After the price of oil fell last year, Saudi Arabia saw a surge in hospitality developments, according to experts at the Gulf and Indian Ocean Hotel Investors’ summit.
At one roundtable discussion, an "industry stakeholder" said that the Kingdom has seen more domestic development rather than international, particularly in Jeddah, Riyadh and the holy cities of Makkah (or Mecca) and Medinah.
Hyatt Hotels VP acquisitions and development Peter Penev said that ever since the oil crisis began, developers "have started looking ‘inward’ and investment opportunities within have hence been on the up." Real estate experts also said that the "plummeting" costs of construction in Saudi Arabia has made development increasingly lucrative.
“Apart from construction costs, the government recently introduced a fee on vacant land,” said Riyada International Hotels and Resorts founder and managing director Mohammad Al Amir. “In the past there were no penalties for just having a piece of land in the middle of the city. [People would] leave it vacant, let it appreciate and then sell it off. But a decision was made late last year to impose fees if you simply hold on to it, and do not develop any anything there.”
Al Amir told the delegates that the amount to be paid in penalties is 2.5 percent of the land’s evaluation.