The importance of these cities is underscored by the fact that Dammam is the third largest city in Saudi Arabia, and ARAMCO, the state owned oil company is based in Dhahran.

According to the 2010 census statistics, the populations of Dammam and Khobar grew by a CAGR of 3.3% and 4.0% respectively between 2004 and 2010. It is this growth in population, combined with the fact that average family size in Saudi Arabia is decreasing, that is the primary driver of demand for residential space in the three cities.

Colliers’ Research has revealed that in general, the quality of residential stock (recently added or under construction) in Dammam and Al Khobar is higher than those of other cities in the country, due to a higher standard of construction, improved finishing, and better periodic maintenance.

Historically the property market in Dammam has focussed more on the residential sector of the market whilst Al Khobar has been more oriented towards the office/commercial sector. In recent months however, there have been a number of new residential developments in Al Khobar. Notwithstanding these recent investments in Al Khobar, Dammam would seem to remain the favoured destination for residential investment, largely because land prices in Al Khobar are higher than those in Dammam.

An observable trend in new residential developments in Dammam and Al Khobar is the increased building heights – usually between 8 to 12 floors. This is indicative of the decreasing stock of developable land both in central Dammam and Al Khobar.

Dammam, Dhahran and Al Khobar are increasingly being seen as a major unified city that is connected by new residential and commercial developments; rather than three individual cities. With limited developable land available to the north and east of Dammam, substantial growth is taking place west and south of the city. Dammam Hills project by Jubail Development Company (Tameer Jubail) is a major project located in west Dammam. The project is expected to deliver approximately 700 single family dwellings (duplexes and villas) and is expected to be completed by 2015. Situated south of Dammam, Al Argan started construction on its Murjana Project in the Al Khaldiyah District, and is expected to deliver 400 single family dwellings by 2014. Dhahran is also expanding its residential developments near major thoroughfares such as the Prince Mohammad bin Fahd Road in new districts such as Al Qusoor. Unlike Dammam which is dominated by large developers, Dhahran is characterised by the presence of medium sized developers. Khobar is expanding mostly towards the south near Azizia Beach with medium sized developers delivering most of the stock. One of the high profile residential projects currently under construction is the Khobar Lakes Gated Residential Community, being developed by Emaar Middle East. The project expects to deliver 2,100 units across several phases. Phase 1 of the project is expected to be completed in the near future, which would deliver approximately 214 units.

Stark contrasts are observed between mid scale developers operating in Dammam and Khobar compared to those in Riyadh and Jeddah. Dammam and Khobar developers are more active with multiple ongoing projects and higher number of units per project. Moreover, many of them use professional sales and marketing tools, something that is absent in Riyadh and Jeddah.

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