Al Shabab’s real estate value makes it an attractive, but more complicated, investment case

Al Shabab’s real estate appeal outweighed its sporting value, postponing its inclusion in the privatisation program. The football club was left out of the privatisation lists and restructuring plans despite investor demand, as some bids focused more on the real estate value of its site than on developing the club as a sports business, giving it a different proposition from other clubs in the program, Al Eqtisadiyah reports, citing a Sports Ministry statement.

REMEMBER- The Sports Ministry opened bidding on five clubs back in June, including Al Riyadh, Al Fateh, Abha, Al Tai, and Al Shoulla, following the Public Investment Fund’s offloading of 70% of Al Hilal to Prince Alwaleed bin Talal’s Kingdom Holding Company at an SAR 1.4 bn a couple of months earlier. It also began transferring the 25% stakes held by nonprofit foundations in Al Ittihad, Al Ahli, Al Hilal, and Al Nassr to PIF.

The club has a prime location, as it occupies a 91.3 sqm site on King Fahd road, one of Riyadh’s main arteries and close to major developments including King Abdullah Financial District and The Avenues Riyadh. The location and size made the club’s valuation a mix of football, real estate and urban development.

“The value of the land could exceed the market value of some major sports clubs,” Indicators Real Estate Valuation’s director Hamdan Al Mutairi said, describing the site as a “rare real estate icon” due to its position on a major commercial corridor and proximity to high-profile projects.

The appraisal process needs to involve several factors: The market value requires an accredited property valuation and would depend not only on the site itself, but also on zoning, permitted uses, ownership structure and obligations linked to the existing sports facilities, Al Saedan Real Estate’s board member Nawf Ibrahim bin Saeedan said. The valuation should also account for its brand, fan base, commercial rights, contracts, and academies.

The site could even support a mixed-use investment model, combining sports facilities with offices, hotels, residential units, retail and entertainment, provided regulations and the privatization terms allow it, Bin Saeedan added. This would generate generate income from the site throughout the day rather than relying mainly on sports revenues.

The overlap between football and real estate is well established globally: Manchester City turned the area surrounding its stadium into sports, commercial, education, and entertainment facilities alongside wider urban development, sports economist Talal Almaghrabi said. Meanwhile, Chelsea involved the location of its Stamford Bridge stadium in investment discussions, including land ownership and future development projects.

This high value, however, could itself be a reason for delaying the sale rather than accelerating it, Almaghrabi mentioned. A club with a high-value property asset creates a more complex investment case, requiring the state to weigh an investor’s ability to run the football operation and unlock sustainable value from its assets while preserving its sporting role. That could make the most suitable investor not necessarily the one with the strongest sports credentials, but one able to combine sports with real estate and urban development.

Looking ahead, investors will need clarity on the land’s legal status and ownership before making their decision. This includes whether it forms part of the assets being offered, available usufruct and development rights, planning requirements and approved projects in the surrounding area, with these factors helping investors determine the site’s worth over the next 10 or 20 years as riyadh’s development plans progress, Almaghrabi added.