RED SEA TOURISM HOTSPOT TO SELL LUXURY HOMES
▶ Saudi Arabia’s TRSDC to deliver 800 residential units on new island
Saudi Arabia’s Red Sea Development Company is planning to sell luxury second homes on a new island as part of the second phase of the tourism project, which is currently under way.
About 800 residential units – a combination of villas and condos, in addition to hotels, a marina and a golf course – will be delivered, John Pagano, chief executive of the TRSDC, said.
“We’re already moving into phase two of the Red Sea [project]. We’ve started on an island which is going to be a second home-type of product,” he told The National on the sidelines of the Arabian Travel Market in Dubai. “That’s been approved and we’re moving forward with that.”
These high-end houses will go on sale “by 2023 or 2024”, appealing to buyers from Saudi Arabia or the GCC looking for a second home that is relatively nearby and in a comparatively cooler climate, Mr Pagano said.
“[The] Saudis and the Saudi market will be a very strong market for us … we’re offering something that nobody else really can offer,” he said.
“We control virtually all the islands on the Red Sea, so to be able to buy a real estate property on an island that is highly serviced. It’s going to be a very unique proposition.
“This new project we will not start selling for another year or two because it’s at the early design stages. The designs have been approved, now we’re actually detailing the designs … you don’t sell off-plan too far in advance.”
The Red Sea has summer temperatures that usually range between 30°C and 35°C, and second homes on the coast would be a short flight away for domestic or Gulf owners, he said.
“I see it as a great opportunity for the GCC market as well as Saudi Arabia to have a home that is relatively close: from Dubai, it is a two-hour flight, and you can be in beautiful turquoise water. It’s very different to the Arabian Gulf, the water quality and colour – it’s a very different experience,” Mr Pagano said.
The Covid-19 pandemic has spurred sales of second homes as the ability to work remotely, alongside incentives such as visas for digital nomads and a desire to travel after a period of confinement, has boosted demand for a home-from-home, Knight Frank’s 2021 Global Buyer Survey showed.
About 33 per cent of respondents said they are more likely to buy a second home as a result of the pandemic, up from 26 per cent in 2020. The enhancement of lifestyle and the desire for a retreat was the key reason cited by home buyers.
Nearly two thirds of buyers looking for a second home abroad said they would be influenced by the local government’s handling of the Covid-19 crisis.
Laheq, the new island being developed by TRSDC primarily for second homes, will feature 500 villas, 300 condos and 300 hotel rooms, Mr Pagano said.
“They’ll be expensive, the market will ultimately decide what we can sell for. We haven’t settled on pricing yet.”
The level of interest from prospective home buyers for the residential units has been significant so far, Mr Pagano said.
“We’re also getting a lot of investor interest from people wanting to invest in the hotel assets because, while we don’t need the capital, the private sector wants to get involved and we’re willing to work with them on a joint venture basis.”
Saudis and the Saudi market will be a strong market for us. We’re offering something that nobody else can offer JOHN PAGANO
CEO of the TRSDC
Phase two of the Red Sea project will include the development of four to five additional islands, with TRSDC currently evaluating locations and experiences that can complement phase one.
The tourism destination’s dedicated airport is “virtually done” and is in the process of obtaining a licence, he said.
“The lights are being installed right now on the runway.”
Phase one of the Red Sea project will be delivered by the end of next year, while phase one of the Amalaa project will be completed by the end of 2024, according to Mr Pagano.
Together, the two projects are currently tendering contracts worth 7 billion Saudi riyals ($1.86bn) to 8bn riyals for hotels and infrastructure works, which will be awarded on an continuing basis, he said.
To date, about 800 contracts worth 25bn riyals have been awarded.
On average, contracts worth 1bn riyals to 1.5bn riyals a month need to be awarded for the projects to stay on track for completion, Mr Pagano said.