(Rewrites first paragraph, adds background, more details)
By John Irish
DUBAI Dec 17 Saudi Arabia's Jabal Omar
Development Co 4250.SE plans to tap the Islamic debt markets
to help finance an 11 billion riyal ($2.9 billion) project in
Mecca that will be built by developers including Binladin Group.
Jabal Omar awarded Binladin, the country's largest
contractor, and Saudi Oger, owned by the family of former
Lebanese prime minister Rafiq Hariri, the contract to build the
project, the Saudi developer said in a statement on Monday.
"A portion of the sum will be raised organically, while a
portion will come from Islamic finance and conventional
methods," Jabal Omar said, without giving details.
Jabal Omar raised $537 million by selling a 30 percent stake
in a November initial public offering (IPO) that valued the
company at around $1.79 billion.
The remaining 70 percent of the company is held by the
owners of a 23 hectare (56.8 acre) plot of land in Mecca near
the Grand Mosque.
The cost of land in Mecca, Islam's holiest city, has surged,
with land selling for as much $50,000 per square metre,
according to government statistics.
That compares with $14,522 per square metre in London and
$24,900 per square metre in Monaco, according to the Global
Jabal Omar said it expected to complete construction of the
development in three years.
In addition to a prayer area accommodating 65,000 people,
the development will have 39 buildings including hotels,
residences and retail facilities, it said.
More than 1.6 million pilgrims have come to Saudi Arabia
from abroad for this month's haj pilgrimage, the largest regular
religious gathering in the world.
Islamic law bans the receipt of interest and operates on the
principle of sharing risk and reward among all those involved in
a business venture.
Investing in sectors such as alcohol, pornography and
gambling is prohibited.