JEDDAH, 4 April 2005 — While the marketing campaign and sale of shares in the new mega real estate investment project in the southern corniche of Jeddah, Venice Islands, is at a high pitch, the Jeddah Municipality and the Higher Committee for the Development of Makkah Region both announced that the project has not yet received their final approval.
For the past few months there has been a wide media campaign of the Duraibi Group for Real Estate Development and its project Venice Islands in Jeddah’s southern corniche, an area which has been neglected for years as most real estate development projects were expanding north thus doubling the size of Jeddah. During the past two weeks the Duraibi Group and its Chairman Saleh Al-Duraibi have held meetings in Jeddah and Riyadh with real estate investors and businessmen to explain the scope of the project and methods of investment in it with more meetings to be held in other cities and in the neighboring Gulf countries.
According to the Al-Duraibi’s announcements in the newspapers, the project costs between SR10 billion and SR15 billion and it includes residential, commercial and entertainment facilities over a 20 million square meter area at a strategic location close to the city with roads and highways connecting it to it which are already under way. “Investment in the project has reached close to 75 percent for the 70 percent of the property offered for investment which is valued at SR1.4 billion. The remaining 30 percent of the land is owned by the group,” Al-Duraibi was quoted in Al-Hayat newspaper. He pointed out that the group now owns the whole property by a legal deed. Al-Duraibi said that the total number of founders for the project is 3,300, 2,600 of whom have already received their capital investment plus profits. In his meetings with investors, he called on them to take this opportunity and buy any of the available lot sizes and enter into an agreement with the group as a developer and marketer for the project, in return the investor is sold the lot at 15 percent discount and can pay the price in installments and has the option of selling the lot for a profit. In an interview with Al-Eqtisadiah on Saturday, he explained that only 30 percent of the land is allocated for real estate merchants while the other 70 percent is strictly for developers. He refuted accusations and rumors that the whole project is simply for the reselling of the lots for a profit after the completion of all the infrastructures rather than a serious development project.
The project was issued a permit by the Ministry of Commerce to be offered as a real estate investment project, but the problem is that the development project of Venice Islands has not been approved by the Municipality or the Higher Committee for the Development of Makkah Region. Dr. Sami Barhamin, secretary general of the committee, announced in the newspapers that the committee is still studying the project to verify its feasibility and compliance with environmental, social and economic considerations.
“The project’s file is being subjected to technical reviews and studied by the committee in cooperation with the developer,” Dr. Barhamin confirmed to Arab News. He could not state how long that will take but the committee is evaluating the project from all points to reach an agreement for the appropriate requirements. As for the consequences of this evaluation on the project, he said that the announcement was to make the investors aware of the situation and the decision is theirs.
The municipality also confirmed to Arab News that the development project has not yet been approved by it. “We have just received the plans for the project and we’re in the process of reviewing them,” said Ahmed Al-Ghamdi, PR assistant director at the municipality. “The developer should not have advertised it until he received our approval, and we have made an announcement in the local papers that the project has not been approved yet but some of the papers refused to publish it for fear of losing advertising money for the project,” he said. At this time they cannot do anything except raise the public’s awareness.
Real estate agents have already predicted a rise in property prices in southern Jeddah because of the project. “As a project it is an excellent idea to develop south Jeddah but the system should be correct for implementing it in order to protect investor’s money, not lose their confidence and not to leave the property hanging in case it failed,” said Mohammed Al-Sharif, secretary-general of the Jeddah Chamber of Commerce and Industry. Similar projects were proposed before in Jeddah and other cities where shares are sold to investors but while the project is being approved the money collected is used by the developer in other businesses inside or outside the country and is no longer available for the initially proposed project thus leaving it hanging. “We should implement a mechanism for protecting investor’s money by holding the money allocated for the project in a special bank account and not allow it to be used for anything else,” he told Arab News.