Saudi Savola Group said on Sunday it had agreed to buy a 5 per cent stake in Taameer Holding Co., Jordan's largest listed property firm, for 100 million Saudi riyals ($26.67 million).

Savola, the Arab world's largest retail and food company by market value, will finance the purchase of the equivalent of 212 million Taameer shares, from its existing resources, the company said in a statement.

Muhammad Kashgari, Savola's president for retail and real estate, said the group had no intention for the moment to raise its stake in Taameer beyond 5 percent.

"The Taameer transaction complies with our expansion plan in real estate," Kashgari said.

"We started with 5 percent since it gives us access to a promising market ... Raising the stake will depend on how things evolve in the future," he told Reuters.

Savola, which owns 30 percent in Saudi Kinan International Real Estate Development Co., also wants to benefit from Taameer's experience in developing housing projects for low-income households.

"Kinan initially focused on commercial property, such as shopping malls, but now we have decided to venture in low-income housing in the (Saudi) kingdom in addition to hotels," Kashgari said.

Kinan plans to develop these projects on land it owns in areas such as the Yanbu industrial zone and Dammam, both on the Gulf coast, and in the Red Sea port of Jeddah, he added.

Khaled al-Wazani, general manager of Taameer Jordan, said on Tuesday Savola's interest in the Jordanian firm was part of a wider "strategic" partnership the two firms were discussing that would focus on joint projects in Saudi Arabia and the region.

Taameer was set up last year by a group of local businessmen, funds and Arab Gulf investors, including Kuwait's Global Investment House. Its initial public offering was oversubscribed 14 times and raised over $1 billion.

Many Gulf investors flush with oil revenue are seeking opportunities in the Jordanian market, attracted by free market policies and relatively lower prices of assets compared with other regional markets.

Savola plans to invest 18 billion riyals to expand in North Africa and Central Asia and developing new businesses, including supermarket retailing. - Reuters