped slightly from 7.4% to 7.05% between 2008
and 2010. As discussed with market participants, the apartment market is more
stable than the villa market.
Going forward, the yields for both villas and apartments are expected to improve
provided land price correction takes place in the near future.
3.5
DEMAND SUPPLY ANALYSIS
3.5.1
OVERVIEW
Between 2004 and 2010, Riyadh has had one of the fastest growing populations
among the major GCC cities with a CAGR of 4.06%. Demand on housing units has
seen sustainable growth as a result.
3.5.2
SUPPLY FORECASTS
The total number of Riyadhs housing units is currently challenging to quantify as
the most recent government statistics are dated 2004. The majority of residential
construction activities are private, individually financed, and managed by mid scale
developers, which makes the existing and upcoming supply impossible to
calculate.
The following exhibit portrays Riyadhs estimated supply projections for the next 10
years:
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Exhibit 92: Supply Projections
40,000
35,000
30,000
36,195
35,106
34,051
33,027
32,034
30,137
29,230
28,352
10,000
27,499
15,000
29,978
20,000
31,071
25,000
5,000
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Supply
3.5.3
DEMAND ANALYSIS
Demand analysis is based on available information, however, due to the absence
of available and up-to-date statistics, Colliers has estimated potential demand
based on historical growth rates. A number of indicators on the residential demand
supply balance in Riyadh show that sales prices along with land prices are on the
rise and yields are compressing amongst the more sophisticated investors.
Population growth is high and sustained, and average household sizes have risen.
These indicators point to a growing supply gap in Riyadhs residential sector.
Colliers modelled the future residential unit demand in Riyadh based on a number
of key assumptions. Population growth in the city is estimated at a CAGR of 2.5%,
and for the purposes of our model, this growth rate is assumed to continue.
The most recent available census data indicates that the average household size
has reached 6.13, while the total number of households is estimated to be around
892,592. This change in population dynamics was taken into account in the
calculation of Riyadhs housing demand.
MARKET-WIDE DEMAND ANALYSIS
Colliers identified three major sources of demand:
Natural demand stemming from population growth
Replacement demand, which is assumed at 2% per year
Declining household size
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Even though Riyadhs average household size increased from 5.71 in 2004 to 6.13
in 2010, Colliers still assumes that the household size of Riyadh will decrease in
the future. This is primarily because the majority of Riyadhs population is young
and is expects to look for housing upon marriage. The average household size is
likely to decline in the future judging from the pace at which Riyadh is urbanising.
This is consistent with trends that cities undergo when going through urbanisation.
The following exhibit provides a 10 year estimate of demand on housing
categorized by income classes:
300
6.25
250
5.85
5.65
68
69
66
67
64
65
62
63
60
62
59
60
57
58
56
57
54
55
50
56
57
100
Household Size
219
209
213
203
207
198
201
192
196
187
190
182
185
177
180
172
175
167
150
181
173
204
195
200
6.05
63
64
Demand (No. Units)
Hundreds
Exhibit 93: Riyadh Market-wide Demand Forecast
5.45
5.25
2011
2012
2013
2014
2015
2016
2017
Demand By High-Income
Demand By Upper Mid-Income
Demand by Low-Income
Household Size
2018
2019
2020
2021
Demand by Mid-Income
An analysis of these indicators places the average demand for housing units at
over 50,000 household units annually for the next 10 years.
3.5.4
MARKET GAP
Riyadh has seen considerable rises in population, which has created a shortage in
the citys housing units. This shortage is most pronounced among the low and mid
income categories of the population, and is prevalent in all major cities in the KSA
due to relatively lower rate of increase in supply compared to demand. These
consequences are caused by the following:
Unreasonable increases in land prices due to land trading
Relative lack of experience of developers
High rate of increase in population (a CAGR of 4%)
The following exhibit depicts the annual net demand, annual net supply and the
market gap in Riyadhs housing units over the next 10 years period:
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Hundreds
Exhibit 94: Market Demand, Supply and Gap per Year for Riyadh
600
25,000
500
20,000
400
15,000
300
10,000
200
467
275
451
284
464
292
477
301
491
311
505
320
519
330
534
341
549
351
565
362
5,000
527
300
100
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Net Annual Demand
Net Annual Supply
Market Gap
3.5.5
AFFORDABILITY ANALYSIS
Colliers has estimated the affordability of different units according to income levels
and prices prevailing in the city. The following characteristics of the market have
helped us formulate mortgage affordability according to income levels.
As the BUA of the unit increases, the sales price per sq m decreases. There is
no clear trend as to how much the sales price decreases as other factors such
as location, quality etc. play an important role. For the purpose of this analysis,
Colliers assumes that sales prices remain constant for both villa and apartment
developments, so that affordability can be gauged. This rate is assumed at SAR
2,800/sq m for villas and SAR 2,400/sq m for apartment developments.
The typical down payment on a mortgage loan is approximately 20% of the

property sales price
The interest rate on the mortgage payment is 4%
The mortgage term is of 20 years (240 months)
The income levels such as provided in the demographic overview
The following exhibit portrays mortgage affordability of different households

according to the above mentioned classifications.
94 of 109
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Exhibit 95: Affordability Analysis
Unit Type
BUA
(Sqm)
Apartment
125
Apartment
Avg. Sales
Price
(SAR/Sqm)
Unit Price*
Down
Payment*
Required Loan
Amount*
Monthly
Installment*
Monthly
Income*
Population
Affordability
2,400
300,000
60,000
240,000
1,454
4,155
94.77%
150
2,400
360,000
72,000
288,000
1,745
4,986
94.77%
Apartment
175
2,400
420,000
84,000
336,000
2,036
5,817
62.97%
Apartment
200
2,400
480,000
96,000
384,000
2,327
6,648
44.77%
Apartment
225
2,400
540,000
108,000
432,000
2,618
7,480
44.77%
Apartment
250
2,400
600,000
120,000
480,000
2,909
8,311
44.77%
Apartment
275
2,400
660,000
132,000
528,000
3,200
9,142
44.77%
Villa
300
2,800
840,000
168,000
672,000
4,072
11,635
44.77%
Villa
325
2,800
910,000
182,000
728,000
4,412
12,604
24.19%
Villa
350
2,800
980,000
196,000
784,000
4,751
13,574
24.19%
Villa
375
2,800
1,050,000
210,000
840,000
5,090
14,544
24.19%
Villa
400
2,800
1,120,000
224,000
896,000
5,430
15,513
11.98%
Villa
450
2,800
1,260,000
252,000
1,008,000
6,108
17,452
11.98%
3.6
LARGE SCALE DEVELOPMENTS

The main developers to have taken the lead in building mega projects in the region
include The Land Holding, Dar Al Arkan, Dalah Al Baraka and various other
developers.
The following list of major projects in Riyadh is illustrative but not exhaustive. It
presents some developers with their projects in addition to other mega projects in
Riyadh:
3.6.1
THE LAND HOLDING DEVELOPMENT & INVESTMENT COMPANY

The Land Holding Company, founded in 2005 will develop a project aimed at
catering to the housing needs of the high-income brackets. It works in collaboration
with Riyadh-based Al Shoula Group and UAE-based Tameer Holding.
95 of 109
FINAL
AJMAKAN
Exhibit 96: Ajmakan Snapshot Overview
Master Developer
The Land Holding,
Land Area (Sqm)
1.84 Mn
Location
Al Khozama District
# of Units
500 Residential
700 2000 Sqm
Average. Unit Size
6,900 7,100
Average Unit Price (SAR/Sqm)

Capital Cost (SAR)
9,000 Mn
Status
Not Completed
Ajmakan is a mega housing project located at Al

Khozama District, close to the Diplomatic
Quarter, King Saud University and other
governmental agencies. Ajmakan, which means
a uniquely beautiful place, is to be built on a
land area of 1.84 million sq m. The project is
divided into 3 key areas: A, B and C with
specific developments allocated for each. The
total capital cost for the project is estimated at
SAR 9 billion.
Current Status: The Project is currently under construction and is expected to be
completed by 2015.
3.6.2
LIMITLESS
The company which is a master development arm of Dubai World came to Saudi
Arabia as a silver sponsor of RestatexThe Riyadh Exhibition for Real Estate and
Architectural Development- in 2008 and is undertaking a project located north of
Riyadh.
96 of 109
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AL WASL PROJECT
Exhibit 97: Al Wasl Project Snapshot Overview
Masterplan ID
Al Wasl Project
Master Developer
Limitless
Land Area (Sqm)
14 Mn
Location
Al Malaga District
# of Units
55,000 Residential
AVG. Unit Size
240-1,700 Sqm
Capital Cost (SAR)
45,000 Mn
Status
Not completed
The ArRiyadh Development Authority has given

approval to Al Wasl Project which is located in
Al Malga District in Al Daraaya Municipality on
a total land area of 14 million sq m west of
Salboukh Road. The project comprises
residential, commercial and hospitality
properties along with open service areas,
general services and amenities, schools,
hospitals, universities and mosques. As for the residential component of the
project, around 55,000 residential units will be constructed to accommodate
200,000 inhabitants with a total built up area of 14 million sq m. House types
include a mixture of townhouses, villas and apartments. According to plans, there
will be 55 mosques, including seven luxurious mosques. Additionnaly, several five
star hotels with primary quality conference facilities will be built. To support the
infrastructure of this large master plan, there will be an environmentally friendly
internal transport system.
Current Status: Upon research by Colliers staff, construction on Phase 1 of the
project started in 2008 with earthworks being completed in early 2009. The project
is currently on hold reportedly due to financial difficulties. Initially the project was
expected to be completed in 2016; however, the new completion date is currently
unknown.
3.6.3
DAR AL ARKAN
One of the largest Saudi large-scale developers is Dar Al-Arkan. The focus of Dar
Al-Arkan is not on the high-end, luxury projects that so many large-scale
developers are building, but on more reasonably priced housing projects targeting
middle-income bracket Saudi families.
97 of 109
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SHAMS AL RIYADH
Exhibit 98: Shams Al Riyadh Snapshot Overview
Masterplan ID
Shams Al Riyadh
Master Developer
Dar Al Arkan
Land Area (Sqm)
5 Mn
Location
Salboukh Road
# of Units
3,189
AVG. Unit Size (Sqm)
400-1,500
Capital Cost (SAR)
6,000 Mn
Status
Not Completed
Located 4 km north of the North Ring Road on

Salboukh Road, Shams Al Riyadh is one of the
few projects in the region that will deliver large
numbers of completed villas to the market
rather than subdivided plots of developed land.
Dar Al Arkans SAR 6 Billion-scheme will deliver
3,189 mixed size residential units in total, some
of which will be apartments. 42% of the scheme
will offer residential areas. The scheme is being developed on a plot of 5 million
Sqm which is approximately a 20-minute drive from the CBD.
The residential units in the project are 4-7 bedroom villas ranging from 400 1500
Sqm. The sales of the villas began in 2011. In addition to the residential units, the
project will feature urban, sports, socio cultural, and other public utilities.
Current Status: The project started its planning process in 2008 and was
undergoing early infrastructure works. The progress of the development is
extremely slow and is believed to be on hold due to financing issues of the
developer (Dar Al Arkan).
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AL QASR PROJECT
Exhibit 99: Al Qasr Project Snapshot Overview
Masterplan ID
Al Qasr Project
Master Developer
Dar Al Arkan
Land Area (Sqm)
814,000
Location
Al-Swaiyadi District
254 Villa
1,479 Apartment
# of Units
AVG. Unit Size
300-800 Sqm
Capital Cost (SAR)
2,000 mn
Status
Completed
Developed within the framework of the

comprehensive development philosophy, Al Qasr
Project is located in Al-Swaiyadi residential area.
It represents an advanced model of the
integrative residential environment projects
aimed to cater to 13,000 medium income
citizens. Estimated at SR 2 billion, it is composed
of 822 pieces of land on an area of approximately
813,389 sq m. The construction of the project
commenced in 2005. Infrastructure and
superstructure works have already been
completed, including the pavements, lanes,
lighting, treeing, irrigation, sewage networks, and
the telephone and electricity lines. A number of
service schemes will be apportioned such as
gardens, parks, commercial centres and
governmental administrative buildings, to serve the project inhabitants and the
nearby residential areas.
The project offers 254 villa units of which the average BUA is of 348 sq m with an
average sale price of SR 2,484/sq m. Al Qasr also has four-storey apartment
buildings offering 1,479 units of 4-bedroom and 3-bedroom apartments.
Current Status: According to Dar Al Arkan the development is completely sold out.
However Colliers believes this is an over estimation of the units sold. According to
Colliers research, out of 254 villa units, approximately 90% are sold, and as for
apartments, out of the total 1,479 units, approximately 50% are sold. Important
lessons can be drawn from Al Qasr development and its progress. The slow pace
of sales can be attributed to a number of factors which are presented below:
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The developers main target segment was Working Class Saudis falling in the
mid income category. Now, the target segment has changed to comprise both
mid income Saudis and mid income expatriates. In hindsight, it can be seen that
the location was a major flaw since Al Suwaidi, situated in South Riyadh, is not a
favoured location for the upcoming mid income class of Saudis.
Potential buyers prefer the upcoming areas in the northern and eastern parts of
the city, which are much better in terms of
Infrastructure including the presence of schools, hospitals and other civic
facilities that are important in functioning neighbourhoods

Accessibility to and fro the primary and secondary CBDs (King Fahd Road,
Olaya Street etc.)

Supporting retail centres (including Grade A and B retail malls, neighbourhood
stores and retail line shops).
The unit mix of the development was not in line with local preferences, which are
targeted towards villas rather than apartments. It should be noted that villas have
sold much more quickly than apartments have in this location. The apartments at
Al Qasr, set up in a community setting, are less preferable than standalone
apartments in non community settings in areas located in the northern and
eastern parts of the city. Although community settings are the upcoming trend
and much more preferred in the market than stand alone developments, the
location factor of Al Qasr has overcome the community element and has not
helped the development in securing quicker absorption.
Despite Al Qasr being an excellent development in terms of quality, price and

unique offerings (Community living, Parks, Retail Mall, Hospital etc.) it has not
performed up to the expectations of the developer due to the above mentioned
issues. It points out to poor predevelopment studies and analysis, which can turn
out to be a huge risk for the development of such large projects.
3.6.4
AL ARGAN
Al Argan began operations in 2006 owned by more than one shareholder. The
companys strategy is to develop the shareholders land properties. One of their
major developments is Manazel Qurtoba.
The average return on investment is about 21% through projects with a life span of
14 months. The companys shareholders are land banks, but they are also ready to
invest in developing potential lands that are not owned by the company. Al Argan
developments are financed through equity and debt. Financing sources are AR
Riyadh Bank, Dar Al Tamleek and Amlak at an average rate of 4.5%
100 of 109
FINAL
MANAZEL QURTOBA
The project is located in the north east of Riyadh city within Cordoba district. It is
situated over a land area of
360,000 sq m offering a total
number of 1,400 residential
units which include 1000
apartments and 400 villas. Only
phase 1 of the project has been
completed, delivering 400
residential units.
The average price range for
villas with average BUA of 400 650 sq m stands at SR 1.1 mn SR 2 mn, while the price range for duplex units
with BUA ranging from 237.5-240 sq m stood at SR 750,000 SR 850,000.
The project is an integrated housing component, delivering all the necessary civil
services such as electricity, sanitation, internal streets, mosques, schools,
restaurants and malls which position it as so much more than just a housing
project.
Current Status: The 400 units of Phase 1 of the project have been sold out are
expected to be completed in Q1 2012. The development is currently undergoing
construction for c.1,000 apartment units and is expected to deliver them by 2014.
3.6.5
RAFAL REAL ESTATE DEVELOPMENT CO. LTD.

Rafal Real Estate Development was founded in 2008 and commenced operations
with Blyncyah. Currently Burj Rafal is one of the companys ongoing project which
is a high rise mixed use development offering hospitality, residential and a limited
retail component. The other ongoing project is Rabia Hills Community, which is a
residential development located along Salboukh Highway in Northwest Riyadh.
Rafal is known for designing unique projects, for a niche market segment by
providing distinctive elements missing in the market. The company focuses on
gated and semi gated projects.
Rafal prefers partnering with land owners for financing purposes. Financing options
are Saudi Fransi Bank, Amlak finance, Riyadh Bank and Al Rajhi bank (considered
to be one of the best options for Saudis). The financing rate obtained from banks is
4%. Rafal states that their typical return on investment ranges between 15%-20%
whilst any increase in return may jeopardize quality. Rafal is building a future
relationship with Aramco in order to build a residential community for their Saudi
employees.
101 of 109
FINAL
BLNCYAH
Exhibit 100: Blncyah Snapshot Overview
Masterplan ID
Blncyah
Master Developer
Rafal
Land Area (m )
85,956
Location
King Abdul Aziz District
# of Units
144 Villas
321 693
Unit Size Range

Capital Cost (SAR)
N/A
Status
Completed and Sold
Blncyah is a master plan project in King

Abdulaziz District in Riyadh. The developer is
Rafal. The total land area is of 85,956 sq m. The
number of units is 144 villas. The selling prices
of the villas range between SR 995,000 and SR
2,500,000. The land area per unit is between
400 to 600 sq m, and the BUA per unit is
between 321 to 693 sq m. There are extra
facilities like a drivers room at the gate, landscaping, maids room on the roof,
available parking space and wide roads and walkways.
Current Status: The project was completed in 2010 and had been completely sold
out before it was completed.
AL RABIA RESIDENTIAL COMMUNITY
Exhibit 101: Al Rabia Community Snapshot
Description ID
2
Land Area (m )
# of Units
Unit Size Range
Project ID
120,000
238 Villas and
Apartment not determined yet
285 Sqm for Duplex on 238 Sqm Plot Area
500 Sqm for detached on 400 Sqm Plot Area
Price Range (SR)
SR 1.2 mn to SR 2.3 mn for Duplexes and Detached
Status
Under Construction
The second gated community by Rafal is located along Salboukh Highway close to
the new Addereyyah. The project comprises villas and apartments. The project is
specifically targeting the middle income segment.
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FINAL
Exhibit 102: Al Rabia Residential Community
Source: Rafal, 2011
The land area of the project is of about 120,000 sq m with a total BUA of
115,000 sq m comprising only two types of villas (i.e. duplexes and detached
units), and no further details are available as of current on the mix of apartments
and sizes.
The developer has positioned the company in building communities, Al Rabia

project is planned to be a gated community with 24/7 security and facility
management services similar to Blncyah project.
Current Status: Rabia Residential Community has started construction, and is

receiving bookings for its villas. The bookings point to an increasing interest from
potential buyers, however, the real performance of the project can only be judged
once the development is near completion and actual sales records are available.
3.6.6
DALLAH ALBARAKA GROUP

Founded by Sheikh Saleh Kamel in 1969, the group has a broad scope that
encompasses many sectors of economic life, including industry, trade, real estate,
tourism, health care, communication, media, production, technical maintenance
and operation, transport, banking, finance and education.
Ranked as the 5th in the top 100 Saudi companies, Dallah Al Baraka recently
launched a mega project that will provide quality housing in the outskirts of Riyadh:
Durrat al Riyadh.
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DURRAT AL RIYADH PROJECT
Exhibit 103: Durrat Al Riyadh Snapshot Overview
Masterplan ID
Durrat Al Riyadh
Master Developer
Dallah Al Barakah
Land Area (Sqm)
3.2 mn
Location
Al Qaseem Road
# of Units
843
AVG. Unit Size
590-2,500 Sqm
Capital Cost (SAR)
3,000 mn
Status
Not Completed
Durrat Al Riyadh, located on Al Qaseem Road, will be developed over the course
of four phases and will provide a total of 843 housing units. It covers an area of 3.2
million sq m, and the first phase includes 150 medium-sized, high-income villas
named Kadi Villas. Kadi Villas are four-bedroom villas with an average plot size of
1,175 sq m and average unit size of 590 sq m.
The average selling price of the villas is at SAR 2,300,000 to SAR 2,700,000. A
maintenance programme is also offered for a period of 8 years at an additional cost
of SR 104,340. The total land area of each villa is between 950-1400 sq m. The
BUA for each villa is 590 sq m. Phase 1 will also include community support retail,
a destination shopping mall, a hypermarket and a 5-star resort hotel. Available
information indicates that 70% of the project will be landscaped.
104 of 109
FINAL
Phase 1 includes 843 villa plots, each of which will sit upon a raised mound
designed to ensure privacy for residents. The second set of villas will be Emerald
Villas, which are 35 villas of Spanish architectural design. The BUA for each villa is
666 sq m and the land area is between 1200-1600 sq m. The villas have three
floors, the ground floor area is of 364.5 sq m, the first floor area is of 245.72 sq m
and the upper floor area is of 42.91 sq m. Based on Colliers research, we believe
selling prices for these villas start at SAR 3,300,000. Finally, the last set of villas is
the Mound Rubies Villas, in which purchasers will be able either to develop their
own villa, according to certain planning guidelines, or to have the villa built from a
range of five design options provided by the master developer. They can choose
from Spanish, Malaysian, Najdi, Andalusia or Modern design. The land area per
villa is 950-2,500 sq m and the BUA is 1,017-2,500 sq m. Plot prices will depend
on size and location of the property although price ranges have not yet been
determined. The entire area will sit within a walled community with 24-hour
security.
Dallah Al Baraka report that they are in advanced negotiations with Amlak Finance
to provide mortgage lending on the villa plots in anticipation of legal changes in this
area.
Exhibit 104: Real Estate Sector Division in Durrat Al Riyadh
Sector
Area (sq m)
Residential
1,008,534
31.8%
Commercial/Offices
110,541
3.5%
Hotel
158,400
5%
Mosques
520.48
1.6%
Schools
675.41
2.1%
Other services
272.01
0.9%
1,205,822
38%
544,962
17.2%
3,175,049
100%
Open areas
Road & pathways
Total
Source: Dallah Al Baraka
Ratio
105 of 109
FINAL
The above table summarizes the arrangement of sectors present on this land. The
communitys retail element has been allocated a total land area of 26,297 sq m split
between several small plots. Additionally, two larger plots of 35,222 sq m and
49,807 sq m have been reserved for retail uses. Dallah Al Baraka hopes to find
sub-developers to build and operate retail facilities on both plots.
The final element of Phase 1 will be a hotel resort. It is planned to offer 160 rooms
and 54 chalet suites. Negotiations are reportedly underway with Rosewood to
operate the property, although it has not yet received a hotel license from the
municipality as yet. The hotel will cover an area of 158,400 sq m.
There will also be four (girl/boy) elementary schools, two (girl/boy) middle schools
and two (girl/boy) secondary schools. The total schools land area is of 67,000 sq
m, which forms 2.5% the total development area. Each school will acquire an area
of 8,400 sq m.
According to plans, eight mosques will require an average land area of 52,000 sq
m, which forms 1.64% of the total area. For each mosque, the population density
will be 1000 pax/mosque. Therefore, the land area of each mosque is of
approximately 6,500 sq m.
This whole project is expected to accommodate 6,800 persons, which equates to
22 pax/hectare or 0.0022 pax/ sq m.
Current Status: The project is undergoing slow construction activity; nevertheless
it has secured buyers for 252 Villas, of which 208 have already been delivered. It is
also reported that approximately 80% of the land parcels have been sold to
individuals who can either hire the developer to build their units, or choose to sub
contract the development. This option remains feasible for buyers who are
currently not in a hurry to secure a unit, but nevertheless want it for future use.
3.6.7
THABAT
Thabat is a joint collaboration of Talaat Mostafa Holding Group in Egypt and Al
Oula Company for Real Estate Development in the Kingdom of Saudi Arabia. It is
an entity that aims to develop residential and commercial communities across the
Kingdom.
106 of 109
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NASSMAT AL RIYADH
Exhibit 105: Nassmat Ar Riyadh Snapshot Overview
Masterplan ID
Nassmat Ar Riyadh
Master Developer
Thabat
Land Area (Sqm)
3 mn
Location
North Eastern
# of Units
4143
AVG. Unit Size
130-480 (Apt)
520-707 (Villa)
Capital Cost (SAR)
6,000 mn
Status
Cancelled
The development was expected to have 4,143

residential units which included villas and
apartments.
The development was located in the north
eastern part of Riyadh on a 3 mn sq m land area.
The residential units were to be made available
on freehold basis only, with villa prices ranging
from SAR 1.2 mn to SAR 3.8 mn while apartment selling prices ranged from SAR
520,000 to SAR 1.8 mn, depending on the residential unit model type.
Current Status: According to Colliers Research, the project was cancelled in Q3
2011. However, this is not officially announced by the developer Thabat. Reasons
for cancelling the project currently remain ambiguous; however, Colliers believes
that this is due to the project not being able to make the off plan sales it was
heavily relying on.
Off plan sales are subject to strict municipality approvals, and even in the instance
of being granted, they are extremely tough to achieve within the local Saudi
market. This especially applies to Nassmat Ar Riyadh which had taken up high
loans and was not able to sell units, due to its flawed strategy of Sell and Build
rather than Build and Sell. Coupled up with the location factor of the project, a
remote area far from the city, the flawed strategy made it difficult to pursue off plan
sales.
3.6.8
KEY LESSONS FROM LARGE DEVELOPMENTS
The strategy of sell-build has been relatively not successful in building the
required demand momentum by individuals and/or bulk purchasers as observed
in Nassamat Ar Riyadh development. In order to build investor confidence in the
projects vision, building the required infrastructure is essential to the success of
any master plan development.
107 of 109
FINAL
Building critical mass in early phases of any master plan is crucial to the success
of the development. Thus the Master developer must take the initiative to selfstart the development before expecting external investors to come in and
support the project life cycle.
In order to build a distinguished project, to add momentum and to differentiate

from existing ongoing developments, it is necessary to provide unique elements
depending on the target market such as a Golf Courses, Equestrian Clubs
and/or Hiking Clubs for high end developments.
South Riyadh is not favoured for mid to high income housing types, as exhibited
by the Al Qasr Developments disappointing performance. Upcoming areas in
the North, Northeast and Northwest are more preferable.
3.7
OUTLOOK
The outlook for Riyadhs residential market is strong with demand continuing to
outstrip supply, thus resulting in a market-wide gap of over 20,000 housing units
per annum. A major portion of this gap lies in the low- to mid-income housing
category which allows the future development of middle to large scale projects
targeted towards this income segment.
This gap is expected to further widen as the population increases and household
sizes continue to decline. The availability of mortgage financing schemes is also
expected to increase demand for residential units. This translates into future
opportunity for the mid scale developers in Riyadh.
108 of 109
CONTACT DETAILS
Tel: +966 (1) 217 9997
Fax: +966 (1) 2174090
Idamrah@colliers-me.com
Colliers International
Office 603, Al Mas Tower
King Fahad Road
P.O. Box 5678
Riyadh 11432
Saudi Arabia
www.colliers-me.com

ISC DLL Study - Final Report - July 2012

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The Investor for Securities

FINANCIAL FEASIBILITY REPORT

PREPARED BY: COLLIERS

PREPARED FOR: THE INVESTOR FOR

COLLIERS INTERNATIONAL KSA

ISC.DLL Study - Final Report - July 2012

Bilal Siddiqui / Mohammad Al Aqqad

Ibrahim Al Rashed / Sari Anabtawi

Site Location Analysis

Proximity to Demand Generators

Summary of Comparable Land Subdivision

Market Research Key Findings

Rationale for the Concept

Land Subdivision Pricing Strategy

Limitations of This Report

Saudi Arabia Macroeconomic Overview

Location and Area

Riyadh city Expansion

Demand Supply Analysis

Large Scale Developments

provision is to be used for a retail development.

developed through conventional land subdivision.

The following exhibit summarizes the financial viability assessment of the

Exhibit 1: Project Cash flows and IRR Summary

Total Land Cost

Total Infrastructure Cost

Colliers Analysis, 2012,

SITE LOCATION ANALYSIS

Exhibit 2: Macro Location of Subject Site

Sources: Google Maps, 2012

Area: c.250,922 Sqm

Sources: Google Maps, 2012

King Saud University

King Khalid Eye

The Ritz Carlton

Sources: Colliers Research, 2012

Hospitality developments: The Ritz Carlton

Governmental institutions: King Abdulaziz Conference Centre

Other developments: Wadi Hanifah and Diplomatic Quarters

Colliers Research, 2012

Financial Feasibility Report

Exhibit 6: Subject Site Accessibility

Access from Western Ring Road

Access from Makkah Road

Access from Western Ring Road

Access from Western Ring Road

Colliers Research, 2012

Access from Makkah Road

Access from Makkah Road

Phase 2 is expected to connect Sheikh Jaber Al Ahmed Al Sabah Road to West

Sources: ArRiyadh Development Authority, 2012

PROXIMITY TO DEMAND GENERATORS

KING KHALID INTERNATIONAL AIRPORT

Prince Salman Road: 48 km

Northern Ring Road: 45 km

King Khalid International Airport

Western Ring Road

PROXIMITY TO OTHER DEMAND GENERATORS

King Saud University

The Ritz Carlton

King Saud University is seeking to develop a 1.7 million sqm science

The King Saud University and its endowment projects comprise 11

Upon Completion, King Abdullah Financial District will become a