Saudi property developer Jenan Properties said on Saturday it would spend 5 billion riyals ($1.33 billion) on two projects which would be ready by the time the domestic property market recovers from a slowdown. Jenan, which was founded a year ago by several Gulf Arab shareholders that include Kuwait Finance House and Aayan Leasing and Investment Co, expects to sell its first units by 2013, Chief Executive Bassam Boodai said.
"We are in the downside of the real estate market and it is always a good opportunity for developers to start at the down time because by the time the market recovers your products are ready to be sold," Boodai told Reuters in an interview.
"Those who have started two years ago are now in trouble," he said. The Saudi property market has not been as badly stung by the global economic crisis as in other countries, mainly due to the non-existence of large scale mortgage financing and also because of a structural housing deficit.
The company has just signed a design agreement with a Canadian firm for a mixed-use complex with three towers in the eastern city of Khobar which will cost 1 billion riyals. The company hopes the 500 apartments will appeal to mid-income young Saudis and expatriates. "There is shortage in Saudi Arabia, mainly in residential," Boodai said. US consultancy Clayton Holdings Inc estimates the world's top oil exporter has a housing deficit of 2 million residential units, a figure rising by 200,000 a year.
Jenan expects to wrap up the investment plan for the second project by the end of the year: It consists of seaside resort covering an area of 2.8 square kilometres on the Gulf coast. "It is going to be developed gradually, over different phases ... We are looking at around 4 billion riyals of investments by us and other sub-developers," Boodai said.
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