Saudi Arabia's SAL to Develop US$1.1 Billion Logistics Zone Near Riyadh

SAL Saudi Logistics Services Company has announced plans to develop a major logistics zone in the vicinity of Riyadh, with a total investment of approximately US$1.14 billion.

Under the agreement, SAL has secured a 30-year lease (extendable by another 15 years) for 1.57 million square metres of land in Falcon City, a newly developing area north of Riyadh.

The logistics zone is intended to bolster SAL’s strategic ambitions to expand its footprint domestically and diversify its revenue base beyond conventional freight operations.

While SAL and its partners have not yet disclosed a detailed timeline for construction or phasing, the project is expected to include state-of-the-art warehousing, distribution hubs, and integrated logistics infrastructure to support rising demand in Saudi Arabia’s supply chain sector.

In March of this year, SAL signed a preliminary agreement with Sela Company to lease the site, laying the groundwork for this more formal commitment.

The development is aligned with Saudi Arabia’s broader national strategy to strengthen domestic logistics capabilities and reduce reliance on external supply chain nodes.

Significance and Market Context

The project comes amid surging demand for “Grade A” warehousing and modern logistics facilities across the Middle East, driven by growth in e-commerce, industrial diversification, and the Kingdom’s push to localize supply chains.

Analysts view SAL’s move as timely, given increasing pressure on logistics capacity and the government’s Vision 2030 agenda that emphasizes transport, trade, and infrastructure as pillars of economic transformation.

The size and scale of the investment mark SAL’s most ambitious development to date. For SAL, this project could serve not only as a logistics backbone for its operations but as a potential revenue stream via third-party leasing and value-added services such as fulfillment, cold storage, and cross-docking.

Challenges and Next Steps

Execution of a project of this magnitude faces multiple challenges. SAL must manage construction risk, timeline uncertainty, infrastructure connections (roads, power, utilities), and tenant acquisition to ensure utilization.

Securing appropriate regulatory approvals, environmental permits, and integration with transport networks (road, rail) will be crucial. In addition, the company must navigate competitive pressures from regional and global players eyeing logistics real estate in the Gulf.

While SAL has not yet committed to a hard completion date, close monitoring by investors and stakeholders is expected. The project’s success could position SAL as a major logistics real estate player in Saudi Arabia and serve as a successful paradigm for large-scale, integrated supply chain infrastructure in the region.