And while the project, like the fund, is not the largest on the map, the contingent expressed their hopes that the creation of the vehicle will start a trend of foreign development in Saudi Arabia.
According to Jamal A. Tartir, group head of private banking for the fund's manager Shamil Bank, some 20% of the total will be underwritten by the developer. By Islamic law, debt is not permitted in investments so the bulk of the fund's capital will come from outside equity. The group is targeting a 17% IRR.
In his presentation, Rikaz president and CEO Sheikh Khalid Al Gahtani indicated the need for roughly 1.5 million housing units in Saudi Arabia in the next two decades. The development calls for more than 40 townhouses, some 314 villas and a boutique hotel of more than 80 rooms.
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John Salustri
John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.
