Dubai-based conglomerate Al Futtaim Group has signed a memorandum of understanding with Riyadh’s Kayannat Real Estate to build Al Diriyah Festival City- the largest shopping mall in Saudi Arabia.
The shopping mall will have 250,000 square metres of gross leasable area (GLA) and will be located at the Al Diriyah district in Riyadh in the vicinity of King Saud University and King Abdullah Financial district, the group said in a statement.
The $1.6 billion (SAR6 billion) super regional mall will be anchored by an IKEA store, construction of which is scheduled to begin soon while the completion date is set after 12 months.
A luxury 500-room hotel and serviced apartments will also be a part of the development, the company said.
Under the agreement, Al Futtaim will manage all matters related to the al Diriryah Festival City project and will provide investment and development management services to construct, lease and operate the mall.
“With a population of 30 million Saudi Arabia is the GCC’s biggest market with a booming retail sector expected to reach a value of SAR276 billion by the end of 2014 which accounts for 17 per cent of Saudi Arabia’s GDP,” said Omar Al-Futtaim, vice chairman, Al Futtaim Group.
“We are privileged to be able to enter into a partnership with a group of prestigious businessmen who include the franchisee of IKEA in the Kingdom, Dr Ghassan Ahmed Abdullah Al Sulaiman, in order to tap into this lucrative market and further contribute to the Kingdom’s economic development.”
The mall’s catchment population is also expected to grow as a number of planned residential communities are taking shape to the north of the site.
“We always plan ahead taking a long-term strategic view and this agreement will add another significant asset into our portfolio of regional malls,” said Al Futtaim.
“It gives us a footprint into the Kingdom’s retail sector and extends our network of shopping centres, which currently includes a number of operational or under-development assets across the Middle East.”
Al Futtaim currently operates its flagship Dubai Festival City Mall, which opened in 2005 while it inaugurated Cairo Festival City in November last year.
In Qatar, the group and its joint venture partners are currently building Doha Festival City – a super regional mall spanning a GLA of 254,000 square metres.
Al Futtaim also has signed a joint venture with local government entities in Oman to develop the country’s largest shopping mall, which will also be anchored with an IKEA store.
Outside of the GCC, Al Futtaim is co-developing a shopping mall, spanning 120,000 square metres of GLA, in Casablanca. Two further malls are in the early stages of planning, the company said.