Real estate picks up in Saudi Arabia’s Eastern Province

• Development in Dammam and Khobar
• Growth in all real estate segments
• Drive to create jobs for local residents

The Gulf city of Dammam and the Eastern Province that surrounds it have long trailed behind Riyadh, Jeddah and Mecca in the push for glitzy development, but real estate activity is picking up across the hospitality, residential and industrial sectors.

The province, which has deep pockets thanks to its importance to the Saudi energy industry, has more recently benefited from a shift in shipping operations to the Arabian Gulf as a result of the Red Sea crisis. 

It has also had an influx of Public Investment Fund money, despite the sovereign wealth fund’s focus on Riyadh. 

“There is visible evidence of development and construction occurring throughout the cities of Dammam and Khobar, signalling that growth is indeed picking up,” says Imad Damrah, managing director for Saudi Arabia at Colliers.

“At the same time, the numerous announced projects indicate a strong blueprint for future development, with their realisation depending on various factors such as funding, regulations and market conditions.”

In mid-September, Saudi asset manager Areeb Capital bought a 32 million sq-m plot in Dammam for $3.2 billion. It intends to develop a mixed-use project on the site.

In August, the General Authority for Ports, or Mawani, and Aljeri Logistics Services said they would jointly build two new logistics areas in Jeddah and Dammam, for a combined $43 million.

There was a 37 percent annual jump in the number of containers handled in the first half of 2024 by Dammam’s King Abdul Aziz Port, according to the Saudi Ports Authority.

Dammam is becoming an increasingly important centre for warehouses and other logistics facilities, especially after Aramco Digital and US semiconductor startup Groq agreed last month to build the world’s largest artificial intelligence inferencing data centre.

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The development of King Salman Energy Park, between Dammam and Al Ahsa to the north, has attracted more than $3 billion in industrial investment so far.

“You’ve got the likes of Honeywell, Siemens – a number of electronics companies – all now looking at gaining a local presence here on the ground and developing that manufacturing capability as part of the mandate of Vision 2030,” says Dean Furey, director and head of real estate for Saudi Arabia at Turner & Townsend. 

Entertainment too is coming to the Eastern Province. PIF-backed Oil Park Development Company is developing The Rig, an entertainment, sports and hospitality complex housed on two repurposed oil rigs off the coast of Jubail, just north of Dammam.

South of the provincial capital, construction has started on the 47,000-seat Aramco stadium in Khobar. 

The Saudi Binladin Group has been building two waterfront entertainment destinations in Dammam and Khobar for PIF subsidiary Saudi Entertainment Ventures (Seven) to the tune of $1.3 billion. 

“Khobar is a really nice place, it’s worth a visit, there has been a lot of investment there over the past 10 years or so,” says Furey. “What’s interesting is that on the back of that [Seven] announcement, you are seeing a lot of regional developers that are now capitalising on the investment going into Khobar.”

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Construction is ongoing at the $2 billion mixed-use project The Avenue in the city, which will include high-end apartments, shops and restaurants. 

According to Hattan Alsharif, senior manager for CBRE KSA, real estate activity across the province has really accelerated over the past three years. 

As per Vision 2030, the goal here is to “lessen” the economy’s dependence on oil and create new jobs for local residents, Alsharif says.

In April, PIF-owned developer Roshn announced it would build a 2,500-residential community in Dhahran. In May it awarded $773 million to the Building Construction Company, a subsidiary of Eastern Province-based, listed developer Retal, for the work.

Dhahran, which is about 14km south of Dammam, is considered Saudi Arabia’s oil capital and is home to the state-owned oil and gas giant Aramco, which is itself working to diversify revenue streams into real estate.

A mixed-use development is also in the offing at the northern tip of the kingdom’s Gulf coast, right on the border with Kuwait, near the town of Kafiji. Al Ahsa, just to the south, is planning its own massive tourism-focused destination, with the involvement of Seven. 

“A lot of the PIF money has been funnelled into Riyadh, whereas if you look at the Eastern Province I think it’s fair to say there’s more local or regional developers, large families that have got local real estate companies,” says Furey.

“There are some really reputable developers in that part of the region and obviously they are expanding quite progressively there.”