By Andy Sambidge
Investment arm of Qatar's Barwa Bank signs agreement to invest in expat areas in Gulf kingdom
The investment arm of Barwa Bank Group has signed a joint venture agreement to invest in expatriate residential compounds in Saudi Arabia.
The First Investor (TFI) said in a statement that the deal with Project Management & Development Co. (PMDC) was the first major initiative in the region to target the expat compounds.
The agreement comes as the Saudi real estate market is experiencing a supply-demand crunch in the expatriate residential compound sector - with demand exceeding supply by more than two times in Riyadh, Jeddah and Dammam.
Most compounds currently have long waiting lists and both companies said it was "an opportune time to focus on this market segment".
As the joint venture initiators, TFI, Barwa Bank and PMDC have invested a total of $30m in the proposition, the statement said.
Khalid Yousef Al Subeai, CEO of TFI, said: "We expect that the joint venture will make its first acquisition in the second half of 2013. I am confident that with TFI's investment expertise and PMDC's specialised knowledge of the KSA real estate market, that the joint venture will achieve the expected results."
The joint venture partners said they are aiming to put together a portfolio of assets that will yield attractive levels of rental income.
Subeai added "With the current market dynamics, expatriate residential compounds are becoming an increasingly attractive sector. Expatriate residential compounds in Saudi Arabia are generating particularly strong returns, so the timing of this partnership could not be more compelling."