Al Mazaya launches firm in Saudi

Kuwait-based Al Mazaya Holding yesterday launched Al Mazaya KSA, a Shariah-compliant real estate development company with a paid up capital of SAR2.5 billion (Dh2.44bn), with plans to develop three projects worth SAR4bn in Riyadh.

Al Mazaya's Managing Director and Chief Executive, Khalid Esbaitah said: "The Kingdom's real estate market will boost its position following the launch of the GCC Common Market, and will attract Gulf Co-operation Council investors, particularly to Mecca, Dammam and Jeddah. The Saudi Arabian Government has spent a substantial amount on infrastructure projects and has raised the value of investment in the low- and middle-income groups' projects to meet the shortage of affordable residential units, especially in the major cities."

"The modernisation of the legislative system in the Kingdom, particularly since the launch of economic cities, and the offering of additional facilities, exceptional privileges and unprecedented incentives for investors, has raised the investment bar in KSA to a new high," he said.

According to Esbaitah, the company will raise capital to fund its ambitious expansion plans across the Saudi real estate market. "The company's primary objective is to invest in the Saudi real estate sector, and to contribute to developing real estate assets and target projects with an return on investment of not less than 15 per cent."

Speaking about the new company's projects, Esbaitah said: "Al Mazaya KSA intends to develop three projects in Riyadh with a value of SAR4 billion during the first year of operation. These projects will include the development of commercial and residential plots of land owned by the Saudi-based companies Essa and Ajlan, and will cover a building area of 150,000 square metres. These projects are expected to generate 20 per cent returns during the five-year ownership period."

"The company expects to develop a further 750,000 sqm at about SAR4bn. Al Mazaya KSA will take part in all real estate activities, including in residential, office and commercial sectors, all of which are seeing a period of increasing demand in the kingdom," he said.

Esbaitah, stating recent statistics, said up to 60 per cent of the population is in need of about 1.2 million residential units over the next few years, with the number likely to rise to about 2.9m in 20 years.

More than $18bn will be invested in Saudi Arabia's real estate sector, as demand for residential units will cross 1.3 million units in the next seven years, NCB Capital said recently in a report titled "Kingdom under construction".

"The top four provinces of Mecca, Riyadh, Madinah and Eastern Province by themselves would require a housing investment of more than $160bn by 2015," according to the report.

The Saudi economy is one of the fastest-growing economies in the world, with a growth in real GDP of 8.1 per cent for the period 2003-06. The International Monetary Fund forecasts indicate that the Kingdom's GDP is projected to grow at a compound annual growth rate (CAGR) of 7.1 per cent for the period 2007-10.

The construction sector, in specific, has grown at six per cent CAGR for 2004-06. Construction as a percentage of GDP has moved up from 6.7 per cent to 7.6 per cent during the same period.