CHICAGO—Global Business Ventures, a Chicago-based consortium of US and Saudi Arabian business leaders, recently took a big step in its effort to transform the daily lives of people in Saudi Arabia. Last week, GBV officials joined representatives from the US Chamber of Commerce and Saudi Arabian General Investment Authority in Washington, DC, for the presentation of its SAGIA business license – which signals the start of serious planning for a mixed-use community with as many as 25,000 housing units and one million square feet of commercial space just north of Riyadh.
Dense, amenity-rich communities of this kind are the cutting edge of real estate development in the US and other advanced industrial countries, but in oil-rich Saudi Arabia such projects are unknown. However, the decline of oil prices is leading the Saudis to rethink how they organize the country. Government planners recently unveiled Saudi Vision 2030, a blueprint to decrease the nation's reliance on energy exports by encouraging manufacturing and energy efficiency. And the country aims to not just boost productivity and foreign investment, but to transform society in fundamental ways, and that means housing will have to change.
“They need a new model,” Randall Langer, GBV's chairman, tells GlobeSt.com. “What they have is not working.” Typically, the real estate markets there are fractured, with homes, retail and other commercial services in separate areas. And even the homes are mostly villas constructed on an individual basis, with very few apartment buildings. As a result, many people live in areas with low density and scattered amenities. “We're trying to create a new brand, and a new type of housing.”
Although planning is still in the early stages, Langer says he envisions dense, ecofriendly communities with thousands of prefab and modular homes and apartment buildings. Most homes will cost between US$200,000 and US$600,000, “with the bulk of them at the lower end.”
He adds that SAGIA endorses this vision and is ready to provide whatever support and loans are necessary to get it done. One of the reasons for such commitment is demographics. About half the population is under the age of 25, and government leaders recognize that providing jobs and affordable communities for this generation is essential. Moreover, many young people are highly-educated and have spent significant time overseas, frequently living in vibrant mixed-use communities. “This will not be something new to the younger generation.”
GBV has retained two global commercial real estate firms to conduct site evaluation and feasibility studies. The pre-development design process, led by Scott Sarver of Chicago-based smdp LLC, is currently underway. “We're in a position to start building models by the end of the year,” Langer says.
But he emphasizes that GBV will not have a pre-determined, cookie-cutter approach. It will start putting together focus groups next month of Saudis currently in the US, and later expand that work to Saudi Arabia itself. And as a project of this scale will move forward in phases, GBV will study what in their new community is most popular and make appropriate adjustments.
The consortium currently has three parcels under contract. Together, they comprise more than 9.75 million square meters, or approximately 2,400 acres.
“We are delighted to award this license and look forward to welcoming Global Business Ventures to Saudi Arabia,” says Ibrahim Al-Omar, governor of SAGIA. “The unprecedented program of reforms being implemented in Saudi Arabia is unlocking an exciting range of opportunities for investors in the Middle East's largest economy.”
“One of SAGIA's strategic goals is to act as an advocate for investors, enable them to invest, and establish their businesses in Saudi Arabia,” he adds. “In its efforts to ease licenses procedures, SAGIA has extended the license period for foreign investment from one year to a period of up to five years, renewable.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
