Construction

Mecca property developer shares could jump after IPO

March 23, 2025, 2:26 PM

Umm Al Qura’s multi-billion Masar project in Mecca is one of the largest redevelopments in the region and is likely to attract a lot of investors when shares start trading

IPO raised $523m
241 times oversubscribed
Masar project appeal

Shares in Saudi Arabia’s Umm Al Qura, which will start trading on the main stock exchange on Monday following an initial public offering, should attract “a lot of interest” from investors looking to capitalise on the real estate market in one of Islam’s holiest cities, analysts have said.

The company, which is overseeing a mixed-use development in Mecca, raised $523 million, in the biggest IPO so far this year, for 9 percent of its shares. The institutional offering was 241 times oversubscribed.

“It’s one of the more unique real estate offerings in Saudi Arabia,” said Muhammad Fuwad Khan, equity research analyst at Riyadh-based Alinma Capital.

“The exposure is towards the holy cities, and the Umrah and the Hajj, which definitely ties in well with the government’s 2030 vision.”

Mecca and Medina in Saudi Arabia’s western province are home to Islam’s two holiest sites, which pilgrims from among the world’s 2 billion Muslims visit for the annual Hajj, or the months outside of it, known as the Umrah.

Saudi Arabia wants to increase the number of pilgrims visiting by 50 percent over the next five years from 18.5 million last year to 30 million by 2030.

Umm Al Qura’s SAR100 billion ($27 billion) Masar project in Mecca is one of the largest redevelopments in the region, stretching more than 3.5km along the city’s western border.

It entails developing 18,000 serviced apartments, 23,000 hotel keys and 9,000 residential units.

Indarpreet Singh, an equity research analyst at asset manager Sico, predicted “quite a lot of interest” in Umm Al Qura’s IPO and listing.

“The valuations are pretty fair and they leave something on the table for investors,” he said.

“Recent IPOs have had a good listing so we’ll probably expect the same from this one.”

Umm Al Qura will be the third Saudi company to complete an IPO and list on the main market this year. It will follow online brokerage Derayah Financial and poultry producer Entaj, which raised a combined $512 million.

Both companies’ share price soared on the first day of trading by the maximum 30 percent allowed.

Umm Al Qura will be the fifth listed real estate company focused on Mecca and Medina. The others are Taiba Investments Company, Makkah Construction and Development Company, Knowledge Economic City, and Jabal Omar Development Company.

In January the CMA ruled that international investors could buy shares in companies with property developments in the two holy cities, prompting a jump in shares in those four companies.