Economic & Financial Impact Report for Zan Waterfront in Jazan

The Zan Waterfront project in Jazan is a mixed-use waterfront destination development combining commercial, entertainment, and hospitality components. It includes shopping centers, restaurant and café zones, a 4-star hotel, a 5-star resort, a marina, and event and entertainment facilities.

The project's economic value does not stem from a single asset but from an integrated spending and operations ecosystem functioning as a complete destination. Therefore, this report measures impact through two complementary approaches: the on-site economy within Jazan, and the national impact through supply chains using the input-output model.

On-site Economy within Jazan

• On-site Economy (Base Case): SAR 872.9 million/year in on-site spending and sales.

Impact on the National Economy

• Direct Domestic Final Demand (after import leakage for goods): ~SAR 750.5 million/year
• Total Supported Domestic Output (Direct + Indirect Output): ~SAR 1.29 billion/year
• Total Supported Value Added (GDP/GVA): ~SAR 0.74 billion/year

Financial Impact on Government Entities

• VAT (Base Case): ~SAR 130.9 million/year (sensitivity range ~SAR 113.5 to ~SAR 156.2 million/year) at a rate of 15%
• Land Usufruct Revenue: SAR 6 million/year after grace period, with 5% increase every 5 years, approximate nominal total of ~SAR 331 million over 50 years (land rent only)

Estimating the economic and financial impact of the Zan Waterfront project in Jazan in two phases:

1. On-site Economy within Jazan: The volume of spending and commercial turnover within the project at stabilization.
2. Impact on the National Economy: Total output and value added (GDP/GVA) supported through supply chains using the Saudi input-output table.

All results are based on the project's program data and financial model (areas, rents, occupancy, and hotel and marina operating revenues), with documented standard assumptions for converting rent to tenant sales.

• The report is based on a stabilized operating year after project completion.
• It measures "on-site economy" as the volume of activity within the project (Turnover), which does not necessarily mean that all spending is a net addition to the city's economy, as part of it may be redirected from existing spending. The project's value appears when linked to attracting visitors, new spending, improving quality of offerings, and enhancing the city's competitiveness as a destination.
• The VAT estimate here is the total VAT on consumption within the site, while actual government collection may be affected by input tax deduction mechanisms for establishments.

1) Converting Rent to Tenant Sales (Tenant Turnover)

Since the economy is affected by sales and spending more than rent alone, rents were converted to tenant sales estimates using OCR.

First: Annual Rent at Stabilization for Each Leased Asset
Annual Rent = Leasable Area × Lease Rate × Stabilized Occupancy

Second: Estimating Tenant Sales Using Occupancy Cost Ratio (OCR)
Tenant Sales = Annual Rent ÷ OCR

OCR Assumptions Used:

• Malls and Retail: 12%
• Cafés and Restaurants: 10%
• Supermarket: 4%
• Events (Multi-purpose): 15%
• Sports Complex: 20%

2) Why Not Treat All Retail Sales as Retail Sector Output?

In national accounts and input-output tables, wholesale and retail trade output is treated as a distribution service and measured through Trade Margins rather than total goods sales value, because a large portion of the goods' value belongs to production and supply sectors.

Therefore, retail spending is decomposed into:

• Trade Margin: Trade Margin = Retail Sales × Margin Rate
• Cost of Goods (COGS): Goes to production sectors with import leakage considered within the input-output model

Margin Assumptions Used:

• Malls and General Retail: 30%
• Supermarket: 15%

3) Estimating Output and Value Added via the Input-Output Model

The Saudi input-output table was used to build the technical coefficients matrix, then the Leontief inverse logic was applied to arrive at:

• Total Supported Output
• Total Supported Value Added (GVA)

Total On-site Spending and Sales (Base Case): ~SAR 872.9 million/year
Includes hotels, marina, retail tenant sales, restaurants, and events.

Direct Economic Reading: This figure represents an economy occurring within Jazan at the level of sales, services, and operations, even with natural leakage of goods through supply chains.

After decomposing retail sales into trade margins and goods, deducting the import portion for goods, then applying input-output model multipliers:

Base Case:

• Direct Domestic Final Demand (after import leakage for goods): ~SAR 750.5 million/year
• Total Supported Domestic Output: ~SAR 1.29 billion/year
• Total Supported Value Added (GDP/GVA): ~SAR 0.74 billion/year

This section shows how results change if actual OCR ratios are better or more conservative than assumptions.

What does this mean practically? If sales are higher per riyal of rent (i.e., OCR is actually lower), the on-site economy rises and the national impact increases through supply chains.

Value Added Tax (VAT) on On-site Transactions

• VAT Rate: 15%
• Annual VAT (Base Case): 872.9 million × 15% ≈ SAR 130.9 million/year
• Sensitivity Range: ~SAR 113.5 to ~SAR 156.2 million/year

Land Usufruct Right

• Annual Rent: SAR 6 million/year after grace period
• Rent Increase: 5% every 5 years
• Approximate Nominal Total over 50 Years: ~SAR 331 million (land rent only)

• The on-site economy represents the volume of activity occurring within the city: sales, operations, services, maintenance, events, hospitality, and experiences.
• The national impact shows that a significant portion of spending extends its effect through supply chains within the Kingdom, with natural leakage of imported goods, which is expected in any input-output model.
• To maximize Local Capture within Jazan, it is recommended to link supply and operations with suppliers and entrepreneurs from the region, especially in food and beverages, marine services, events, and logistics.

At operational stabilization, the Zan Waterfront project is estimated to achieve:

• ~SAR 872.9 million/year in on-site spending and commercial turnover in Jazan.
• At the national economy level, it supports approximately ~SAR 1.29 billion/year in domestic output and ~SAR 0.74 billion/year in value added (GDP/GVA).
• It also generates financial impact through estimated VAT of ~SAR 130.9 million/year in addition to land usufruct rights per model terms.

1. Methodology and Quality Report for Supply and Use Tables and the Input-Output Table. General Authority for Statistics (GASTAT), Saudi Arabia. 29/04/2025. stats.gov.sa
2. Handbook on Supply and Use Tables and Input-Output Tables with Extensions and Applications. United Nations Statistics Division (UNSD). 2018. unstats.un.org
3. What Is Occupancy Cost in Commercial Real Estate? IPG (International Property Group). 02/09/2025. ipgsf.com
4. Optimize Average Restaurant Rent as a Percentage of Sales. Paytronix. 27/03/2025. paytronix.com
5. Occupancy Cost Ratio Calculator and Grocery Benchmarks. Inmall. Accessed: 22/02/2026. inmall.io
6. Retail Store Profitability Analysis: Measure and Improve Margins. Shopify. 19/02/2025. shopify.com
7. Annual Report 2023. BinDawood Holding. 2023. bindawoodholding.com
8. VAT Professional Services Guideline. Zakat, Tax and Customs Authority (ZATCA), Saudi Arabia. zatca.gov.sa
9. ZAN Project Program + ZAN Financial Model (Internal). ZAN. 2026. Internal.