Saudi’s Rikaz targets ‘crucial’ logistics sites and potential IPO

• $600m Mecca development for 2028
• Also looking at education sector
• IPO is ‘always on the table’

Saudi developer Rikaz is focusing on projects in Islam’s holy cities and weighing up a future listing to fund its expansion across the kingdom, its chief executive has told AGBI.

Rikaz, which is headquartered in Khobar, is developing 13 million square metres of warehousing, logistics and distribution space across Saudi Arabia. It is also looking to work on projects in the education sector.

Although most of the schemes were planned before the US-Iran war, chief executive Khalid Al Gahtani said investor interest has “definitely” picked up as the Strait of Hormuz disruption highlighted the need for more resilient supply chains.

“Recent events in the region have proved that logistics is crucial,” he said. “It might not be as attractive as far as an asset class, but in terms of its importance to the economy, that’s well proven.”

As part of Saudi Arabia’s Vision 2030 development targets, the country hopes to become a “global logistics hub” by the end of the decade, “leveraging the kingdom’s competitive advantage at the crossroads of three continents.”

Rikaz is developing a number of projects, including The Node, a 3 million square metre logistics park in eastern Riyadh.

The company announced last month a SAR2.2 billion ($586 million) mixed-use East Hindawiyah development in Mecca, with construction to begin within 12 months. As part of a consortium with developers Aljada First Development Company and AlMajdiah Real Estate Company, Rikaz hopes to deliver on the project within 24 months.

“After that we will be engaging ourselves, as well as other potential partners, in developing components of these products,” said Gahtani, adding that the company will look to pick up further projects in Mecca. “This is a long-term investment.”

Its other major focus for the near future is in education, Gahtani said, having established an investment fund in cooperation with developers First Avenue Real Estate Development Company and AlMajdiah as well as SNB Capital, the investment wing of Saudi Arabia’s largest bank.

The fund will look to develop new schools and education facilities and renovate existing ones, Gahtani said, an opportunity that was rarely available to developers before.

“Historically, education has been dominated by the public sector but with new government initiatives and Vision 2030, it enables the private sector to assume a larger role,” he said.

The Saudi government is looking for companies to invest in education, even suggesting that private companies could bid to run public schools.

Gahtani said that Rikaz is considering an initial public offering (IPO) to fund its expansion plans, but that there are no immediate plans to list.

Further reading:

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• Saudi ‘white land’ law to prompt wave of development
• Saudis are skipping developers to build their own homes

Last year, a number of developers indicated their intention to list on the Saudi Exchange – Mecca developer Masar, Al Majdiah and AlRamz Real Estate Company went public and were expected to be followed by others.

So far this year, new listings have fallen to an eight-year low, with only two companies going to market and raising just $122 million. One contractor pulled an IPO that could have been worth $800 million, citing pressures from the war with Iran.

“We continuously evaluate,” said Gahtani. “We believe that if and when the IPO is the right solution, we will do it. As long as we retain our ability to read the market and make long-term decisions.”