Banks in Qatar have completed the funding packages for two mall developments in Doha totalling QR2.5bn ($686m).

The financing is split between a QR1.5bn 12-year project finance loan for the Doha Festival City project, and a QR1bn 10-year loan for the Northgate Mall. Both deals have been structured as Sharia compliant financings.

Sources close to the two deals say both were finalised during the summer by a group of around four or five local banks lending exclusively in Qatari riyals. The two malls are now under construction.

Doha Festival City is expected to cost around QR6bn to develop and will include a retail centre, an entertainment park, and two hotels. The first phase of the project is the retail complex, which is scheduled to open in 2012, and the next two phases are due to be completed by 2015. Mace International is the project manager. Bawabat al-Shamal is the parent company behind the project and has supplied the land. Its shareholders include the UAE’s Al-Futtaim Group and the local Qatar Islamic Bank (MEED 6:5:11).

The Northgate Mall is expected to cost around QR1.5bn and will include a mall, office buildings and a cinema covering a total of 417,500 square metres. Local developer Equinox is the project sponsor and the mall was designed by the US-based architecture firm Callison. The consultant for the project is the local office of Lebanon’s Associated Consulting Engineers (Ace).

Qatar has not been very active in terms of international project finance for the past few years, except for the Barzan gas project, which is currently seeking around $5bn in loans from a group of international and local banks. Instead, local banks have become more active financing developments through short-term contractor finance deals, or longer term deals done in the local currency by local banks.