Gulf Investment House and The Ahmed Ramadhan Juma group of companies announced on Tuesday, December 6, 2005 with the contribution of Gulf investors the offering of AED500 million (US$136 million) worth of private subscription for the Madai'n Real Estate Company in the UAE.
In a press statement, Waleed A. Al-Rowaih, Vice Chairman and Managing Director of Gulf Investment House, said: "The newly established company (Mada'in) will work in various fields including investment, trading, development and real estate management in addition to real estate auctions and consultative services".
“The establishment of Mada'in comes as part of Gulf Investment House geographical expansion strategy and the desire to create a series of companies with common goals in cooperation with strategic partners from the Gulf region, including the AED 1 Billion investment from the Ahmed Ramadhan Juma group of companies,” Al-Rowaih stressed.
He also pointed out that: "The share of GIH and its clients from Kuwait and other GCC countries will be 49%, while the strategic partners and their clients from the UAE will have 51% of the Privately Subscribed Capital".
He went on to say, “That GIH had prepared an extensive feasibility study for the establishment of a real estate company in Dubai, which yielded very encouraging and positive results.
“The sister companies under the umbrella of GIH constituted a large base of experienced real estate developers, that is in addition to owning many properties in the region. GIH owns many different companies of varying size and activity, such as the Arkan Real Estate Company (Kuwait), Amar Financial Company & Igara Co., which specializes in real estate financing, Gulf Construction Company, which is a Bahraini real estate joint-stock company, and Gulf Real Estate, which is considered the first Gulf-Saudi real estate company,” Al-Rowaih added.
He also mentioned that investing in companies from different countries worked to reduce the overall risk, and that the company will start its operations in the most effective markets such as Abu Dhabi & Dubai, and will then move on to other Emirates and GCC countries.
The 42% increase in population between 1998 and 2003 from 2.8 to 4 million is amongst the most encouraging factors, and as a result of this increase the real estate sector has witnessed and will continue to witness a tremendous surge in demand.
“As a result of the diversification, we are witnessing major development into other sectors such as Tourism, Construction and industry. This period is categorized by the development of projects of mammoth proportions, high-rise residential and office towers, industrial zones, and huge commercial complexes,” Al-Rowaih continued.
From his side, Ahmed Ramadhan Juma, Chief of the Founding committee of Mada'in, said that: “With the support of Gulf investors who have strongly contributed to the strengthening of the various products, the company will be distinguished in its various fields and will be introduce its products to the market place in the most innovative way. Mada'in will very much benefit from the support and the experience of GIH in the establishment of new companies, as well as the experience of the two founding companies who have a vast experience in the real estate industry.”
"The company will concentrate most of its activities to real estate, so the products will be distinct by introducing specialized and various investments in the real estate sector in UAE that will realize excellent returns to investors" he added.
Juma pointed out that the feasibility study showed that the target internal rate of return (IRR) on the Capital is %16.1 after deducting financial cost. The Internal Rate based on economic assumptions prepared by specialized consultant, and that Mada'in will cooperate with companies established by GIH in Kuwait, Saudi Arabia and the Kingdom of Bahrain to provide more beneficial opportunities to their clients utilizing from the various experiences and information of the network of these companies.
“The company selected the UAE as headquarter for its operations due to the strength of and promising opportunities presented by the Emirates real estate sector, in addition to the encouraging and flexible regulations for the foreign investment,” Juma added.
The activities of the company will include, the preparation of different real estate studies and consultations for the benefit of individuals, governmental or private institutions or others, in addition to utilization of properties, management for the account of the company or other third parties in UAE or abroad.
The company will work in all real estate activities including the purchase, sale, possession, division & the development of land & properties. It will also be involved in the construction and development of real estate i.e., residential, commercial, and Industrial or tourism developments, executed directly by the company or through third party partners.
“The company will also Utilize of financial excess of the company by investing it in other companies, real estates portfolios, or funds managed by specialized experts whether in UAE or abroad. We will also buy and sell securities of other companies working in the same domain," he added.
The commitment of the company to the Islamic Shariah principles will increase its competitive power particularly after the excellent acceptance of financial Islamic products in UAE, taking into consideration the lack of Islamic products in the real estate sector.
Juma concluded that: "The growth rates of population which reach 7.5% annually in Dubai create further new demands for real estate products, and that Mada'in will benefit from the biggest projects executed by other companies, either by sharing or by offering integrated services and projects.
© 2005 Al Bawaba (www.albawaba.com)
