Saudi developer Jabal Omar to close Umm Al Qura merger deal in 2018

Jabal Omar Development will launch a real estate fund to finance new phases of its Makkah mega project that includes commercial malls, residential properties and hotels. (Courtesy Jabal Omar Development)
Updated 01 March 2018
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Saudi developer Jabal Omar to close Umm Al Qura merger deal in 2018

RIYADH: Jabal Omar Development Co. , one of Saudi Arabia’s largest listed property developers, expects to finalize its merger deal with Umm Al Qura Development and Construction in 2018, a senior company executive said.
The deal, announced in November, is key to strengthening Jabal Omar’s presence in the real estate market of the Muslim holy city of Makkah beyond its flagship project within walking distance of the Grand Mosque to help tap growth in tourism.
“A key objective of this deal is basically to add value to Makkah real estate market,” Faisal Shaker, chief investment and development officer, said in an interview.
“The size of King Abdulaziz road (which Umm Al Qura Co. is developing) is over 6 million square meters (65 million square feet) of built-up area. We aim to close the merger with Umm Al Qura in 2018,” he added.
He said the company was currently working on a valuation for the deal with adviser Goldman Sachs.
In November, local media estimated the merger would create a real estate business with 50 billion riyals ($13.3 billion) of investments.
Pilgrimage to Islam’s holiest sites in Makkah and Medina is the backbone of a plan to expand tourism under Crown Prince Mohammed bin Salman’s economic reforms to diversify the economy away from oil.
The annual Hajj pilgrimage and the lesser year-round pilgrimage known as Umra generate $12 billion in revenues from lodging, transport, gifts, food and fees, according to BMI Research.
The government’s Vision 2030 reform plan aims to accommodate 30 million Umra visitors per year, up from 8 million now.
To finance its working capital, Jabal Omar plans to issue Islamic bonds, or sukuk, in the first half of 2018. Gulf International Bank (GIB) and HSBC are the advisers, Shaker said, declining to give further details.
In November, sources said that Jabal Omar was planning a sukuk sale that could top 4 billion riyals.
The company will also launch a real estate fund to finance new phases of its mega project that includes commercial malls, residential properties and hotels over a total built-up area of 1.66 million square meters.
“We are working on a number of investment products such as the REITs (real estate investment trusts) and funds with various structures, and we are looking to put some assets into income producing funds,” Shaker said.
Jabal Omar will have around 5,000 new hotel rooms in its inventory in 2019. It will start off-plan sales of residential properties once it gets the license from the ministry of housing, probably in 2018, he said.


OPEC oil ministers gather to discuss production increase

Updated 19 June 2018
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OPEC oil ministers gather to discuss production increase

  • Analysts expect the group to discuss an increase in production of about 1 million barrels a day
  • The officials were arriving in Vienna ahead of the official meeting Friday

VIENNA: The oil ministers of the OPEC cartel were gathering Tuesday to discuss this week whether to increase production of crude and help limit a rise in global energy prices.
The officials were arriving in Vienna ahead of the official meeting Friday, when they will also confer with Russia, a non-OPEC country that since late 2016 has cooperated with the cartel to limit production.
Analysts expect the group to discuss an increase in production of about 1 million barrels a day, ending the output cut agreed on in 2016.
The cut has since then pushed up the price of crude oil by about 50 percent. The US benchmark in May hit its highest level in three and half years, at $72.35 a barrel.
Upon arriving, the energy minister of the United Arab Emirates, Suhail Al Mazrouei, said: “It’s going to be hopefully a good meeting. We look forward to having this gathering with OPEC and non-OPEC.”
The 14 countries in the Organization of the Petroleum Exporting Countries make more money with higher prices, but are mindful of the fact that more expensive crude can encourage a shift to renewable resources and hurt demand.
“Consumers as well as businesses will be hoping that this week’s OPEC meeting succeeds in keeping a lid on prices, and in so doing calling a halt to a period which has seen a steady rise in fuel costs,” said Michael Hewson, chief market analyst at CMC Markets UK
The rise in the cost of oil has been a key factor in driving up consumer price inflation in major economies like the US and Europe in recent months.
Already US President Donald Trump has called on OPEC to cut production, tweeting in April and again this month that “OPEC is at it again” by allowing oil prices to rise.
Within OPEC, an increase in output will not affect all countries equally. While Saudi Arabia, the cartel’s biggest producer, is seen to be open to a rise in production, other countries cannot afford to do so. Those include Iran and Venezuela, whose industries are stymied either by international sanctions or domestic turmoil. Iran is a fierce regional rival to Saudi Arabia, meaning the OPEC deal could also influence the geopolitics in the Middle East.