Umm Al Qura Development and Construction Company, the master developer of the “Masar Destination” in Makkah, announced a significant regulatory step: the termination of a land sale contract valued at approximately SAR 265 million. This decision, officially announced, resulted from the purchaser, “Tumooh Al Khaleej Financial,” breaching a fundamental obligation stipulated in the contract between the two parties, thus underscoring the developer’s commitment to the highest standards of contractual governance.
General context of the Destination Route project
The Masar Destination is one of the largest and most ambitious development projects in the Kingdom of Saudi Arabia, located in the heart of the Holy City of Mecca. The project aims to bring about a qualitative leap in the infrastructure and services provided to pilgrims and residents of Mecca alike. Spanning a vast area west of the Grand Mosque, the project seeks to provide an integrated system encompassing international hotels, residential units, commercial centers, and green spaces, in addition to developing the road and transportation network to facilitate crowd movement. The project is closely linked to the goals of Saudi Vision 2030 , particularly in the area of serving pilgrims, increasing the capacity for Hajj and Umrah pilgrims, and enriching their religious and cultural experience.
Details of the cancelled contract and its financial impact
According to the official statement issued by Umm Al Qura Company and published on the Saudi Stock Exchange (Tadawul) on January 29, 2024, the termination decision pertains to the sale of a plot of land measuring 2,703.50 square meters. The original contract was signed on June 30, 2023, for a total value of SAR 264,943,000 (excluding taxes and fees). Regarding the financial impact, the company transparently explained that the contract termination will result in an expected decrease in 2025 revenues of SAR 264.9 million and a decrease in net profit of SAR 119 million for the same period. However, the company reassured investors, emphasizing that will not have a material impact on the targeted levels of overall profitability, reflecting the strength of the project's financial position and the diversification of its investments.
Future importance and confidence in the project's attractiveness
This development has not cast a shadow on confidence in the future of “Masar Destination.” On the contrary, Umm Al Qura Development and Construction Company affirmed its complete confidence in the project’s appeal and the strong demand for the investment opportunities it offers. The company added in its statement that it anticipates being able to finalize an alternative deal for the same plot of land with another investor at a later date. This confidence reflects the strategic importance of the project, given its location in one of the holiest places on earth, and its attraction of significant interest from local and international investors eager to participate in the Kingdom’s development boom, making it a key driver of real estate investment in the region.
