JEDDAH, 19 November 2006 — The Jeddah Mayor, Adel Fakieh, announced yesterday the king’s approval to establish the Jeddah Real Estate Development Company, which aims to re-design and develop the city’s randomly developed districts at an initial cost of SR210 billion ($56 billion).
The state-owned company would be self funded and would not be a burden to the Ministry of Finance, the mayor said, adding that it would rely on involving the private sector to invest in the locations and generate self finance for the company.
The mayor was speaking to the press yesterday afternoon at the municipality’s downtown headquarters.
Fakieh said there are about 50 randomly developed districts around Jeddah covering an area of 534,000 square meters and inhabited by 1.5 million people. These districts have been developed willy-nilly during Jeddah’s rapid urbanization in the past 30 years, in many cases with commercial and residential buildings erected side by side with little consideration for efficient zoning or residential safety concerns.
The company would first start a three-phase project to develop the southern districts of Al-Sabeel and Khuzam. They would start with the municipality-owned lands and other real estate owned by various government agencies and departments, such as the Ministry of Agriculture and Ministry of Commerce and Industry.
The first phase would focus on Khuzam, where the municipality owns most of the land. The area would be zoned and equipped with public facilities, roads and new buildings. The initial cost of the first phase would reach to about SR250 million ($66.6 million), he said.
The money for compensation of houses and property would be generated by the investments that would be facilitated for the private sector, which would handle the work of development in these areas.
Fakieh said he hoped that the first phase would be completed within three years.
“So far, we have initial studies and plans about the projects,” he said. “As soon as we achieve a solid proof plan we would start executing it immediately.”
He said that the development company would become a joint stock company within six years of its establishment. For now, he said, the company would have 11 board members headed by the mayor. Five of the board members would represent the private sector and the rest would be from various government sectors.
About the private property compensations, he said that a special committee would estimate the value according to a systematic process. He said that owners could sell their property to the investing companies and they could also give their property as assets and become shareholders in the existing development project.
Fakieh said that the municipality has stopped issuance of building licenses in random areas in order to contain their spread until the project is completed.
He said that the role of the company is hoped to expand by not only developing random areas, but the whole city as well.
“This company is the first of its kind in the Kingdom and we hope that it would set an example of success so that sister companies would be born in other cities around the Kingdom,” the mayor said.
