A plot of land seized by Saudi Arabia's government from Saudi Telecom Co (STC) is probably worth multiple times its book value, property consultants estimate, potentially putting the company in line for a huge compensation.
Earlier this month, the telecom operator announced the government had seized a 1.05 million square metre plot in the Al Faisaliah district of Riyadh, stating the land's book value was SAR105.3m ($28.08m).
That equates to 101 riyals per square metre.
But land in Al Faisaliah is actually worth 1,300-1,700 riyals per square metre in the old part of the district and 1,800-2,700 riyals in the ring road industrial zone, JLL, formerly known as Jones Lang LaSalle, told Reuters.
These estimates suggest the land seized from STC is worth between SAR1.36-2.83bn.
"STC does not have the exact information as to when the government will finalise the land sale transaction and at which price," STC told Reuters on Monday.
STC, the former telecom monopoly which is 70 percent owned by the government and made a net profit of SR9.9 billion in 2013, has not said why the government seized the land. It did not disclose the precise location of the plot when asked by Reuters.
Parts of Al Faisaliah are in Riyadh's central business district, where land values range from 8,000 riyals to 20,000 riyals per square metre, said Jang Shabbir, associate director at property consultants Colliers International in Riyadh.
Land in the southern district of Riyadh, which is among the cheapest parts of the city, is worth 3,000 to 4,000 riyals per square metre, Shabbir said.
Such valuations could make STC's former plot worth somewhere between SAR3.1-20.9bn.
"Growing demand across all sectors combined with a generally limited supply has forced real estate prices to accelerate over the past few years," said Shabbir.