Emaar the Economic City, the Saudi subsidiary of Dubai’s Emaar Properties, has announced that an affiliate has finalised a SR2.7bn ($720m) Islamic loan.

In a bourse statement, the developer said the loan from Islamic banks is to finance the second phase of building King Abdullah Port.

Ports Development Company has secured an Islamic facility from the local Arab National Bank and Sabb with a tenor of 14 years. The collateral on the loan is the port’s land, said the statement.

King Abdullah Port (Millennium Seaport), which is being developed by a consortium led by Emaar the Economic City, will be part of King Abdullah Economic City (KAEC) in Rabigh.

The megaproject is part of the kingdom’s efforts to expand the economy, create employment opportunities and function as a catalyst to attract foreign investment, global trade, commerce and industry.

Stages A and B of the first phase of the port are already completed, with further work on the phase expected to be completed by the end of the year.

Earlier this month, MEED reported that Saudi Arabia’s Public Investment Fund (PIF) is negotiating to buy a stake in King Abdullah Economic City (KAEC), as the kingdom restructures its economy on the back of lower oil prices.

The PIF will inject capital into KAEC, which is being built on the Red Sea coast near Saudi Arabia’s commercial hub of Jeddah, according to a report from news agency Reuters. Emaar the Economic City is the developer of the project.

Launched in 2005, KAEC had a population of about 5,000 people and 120 industrial tenants at the end of last year. In January, the CEO of the city, Fahd al-Rasheed, said KAEC’s population was projected to hit 50,000 by 2020, with an ultimate target of 2 million by about 2035.