Al Mazaya launches SR2.5bn Mazaya KSA

Through the new company, Al Mazaya plans to capture a sizeable share of the KSA's booming property market and reinforce its regional standing.

KSA's oil-fueled real estate boom has received a further boost through the legislative infrastructure reform, which created an investor-friendly climate to lure foreign direct investment to the region's largest real estate market.

Other contributory factors, such as the increasing demand for residential units, the growing population, the rising income per capita and the phenomenal growth in religious tourism, have collectively led to additional foreign capital being injected into the Kingdom's vibrant real estate market.

Speaking of KSA's real estate market, Eng. Khalid Esbaitah, Al Mazaya's Managing Director and CEO, said, 'The Kingdom's real estate market will boost its position following the launch of the GCC Common Market, and will attract GCC 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 modernization 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,' added Eng. Esbaitah.

He also pointed to recent statistics, which show that up to 60% of the total population is in need of around 1.2 million residential units over the coming period, with this number likely to increase to around 2.9 million over the next twenty years.

With regard to Al Mazaya KSA, Eng. Esbaitah affirmed that the company has the capability to undergo rapid growth to become one of the leading real estate developers in the Kingdom, as the mother company, Al Mazaya Holding, has already established itself as a company synonymous with reliability, trust and shareholder's confidence, and a PJS company of choice for investors.

He clarified that the company will raise capital to fund its ambitious expansion plans across the KSA real estate market.

He added that Al Mazaya Holding will manage its KSA company for a period of three years to replicate their past success in making strong debuts in Dubai and Qatar, and utilizing the management team's superior experience in entering new and highly competitive markets.

'The company's primary objective is to invest in the KSA real estate sector, and to contribute to developing real estate assets and target projects with an ROI of not less than 15%,' Eng. Esbaitah added.

Speaking about the new company's projects, Eng. Esbaitah said, 'Al Mazaya KSA intends to develop three projects in Riyadh with a value of 4 billion SR during the first year of operation. These projects will include the development of commercial and residential plots of land owned by the KSA-based companies Essa and Ajlan, and will cover a building area of 150 thousand square metres. These projects are expected to generate 20% returns during the five year ownership period.'

'The company expects to develop a further 750 thousand square metres at about SR4bn. Al Mazaya KSA will take part in all real estate activities, including in the residential, office and commercial sectors, all of which are seeing a period of increasing demand in the kingdom,' he clarified.

The latest development in the KSA housing crisis featured government intervention to address the problem in cooperation with the private sector.

The new approach aims to provide affordable housing units for all social segments and to bridge the widening gap, as demand for housing is far outstripping supply.

KSA currently needs 200,000 residential units at a total cost of SR100bn ($26.6bn), as per the 8th development plan.

The average annual supply of residential units for the period 2005 to 2010 has been estimated at 95,300 units, with the total supply for the same period being 571,780 units.

During the same period, the average annual demand for units was calculated at 80,100, with the total demand set at approximately 1.08 million residential units.