Saudi private investment bank KSB Capital Group said it will raise SR200 million ($53.3 million) for a public closed-ended fund that will develop a property project in Riyadh.

KSB expects a drop in construction costs to encourage private and institutional investors to subscribe in the fund, said KSB executive in charge of business development Ahmad bin Saedan.

'A lot of people who wanted to build over the past few years have had to delay their plans because of the rise in construction costs,' he said.

'The prices of villas that are now available for sale are too high because they were built at a time when costs were too high. Now the prices of building materials have declined but demand is still there.'

KSB wants to use the cash from the new three-year fund to build 48 villas and develop land plots in a parcel in Riyadh before selling them. The owner of the parcel will inject 40 per cent of the total amount KSB seeks to raise.

Subscription to the fund will be open to private and institutional investors from Gulf countries between February 28 and March 11. Minimum subscription is SR10,000.

The fund was approved by the government's Capital Market Authority, KSB said in the fund's prospectus.

If fully-subscribed, the new fund will be KSB's third to be devoted to real estate after it raised SR258 million last year, about a quarter of which were from a private placement.-TradeArabia News Service