Global Investment House “Global” announced the launch of Al-Thouraia Project Management Company’s capital increase to KD180 million. Al-Thouraia shall be utilized as a Special Purpose Vehicle (SPV) to invest its whole capital in Mazaya Saudi for Commercial Investment Company “Mazaya Saudi”, which has been incorporated in the Kingdom of Saudi Arabia, and will be managed by Mazaya Holding Company “Mazaya”.
Mazaya Saudi will operate as a real estate development company in the Kingdom of Saudi Arabia in order to capitalize on the opportunities available in the Saudi Arabian real estate sector, which is known to be a vibrant, growing and a lucrative market. Mazaya Saudi will have a paid-up capital of SR2.5bn. Mazaya Saudi shall conduct its business in accordance with Islamic Shari’a.
Mr. Omar M. El-Quqa, Executive Vice President at Global stated that Global will manage the launch and private placement of the KD offering of Al-Thouraia to its investors. Al-Thouraia will invest its whole capital in the capital increase of Mazaya Saudi. Through this, investors will enjoy the fruits of the Company's real estate plans and also benefit from the increased liquidity in the market and the strong economic growth witnessed in the Kingdom, which Mazaya Saudi will capitalize on.
Eng. Khaled Esbaitah, Vice Chairman & CEO of Mazaya Holding stated, “Mazaya Saudi is gearing up to become a leading Saudi real estate company, and will use the funds raised through the capital increase to implement its aggressive expansion plans throughout the Kingdom, and to fuel its ambitious plans in becoming a leading real estate company in Saudi Arabia.”
Eng. Esbaitah affirmed that Mazaya Saudi is embarking on an ambitious strategy in entering the Saudi real estate arena, a new era in corporate growth by positioning itself as a leading regional real estate company by entering new and lucrative markets. Mazaya Saudi will be managed by Mazaya Holding Company as part of its overall corporate strategy. Mazaya Holding shall implement its corporate strategy upon the Company. Mazaya Saudi will provide comprehensive real estate services for all types of projects, and manage the projects from architectural design to execution. The Company will also conduct the following activities, as permitted by Saudi law:
• Real Estate Development
• Marketing Management & Consultancy
• Project Management & Consultancy
• Strategic Partnerships
• Real Estate Brokerage, Property Valuation & Market Research
Eng. Esbaitah continued by stating that Mazaya Holding shall assume all duties and responsibilities of managing Mazaya Saudi, for an initial term of 3 years. The strong management team that Mazaya Holding will bring will steer the company, as Mazaya has a proven track record in entering new and competitive markets.
Mazaya Saudi will be positioned to leverage on Mazaya Holding’s competitive market edge. The Company will gain from Mazaya Holding’s breadth of practice, which has materialized through the projects Mazaya Holding has on hand.
The core objective of Mazaya Saudi will be to invest in the Saudi real estate sector and be engaged in the development of real estate assets, the Company is targeting projects with a minimum IRR of 15%. The Company’s initial venture would be to develop three plots of land in Riyadh, and will seek further opportunities in the Kingdom. The Internal Rate of Return based on a 5-year holding period is expected to be in excess of 20%.
Mazaya Saudi will be engaged in all facets of real estate development, catering to the residential, commercial and office markets, which are in high demand in the Kingdom. Projects under Mazaya Saudi will be designed in accordance with the latest construction and design standards.
The Company plans to begin developing the three projects during the first year of operations. The three initial projects will be located in Riyadh and will include commercial and residential developments totaling over 150,000sqm of built-up area.
Mazaya Saudi will continue to identify attractive properties to development in the Kingdom of Saudi Arabia. The Company will either acquire these properties with its own capital or will enter into joint-ventures with land owners to develop their properties.
Mr. El-Quqa added that Mazaya Saudi’s strategic partners will add great value to Mazaya Saudi, lending expertise to the relevant needs of the company, financial backing, and industry insight. The partners include Al Mazaya Holding Company, Abdullatif Alissa Group Holding Company, Abdulaziz Alajlan Sons for Commercial and Real Estate Investment Company, Global Investment House and other strategic investors.
Mr. El-Quqa had highlighted that the real estate sector in the Kingdom of Saudi Arabia plays a key role in the Kingdom’s economy and is increasingly gaining significance. The key drivers for the real estate sector in Saudi Arabia include:
• Increasing oil wealth, rising GDP and per capita income. Furthermore, the expected growth in the Saudi economy will increase the demand for residential and commercial properties for citizens and foreigners, driving appreciation rates of real estate assets in the Kingdom
• Noticeable demand-supply gap in the housing sector in Saudi Arabia, which will drive demand
• Favorable demographic profile with a young population will further drive development in the Saudi real estate sector, affecting all segments of the sector in the Kingdom
• More than half the national population of Saudi is under the age of 30. A high annual population growth rate of approximately 2.5% is also driving demand for real estate
• The new mortgage law is also a demand driver, making it more affordable to purchase property
• Entry to the WTO has led to relaxed regulations
• The new property ownership laws have made it easy for non-Saudi investors to own property, attracting foreigner investors, thus increasing demand and value
• Buoyant GCC economies in general along with the strong regional real estate sector performance
Demand for real estate in the Kingdom is led by the residential sector. It is estimated that the Kingdom requires at least one million new homes within the next five years. The positive business environment in Saudi Arabia as well as the Economic Cities program has also resulted in many opportunities for the commercial segment.
Furthermore, the real estate sector in the Kingdom of Saudi Arabia plays a key role in the Kingdom’s economy and is increasingly gaining significance. The growth of the sector can be attributed to the healthy state of the Kingdom’s economy. Appreciation in oil prices over recent years has positively affected various aspects of the Kingdom’s economy, resulting in strong liquidity and budget surpluses.
Additionally, reform initiatives underway are favorably impacting the real estate sector in Saudi Arabia. For instance, the laws pertaining to ownership are attracting foreign investors and developers alike.
El-Quqa continued, “The country remains a leading producer of oil and natural gas and holds approximately 22% of the world’s proven oil reserves and 16% of GCC gas reserves. The government continues to pursue economic reform and diversification, in addition to promoting foreign investment in the Kingdom, particularly since Saudi Arabia’s accession to the WTO in December 2005.”
