ASAS MAKEEN SIGNS 315 MILLION SAR CONSTRUCTION CONTRACT WITH ITTIHAD ALTHABAT FOR RIYADH RESIDENTIAL AND COMMERCIAL PROJECTS

Riyadh, Saudi Arabia — Asas Makeen Real Estate Development and Investment Co. signed a construction contract with Ittihad Althabat Company for Contracting on September 17, 2026, valued at a total estimated 315 million SAR. The deal covers contracting, construction, and finishing works across a portfolio of residential and commercial projects in Riyadh, spanning approximately 65,000 square meters.

The contract operates on a cost-plus-fee basis. Ittihad Althabat will deliver each project on a turnkey basis, meaning it carries full responsibility from construction through to completion. The final cost will be confirmed project by project, aligned with approved budgets and scopes of work under the contract’s terms.

Deal Details

Each project under the contract carries an 18-month execution window. That clock starts when the Ministry of Municipalities and Housing approves the relevant plans. The budget, scope, technical specifications, and schedule for each individual project will be set and approved separately before work begins.

The cost-plus-fee structure means Asas Makeen reimburses Ittihad Althabat for actual project costs, then pays an agreed fee on top. The 315 million SAR figure includes the contractor’s fees and expenses but excludes value-added tax. No related parties are involved in this transaction.

Why It Matters

• The 315 million SAR contract is one of the larger single construction commitments disclosed by a listed Saudi real estate developer this year.
• A 65,000-square-meter footprint across multiple Riyadh projects signals meaningful pipeline scale for Asas Makeen.
• The cost-plus-fee structure limits contractor risk but places the burden of cost discipline squarely on Asas Makeen’s project management.
• Financial impact will flow gradually through Asas Makeen’s income statement as work progresses, tied to monthly payment certificates — not as a lump-sum recognition.

What This Means for Investors

• Earnings timing is tied to construction progress. Investors should track monthly payment certificate milestones rather than expecting immediate revenue recognition.
• The cost-plus model means actual project costs could exceed the 315 million SAR estimate if scope expands or materials prices rise — the final figure is not fixed.
• Ministry of Municipalities and Housing plan approvals gate each project’s start date, introducing regulatory timing risk outside Asas Makeen’s direct control.
• No related parties are involved, removing a common governance concern that often accompanies large developer construction contracts in the Kingdom.

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THE SAUDI STANDARD’S VIEW: ASAS MAKEEN’S 315M SAR RIYADH BET SIGNALS DEVELOPER CONVICTION IN THE CAPITAL’S GROWTH STORY

Asas Makeen’s commitment of 315 million SAR to a multi-project Riyadh construction program is a meaningful signal of developer confidence in the Kingdom’s most active real estate market. For investors, however, the structure of this deal demands as much attention as its headline figure — because how the money flows is as important as how much is being spent.

• COST-PLUS ARCHITECTURE SHIFTS RISK TO MANAGEMENT DISCIPLINE

The cost-plus-fee framework protects the contractor’s margin but transfers cost exposure directly to Asas Makeen’s project management capability. Any scope creep, materials price inflation, or design changes will translate into higher actual costs against the 315 million SAR benchmark, making internal controls and budget governance critical variables for investors to monitor. The company’s ability to manage this structure efficiently will be a direct test of its operational maturity.

• REGULATORY GATING INTRODUCES TIMING UNCERTAINTY

Each project’s 18-month execution window only begins upon Ministry of Municipalities and Housing plan approval, meaning the pipeline’s delivery timeline is partially outside Asas Makeen’s control. Staggered approvals could smooth capital deployment and cash flow demands, but they equally risk delaying revenue recognition if approvals cluster or face administrative lag. Investors should treat the 315 million SAR as a committed ceiling across a rolling, approval-dependent schedule rather than an immediate deployment.

• GRADUAL REVENUE RECOGNITION REWARDS PATIENT CAPITAL

Financial contribution from this contract will accumulate incrementally through construction progress milestones rather than being recognized at signing, which is consistent with IFRS treatment of long-term construction contracts. This earnings profile suits investors with a medium-term horizon who can track execution quality quarter by quarter. Short-term traders should note that the contract’s announcement alone carries limited immediate income statement impact.

• GOVERNANCE CLEANLINESS STRENGTHENS INSTITUTIONAL APPEAL

The absence of related-party involvement in a contract of this size is a notable governance positive for a listed Saudi developer, removing a friction point that institutional investors routinely scrutinize in emerging market real estate transactions. A clean arm’s-length structure between Asas Makeen and Ittihad Althabat also reduces the risk of conflict-of-interest disclosures disrupting investor confidence mid-execution. In the current environment of heightened Tadawul disclosure standards, this transparency is commercially valuable.

This contract sits squarely within the Vision 2030 imperative to expand Riyadh’s residential and commercial capacity as the capital absorbs population growth, corporate relocation, and rising domestic demand. Asas Makeen’s strategic decision to lock in a turnkey contractor across a 65,000-square-meter portfolio reflects the broader shift toward institutionalized, scalable development that the Kingdom’s economic transformation requires. Execution will determine whether this commitment becomes a case study in disciplined growth or a lesson in cost management — and the market will be watching every payment certificate along the way.