Feasibility Study for an Integrated Mixed-Use Coastal Resort Development in Saudi Arabia's Tourism Sector

A Saudi investment company evaluating the development of an integrated mixed-use coastal resort comprising hospitality, residential, retail, and leisure components, positioned to capture domestic and international tourism demand generated by Vision 2030's tourism and quality-of-life agenda. With a prospective capital investment exceeding SAR 3.5 billion, the company engaged Saudi Strategy Advisory to conduct a comprehensive feasibility study before committing to development.

• Unproven Demand & Concept Fit: The company lacked an independent, evidence-based assessment of demand for the proposed resort across tourism, residential, and leisure components, and could not confirm whether the concept and scale were matched to realistic market demand.
• Uncertain Financial Viability: The development required a very large, long-duration capital commitment with returns spread over many years. The company needed a rigorous financial assessment to determine whether the project met its investment-return thresholds under realistic assumptions.
• Optimal Development Mix & Phasing: The balance between hospitality, residential, retail, and leisure components, and the phasing of their delivery, would materially affect risk and returns. The company required analysis to optimise the development mix and sequencing.
• Site, Infrastructure & Regulatory Constraints: The coastal site carried infrastructure, environmental, and regulatory considerations that could affect cost, timeline, and feasibility, and which needed to be assessed before commitment.
• Funding & Delivery Structure: The company needed to understand the funding requirement, potential financing and partnership structures, and the delivery model best suited to a development of this scale and complexity.

Saudi Strategy Advisory was engaged to deliver a comprehensive Feasibility Study — providing the company with independent market and demand analysis, an optimised development concept and phasing plan, a full financial feasibility assessment, and funding and delivery recommendations to support a confident go or no-go investment decision.

• Market & Demand Assessment: Analysed domestic and international tourism demand, residential and retail market conditions, and competitor supply to quantify realistic demand across each component and to test the fit of the proposed concept and scale to the market opportunity.
• Development Concept & Mix Optimisation: Evaluated alternative development mixes and densities for the hospitality, residential, retail, and leisure components, optimising the concept to maximise risk-adjusted returns and align with assessed demand.
• Technical, Site & Regulatory Review: Assessed site conditions, infrastructure requirements, environmental and regulatory considerations, and indicative construction costs and timelines, identifying the constraints and cost drivers material to feasibility.
• Financial Feasibility Modelling: Built a detailed financial model projecting capital costs, revenues, operating performance, and returns across the development lifecycle, and tested viability through sensitivity and scenario analysis on the key value drivers.
• Funding & Delivery Structuring: Assessed the funding requirement and evaluated financing, partnership, and delivery structures, recommending the approach best suited to the development's scale, risk profile, and the company's objectives.

• Phased, Demand-Led Development: Recommended a phased development led by the hospitality and leisure components that anchored the destination's identity and demand, with residential and retail phases released as visitor demand and market evidence justified, reducing exposure to a single large upfront bet.
• Optimised Component Mix: Recommended an adjusted development mix that increased the weighting of the highest-return components identified in the analysis and right-sized those where the demand assessment indicated oversupply risk, improving overall project returns.
• Early Infrastructure & Permitting: Recommended resolving the critical infrastructure and regulatory constraints before committing to construction, sequencing enabling works and permitting to protect the development timeline and cost envelope.
• Partnership-Based Funding: Recommended a funding structure combining the company's equity with hospitality-operator partnerships and phased external financing, reducing the company's upfront capital exposure and bringing in operating expertise for the hospitality assets.

• Informed Investment Decision: The feasibility study gave the company's board a rigorous, evidence-based basis for its investment decision, replacing an optimistic concept with a demand-validated, financially tested development plan.
• Improved Project Returns: Optimising the development mix and phasing was projected to improve the project's internal rate of return by approximately 2.4 percentage points relative to the original concept, while reducing downside risk.
• Reduced Capital-at-Risk: Phased, demand-led development reduced the capital committed before market demand was proven, materially lowering the company's exposure to demand and execution risk in the early stages.
• De-Risked Delivery: Early identification of infrastructure and regulatory constraints allowed them to be addressed before commitment, avoiding cost and timeline shocks that would otherwise have emerged during construction.
• Bankable Funding Structure: The recommended partnership-based funding structure improved the project's bankability and brought in experienced hospitality operators, strengthening both the financing case and the operational prospects of the development.