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The bear case on Saudi retail property is no longer contrarian. Riyadh’s total retail supply is expanding by around 20 percent to an estimated 5.2 million square metres by 2026, according to Knight Frank, part of a construction wave S&P Global says could force landlords into rental discounts, revenue-sharing leases and other concessions to hold occupancy. The agency’s own conclusion is that retailers now prioritise foot traffic and tenant mix over sheer size. In plain terms: Riyadh is about to have more malls than tenants, and the commodity end of the market will pay for it.
The Anomaly in North Riyadh
Which makes one data point in north Riyadh genuinely strange. The Avenues Riyadh, the 1.8 million square metre development rising at the intersection of King Salman Road and King Fahad Road, has passed 70 percent leasing on roughly 400,000 square metres of leasable space before its doors open. Construction stands at 65 percent, according to Chief Operating Officer Waleed Al Fahad, with the mall slated to open between late 2026 and early 2027 and its five towers to follow roughly a year later. In a market bracing for concessions, tenants are queuing to commit to the largest single retail asset in it, sight unseen.
The developer is not Saudi. It is Kuwait’s Mabanee, operating through its Saudi subsidiary, and the scale of its commitment matches the thesis. The development carries a reported cost of SAR 17.2 billion, financed in part through total debt facilities of SAR 11.44 billion, around USD 3 billion, structured over more than 14 years after an upsizing of USD 1.6 billion secured in November. The five towers, contracted at SAR 1.13 billion for the second phase, will house offices, residences and three hotels, a Waldorf Astoria, a Conrad and a Canopy by Hilton, above a mall of nine districts, 19 cinema halls and parking for roughly 15,000 vehicles, rendered in the Salmani architectural language of modern Riyadh. That last detail is strategy, not decoration: Mabanee is not exporting a Kuwaiti box into Saudi Arabia, it is building a Saudi landmark with Kuwaiti capital and a Kuwaiti playbook.
Two Landlords, One Bet, Different Books
The sharpest way to test the thesis is against the incumbent. Cenomi Centers, Saudi Arabia’s largest mall owner with some 20 assets and 1.3 million square metres of leasable space, is running its own destination play: Westfield Jeddah opened in May and Westfield Riyadh, 220,000 square metres and 90 percent pre-leased, is due in September, beating The Avenues to the capital by a few months. It is a credible pipeline. But the cost of building it is visible in the accounts and the share price. Net debt climbed to SAR 12.7 billion by the end of 2025 from SAR 11.5 billion a year earlier, first-quarter profit fell 9 percent to SAR 203 million as finance costs jumped 33 percent, and the stock has shed roughly 8 percent this year to trade near SAR 17.
The Scoreboard the Market Is Paying For
The Kuwaiti entrant’s equity tells the opposite story. Mabanee shares trade on Boursa Kuwait at a market value of roughly KD 1.6 billion, around USD 5.2 billion, having recovered strongly from their 52-week low of 775 fils, and carry unanimous buy ratings, with the average 12-month analyst target of 1,132 fils sitting above current levels. The dividend profile explains the patience: a yield below 2 percent, but a long record of cash payouts supplemented by near-annual bonus shares, with the modest payout ratio a deliberate choice to recycle capital into the Saudi pipeline. Guidance gives that pipeline a calendar. Aventura Mall in Kuwait completes this quarter, Souk Sabah targets operations in the fourth quarter, the Riyadh mall opens around the turn of the year with its towers due in 2028, and The Avenues Khobar, a SAR 7.2 billion project now 38 percent complete, follows in early 2028. Even the stress test read well: first-quarter EBITDA came in marginally above last year and net profit held stable excluding a one-off land gain, through a regional war. Two landlords are making the same destination bet in the same city; the market is currently paying a premium for the one whose financing sits at project level, over fourteen years, rather than in this quarter’s income statement.
Demand Scaling Toward the Doors
The demand side, meanwhile, is scaling toward the opening rather than away from it. Saudi consumer spending reached SAR 1.41 trillion in 2024, up 7 percent year on year, per Knight Frank. The Kingdom recorded around 122 million tourist visits and USD 81 billion in tourism spending in 2025, Riyadh Season alone draws more than 15 million visits a year, and Expo 2030 will bring the world to the capital months after the towers complete.
Bigger Than One Asset
Step back and the story is larger than one asset. In Bahrain, the second phase of The Avenues was inaugurated under the patronage of the Crown Prince and Prime Minister, adding 40,000 square metres, while the original Avenues in Kuwait has anchored national retail since 2007 as the reference asset that made the model bankable and exportable. If the supply-glut warnings prove right, the coming shakeout will separate destinations from square metres across Riyadh. The pre-leasing, the lender tenor and the analyst consensus all point to the same conclusion: the market has already decided which side of that line carries a Kuwaiti signature.
