Saudi Arabia's Kingdom Holding said on Sunday that its affiliate Jeddah Economic Co had agreed with Alinma Bank to establish an SR8.4 billion ($2.2 billion) real estate development fund for Jeddah project.

Jeddah Economic Company is the owner and developer of the Jeddah Economic City project and Jeddah Tower in Obhur, just north of Jeddah on the Red Sea coast.

Alinma Investment is an SR1 billion ($266 million) Saudi limited liability company established by the namesake bank to pioneer a comprehensive system of investment products and services.

The fund, to be named the Alinma Jeddah Economic City Fund, is a Sharia-compliant fund that will operate under the Saudi Arabian Capital Market Authority (CMA) and current laws in Saudi Arabia.

Initially, its purpose will be to develop the first phase of the Jeddah Economic City project and finish construction work on Jeddah Tower, currently at its 26th floor, as well as a number of major real estate projects within the project.

Alinma Bank will finance the fund, to be managed by Alinma Investment, while Jeddah Economic Company will be the master developer of projects that will draw on the fund’s credit lines.

Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, chairman of Kingdom Holding Company will chair the fund’s board, with AbdulMohsen Alfaris, chief executive officer of Alinma Bank, as deputy chairman.

Jeddah Economic Company bought out the entirety of the fund’s units.

“This agreement with Alinma is part of Jeddah Economic Company’s drive to diversify its sources of funding for Jeddah Tower and Jeddah Economic City,” said Prince Alwaleed. “Our cooperation with the banking sector is a manifestation of just how strongly we believe in this ambitious project, which is set to become the pride and joy of every Saudi, especially those who reside in Jeddah, and will become an iconic urban center that will take the city to the next level, both regionally and globally.”

Prince Alwaleed added that the primary purpose of developing Jeddah Economic City is to provide a state-of-the-art living, working and entertainment environment for its community to enjoy a unique way of life, with the best possible levels of services that up-and-coming Saudis aspire to.

“Jeddah Economic City will be a must-go destination for those who visit Jeddah for business, trade, entertainment, culture, medical treatment and education, and will be a trendsetter in future real estate and urban development, all while securing the future of young Saudis with job opportunities and meeting the ever-growing demand for housing.”

Alfaris said that since its inception, the bank has been keen to build a continued, sustained relationship with each and every business sector in the Kingdom, out of its conviction as to the role it is capable of playing in supporting infrastructure projects and businesses that contribute to the Kingdom’s economic development.

“We at Alinma Investment seek to create fruitful strategic partnerships with various sectors in the real estate industry that enjoy a wealth of management expertise and are capable of managing successful investment projects, thus supporting investment plans and removing hurdles in the way of bringing these projects to fruition. Jeddah Tower and Jeddah Economic City are pioneering projects that will transform their namesake city, and we are happy to be cooperating with Jeddah Economic Company and contributing to the building of this great project,” he added.

Talal Al Maiman, executive director of the Kingdom Holding Company, said that financial planning for the project took over two years.

“When we formulated and prepared the financial model, which included all aspects of cost and revenue, we made sure that we studied every single one of the project’s needs,” he said.

“Alinma Investment has been an active partner in the process of devising a detailed, sophisticated financial model that complies with Sharia and law so we can build the world’s highest skyscraper on our homeland. Such a financial model will set the trend for future real estate projects.

Mounib Hammoud, chief executive officer of Jeddah Economic Company, said that as of yet, 26 floors of Jeddah Tower built over an area of 85,000 square meters, has been completed.

Now that the agreement has been signed and required funds secured, Hammoud expects the project to be finished on schedule.

“With this deal, we will reach new, as yet unheard of highs in real estate development, and will fulfil the company’s objective of creating a world-class urban center that offers an advanced lifestyle, so that Jeddah may have a new iconic landmark  that attracts people from all walks of society with comprehensive services and a multitude of uses,” said Hammoud.

“The overall layout of Jeddah Economic City is designed to accommodate a comprehensive, multipurpose environment, replete with aspects of a modern lifestyle over its 5.3 sq km, supported by world-class, state-of-the-art infrastructures.

“The first phase, to be constructed over 1.5 sq km, will accommodate more than 3.3 million sq m of modern, multipurpose structures, which will form the nucleus of northern Jeddah’s downtown, bolstering the city’s standing in the world,” he added. – TradeArabia News Service & Reuters