Saudi bank eyes $53m property fund

SAUDI ARABIA: KSB Capital looks to fund property project in Riyadh. (Getty Images)

Saudi private investment bank KSB Capital Group said on Tuesday it will seek to raise 200 million riyals ($53.3 million) for a public closed-ended fund that will develop a property project in the capital Riyadh.

KSB expects a rut in the local stock market and a drop in construction costs to encourage private and institutional investors to subscribe in the fund, said Ahmad bin-Saedan, a KSB executive in charge of business development.

"A lot of people who wanted to build over the past few years have had to delay their plans because of the rise in construction costs," he told Reuters.

"The prices of villas that are now available for sale are too high because they were built at a time when costs were too high ... Now the prices of building materials have declined but demand is still there."

KSB wants to use the cash from the new three-year fund to build 48 villas and develop land plots in a parcel in the capital Riyadh before selling them.

The owner of the parcel will inject 40 percent of the total amount KSB seeks to raise, he said.

Subscription to the fund will be open to private and institutional investors from Gulf Arab countries between Feb. 28 and March 11. Minimum subscription is set at 10,000 riyals.

The fund was approved by the government's Capital Market Authority (CMA), KSB said in the fund's prospectus.

If fully-subscribed, the new fund will be KSB's third to be devoted to real estate after it raised some 258 million riyals last year, about a quarter of which were from a private placement.

Cement and steel prices have fallen sharply over the past six months.

The government slapped in early June a ban on exports of cement to alleviate supply bottlenecks amid a surge in demand both domestically and from neighbouring countries.

Saudi steel firms have cut prices by around two thirds over the past six months after the government banned exports of both steel and scrap metal. (Reuters)

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