By David Ingham
32,983 shares on offer are sold out in four days; 20% of the equity is snapped up by Gulf investors outside Saudi Arabia.
Rikaz Developers’ subscription for shares in its City Fanar project sold out in four days last week. The 32,983 shares, priced at US $153.4 million, were snapped up in next no time by investors keen for a stake in the landmark waterfront development on Saudi Arabia’s eastern coast.
“The speed at which the shares sold out is a remarkable achievement for Rikaz, and highlights the credibility of both Rikaz, as the developer, and the project itself,” said Sheikh Khalid H. A. Al-Ghatani, president and CEO, Rikaz.
“This achievement further illustrates the confidence that exists in the Saudi economy, specifically the Eastern Province, as well as investor confidence and appreciation of the clarity and professionalism that Rikaz had employed when structuring the Musahamat.”
The share issue has taken place in accordance with an Islamic investment principle called ‘Musahamat.’ Rikaz reports that 20% of the investment came from Gulf Cooperation Council (GCC) states outside Saudi Arabia.
“The fact that 20% of the investment has come from outside Saudi Arabia, proves that the project has substantial regional appeal,” said Sheikh Khalid. “This shows that there is a clear need for such a well planned mixed use development and also a renewed interest in real estate investment funds that are well structured.”
The Fanar project, also known as ‘Future City’, will cover 3.4 million square metres and contain residential, commercial and retail space. The development will be built around a 300,000 square metre manmade lagoon located on the eastern coast of Saudi Arabia between Dammam and Al Khobar.
An important part of the City Fanar master plan is the Eastern Province’s first and longest pedestrian walkway. This will in turn connect the piazza, a 20 square metre ‘architectural marvel’ in the heart of the commercial area, to the city’s 115,000 square metre main shopping mall, which will inevitably be amongst the largest in the Eastern province.
Recent months have seen the early completion of land reclamation work and the appointment of PolyStar as the project manager for phase one of the development. PolyStar will be responsible for project management, design and oversight of the construction process.
“PolyStar is committed to developing strategies for managing risks and selecting the appropriate method of financing to ensure we maximise return on investment for City Fanar,” commented Imad Abulaban, CEO and president, PolyStar.
Rikaz has now developed over a dozen projects based on the Musahamat principle, with investment totalling over SR3.5 billion.