Gulf Capital, an alternative investment firm based in Abu Dhabi, is venturing into property development in Saudi Arabia with a 1 billion Saudi riyals residential project in Riyadh.
Gulf Capital plans major development in Riyadh
Gulf Capital, an alternative investment firm based in Abu Dhabi, is venturing into property development in Saudi Arabia with a 1 billion Saudi riyals (Dh979.4 million) residential project in Riyadh.
The first phase of the development includes a residential compound for expatriates with 450 to 500 villas, townhouses, and apartments, which will be rented out. The project is being developed by Gulf Related, a joint venture between Gulf Capital and Related Companies, a property developer based in the United States.
"We've identified Saudi Arabia as being an important market for us," said Emile Habib, the managing director of Gulf Related.
"A lot of foreign companies have moved into Saudi Arabia," he added. "According to our studies, we've seen in the last three years the expat population growing by 20 per cent ... and we see that continuing as the government spends more."
There is a shortage in housing for expats and nationals in Saudi Arabia, he said.
Gulf Related is finalising the masterplan for the development. Construction is expected to start at the end of the year, with the project planned to be completed by the first quarter of 2015.
Gulf Related has already bought the land but still needs to secure permits for the construction of the development. It plans to raise 450m riyals for the first phase through a Saudi bank, which it declined to name. Some 200m riyals is being injected from its own equity.
The second phase is likely to be a mixed-use extension of the compound, Mr Habib said.
"Expatriate residents and employers will soon be spoilt for choice in Riyadh after a decade of almost no development," said John Harris, the head of Jones Lang LaSalle Saudi Arabia.
"We expect to see a 50 per cent increase in the stock of compound units over the next three years," he added. "Expatriate employment growth remains strong, however, especially from the construction, defence and healthcare sectors."
Mr Harris added that, as residents take advantage of the new properties available, he expected to see some challenges for owners of the older compounds in attracting tenants.
Gulf Related was established three years ago, as Related Companies looked for opportunities outside the US where the property market was being hit hard by the global economic crisis, and Gulf Capital was looking for a partner to expand into property development.
"We are continuously studying projects in Abu Dhabi, Dubai, in Saudi Arabia, in Egypt, in Qatar," said Mr Habib.
"[But] with what's happening in the market, we are taking cautious steps in places like Egypt."
Gulf Related is also developing the retail and dining venue The Galleria at Sowwah Square in a joint venture with Mubadala Real Estate & Hospitality, a unit of Mubadala Development, a strategic investment company owned by the Abu Dhabi Government.
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