ABU DHABI, June 15 (Reuters) - Abu Dhabi-based Gulf Capital said on Monday it plans to enter the property sector in the Gulf in partnership with a U.S. firm to tap growing demand and take advantage of lower prices.
Gulf Capital and New York-based Related Companies have set up a joint venture called Gulf Related with an initial capital of $50 million that will be increased five-fold by 2012.
“Land prices have dropped, construction costs are down and projects can be built at lesser costs. It is a good entry point into the real estate sector,” Karim Solh, chief executive of Gulf Capital said.
“We will be focusing on Riyadh and Jeddah in Saudi and Abu Dhabi in the United Arab Emirates. There is a desperate need for mixed-use and housing projects in the Saudi cities and pockets of demand in Abu Dhabi for affordable housing,” he told Reuters in a telephone interview.
In Saudi, the world’s largest oil exporter, the population is expected to grow from 25 million to 33 million in the next decade, creating a shortfall of 2 million housing units, he said, adding that the increasing GDP and a new mortgage law makes the market promising.
The Abu Dhabi-based venture’s first project will be launched in mid-2010 after evaluating the markets. Fresh capital will be injected as projects are launched.
“We plan to inject additional capital up to $272 million in three years. Capital will be raised from third party equity (external investors) and bank financing as well as off-plan sales,” he said. (Reporting by Stanley Carvalho; Editing by David Holmes)
Our Standards: The Thomson Reuters Trust Principles.