Makkah developer Thakher hunts big buyers as foreign money flows

Thakher Development is in talks with local and international investors on further large land-block sales in Makkah, after Indonesia’s sovereign fund became the first foreign state entity to buy property in the holy city last month, CEO Faisal Shaker tells EnterpriseAM. He didn’t name the buyers, give the value of the talks, or say when agreements might be signed. “The Makkah market is always driven by faith, not by cycles,” Shaker says.

Indonesian sovereign wealth fund Danantara bought the Novotel hotel and 14 plots in Thakher’s Makkah destination last month for around SAR 2 bn (USD 533 mn), and plans to add hotels and a shopping mall. The fund, set up last year to manage the country’s state-owned companies, checked local prices and infrastructure before agreeing on terms, as a Saudi buyer would.

Makkah is holding its ground while air travel is disrupted: Pilgrims keep arriving, land within reach of the Grand Mosque is scarce, and foreigners have been able to buy there since January. The Kingdom is targeting 50 mn religious visitors a year by 2030.

Prices are moving elsewhere in the city. Umm Al Qura, the developer behind the Masar Destination district on the road to the Grand Mosque, sold multiple plots in late October for about USD 118 mn, twice their book value, with land sales lifting its 3Q net income 29%. Shaker says it’s too early to tell whether overseas demand is lifting Thakher’s land prices, because the effect hasn’t shown up yet.

Most of the Danantara proceeds go back into Thakher’s own pipeline — more hotels, branded hotel apartments, and retail — with the rest funding the infrastructure still to be built in the destination and meeting annual targets under the company’s bank obligations. “It is self-financed by the company from the sales proceeds,” Shaker tells us.

Thakher holds no stake in what Danantara builds but owns the land around it, so it stands to gain if the new hotels and mall draw more visitors to the destination. Four large clusters remain for sale over the next three to four years, and Shaker is weighing how much to build directly against how much land to keep selling. He is also looking at more projects in Makkah and Madinah, though the focus stays on existing ones for now.