One of Saudi Arabia’s largest developers, Jabal Omar, has signed a preliminary agreement with the UAE’s Shuaa Capital to jointly manage real estate investment funds in the Kingdom.
The two companies are looking at ways to work together to create and manage real estate funds that support new developments in prime property hotspots in the Kingdom, according to a Dubai Financial Market (DFM) filing.
“Shuaa’s established record in managing real estate funds and developments within the Kingdom, coupled with Jabal Omar’s unique reputation and achievements in building prime mega developments, will help create a favorable and mutually-beneficial partnership model for delivering the highest quality developments and achieve returns for stakeholders,” said Jassim Alseddiqi, chairman of Shuaa Capital, in the DFM filing.
Jabal Omar’s existing flagship development is in Makkah, just walking distance from the Grand Mosque. Set to be delivered in phases, the project covers two square-kilometers and will feature high-rise towers, apartments, residential units and shopping malls.
Construction of the second phase is due to be completed by the end of the fourth quarter this year, according to the company’s website.
The agreement follows a similar deal announced on May 3 between the Tadawul-listed Jabal Omar and Abu Dhabi’s ADFG to explore opportunities to collaborate on property projects in the Kingdom.
ADFG is keen to expand its presence in Saudi Arabia, according to a press release. It is currently active throughout the UK, Eastern Europe and the Middle East. It majority-owns the London-based luxury developer Northacre.
The deal also comes as Shuaa Capital posted a decline in total profits in the first quarter of this year, which it blamed on lower interest income from its lending arm following a reduction in bank debt at its lending subsidiary, Gulf Finance Corporation.
Profits declined to 11.7 million dirhams ($3.2 million) compared to 24.8 million dirhams in the first quarter of 2017, according to a filing on the DFM on May 7.
However, the Saudi Arabian real estate market is potential bright spot for Shuaa.
Profits at the company’s asset management arm, which manages and identifies prime real estate opportunities in the Kingdom and the UAE, more than doubled from 1.4 million dirhams in Q1 2017 to 4.1 million dirhams this year.
Shuaa is currently completing construction on its third project in the Kingdom in Damman, and has begun construction works on its new SR1.4 billion ($373.3 million) ‘Wadi Al-Hada’ mixed-use residential compound in Riyadh.