The Dubai-based Al-Futtaim group has signed a memorandum of understanding (MoU) with Riyadh-based Kayannat Real Estate to develop a new $1.6bn shopping mall.
The Al Diriyah Festival City is planned to be located 5km from King Saud University and 10km from King Abdullah Financial District in west Riyadh. The mall will have a gross leasable area of 250,000m².
As part of the MoU, Al-Futtaim will provide investment and development management services to construct, develop, lease and operate the mall.
In addition to retail space, the development will also include a 500-room hotel and serviced apartments.
Al-Futtaim group vice-chairman Omar Al-Futtaim said the scheme has obtained all necessary building permits and is ready to start construction in the coming weeks.
"With a population of 30 million, Saudi Arabia is the GCC's biggest market with a booming retail sector expected to reach a value of SAR276bn ($73.5bn) by the end of 2014, that accounts for 17% of Saudi Arabia's GDP," Al-Futtaim said.
"We are privileged to be able to enter into a partnership with a group of prestigious businessmen who include the franchisee of IKEA in the kingdom, Dr Ghassan Ahmed Abdullah Al Sulaiman, in order to tap into this lucrative market and further contribute to the kingdom's economic development."
Construction of the mall is expected to begin soon and is scheduled for completion in 12 months time.
In addition to the mall, Al-Futtaim currently operates the 2005-opened Dubai Festival City mall, and the 2013-inaugrated Cairo Festival City mall.
The company has other projects under construction, including the Doha Festival City mall, which recently finished the phase one construction. It is also co-developing a shopping mall in Casablanca with a gross leasable area of 120,000m².
Image: Officials at the MoU signing ceremony of the new Al Diriyah Festival City shopping mall. Photo: courtesy of Al-Futtaim Group.