Nakheel enters KSA through joint venture
New venture with MBI to establish several real estate investment companies
Nakheel, the property developer behind some of Dubai’s largest projects, is entering the Saudi Arabian real estate market by establishing a joint venture enterprise with MBI International and Partners. The company is a hospitality, agro business and real estate development and investment company, which also owns and operates luxury residential developments in Saudi Arabia, Middle East and Europe.
The new company, Nakheel Saudi Arabia, will create separate companies to offer home finance, insurance and securitisation services, as well as property development. Nakheel and MBI International will each have a 50% stake in the new company, which will be headquartered in Riyadh.
The company is to be incorporated as a joint stock company headquartered in Riyadh with an authorised share capital of SR 1 billion. For the new venture, Nakheel will look to leverage its strong alliances with Tamweel, the Dubai-based home finance company, and Istithmar, which specialises in securitisation of assets.
“Nakheel is expanding its investments in the Arab world to promote pan-Arab business cooperation,” said Sultan Ahmed bin Sulayem, executive chairman, Nakheel. “The joint venture is an amalgamation of the core competencies of two leading players in real estate development and investment in the region. This alliance is a result of the extensive analysis of the dynamics of the sector in Saudi Arabia and elsewhere in the region,” he added.
The partnership between the two behemoths in real estate development comes at a time when the property development market in the region is at its most buoyant. As reported in CW issue 51, the value of projects currently underway in KSA is believed to be US $27.27 billion. Annual population growth of 4% annually is creating huge demand for residential housing.
The joint venture will become effective in the next few months, with the creation of the partnership being supported by the assets of Nakheel and MBI International and Partners. The company has annual revenues of $1.7 billion, over 9000 employees worldwide, and has interests in Middle East, Europe and the United States.
“The Kingdom of Saudi Arabia is witnessing an enormous boom in the development of real estate,” said Mohammed bin Issa Al Jaber, chairman, MBI International. “This tie up with Nakheel will certainly [support] real estate development in KSA and the region and addresses its need for modern cities and housing.”