Share sale to fund Mecca regeneration

10 October 2008
Developer Dallah al-Baraka seeks to raise $5.6bn for the scheme by selling shares in a new project company.

Riyadh-based developer Dallah al-Baraka Group hopes to raise SR21bn ($5.6bn) to fund the construction of the Tareeq al-Mawazee project in Mecca by selling shares in a new project company in the first half of 2009.

The Tareeq al-Mawazee urban-regeneration project will focus on widening the main road into Mecca and redeveloping the land either side of the highway.

Riyadh-based Swicorp, financial adviser to Dallah al-Baraka, is preparing detailed proposals of the development to present to the Higher Commission for the Development of Mecca by the end of the year.

“It is one of Mecca’s most advanced projects,” says Kamel Lazaar, chief executive officer of Swicorp.

“We are in discussions with Mecca on the masterplan and once we receive the blessing from the authority, we will set up a publicly-listed company.”

The project will develop a 3-kilometre-long, 80-metre-wide, four-lane highway into the city. Properties on either side of the road, which cover 1 square kilometre of land, will be rebuilt.

“Work is already taking place on demolishing [existing buildings close to the highway],” says Lazaar.

The project will feature mixed-use real estate developments comprising residential, commercial, retail and hospitality elements. It is due to be completed in 2018.

It is hoped that the redeveloped highway will help to ease traffic congestion in the city, especially near the Masjid al-Haram (Grand Mosque).

Dallah al-Baraka will be one of the promoters and founding shareholders of the new project company, which is yet to be named.

The Tareeq al-Mawazee scheme is part of a series of major changes planned for Mecca, as the city authorities demolish old buildings and redevelop the areas to accommodate the growing number of religious tourists.

It is estimated that up to 4 million religious tourists visit Mecca during the Hajj period each year.

Among the other key projects planned for the city is the Al-Shamiyah redevelopment. The SR50bn project is a 1.5-sq-km urban regeneration scheme running from the Grand Mosque to beyond the second ring road to the north of the city, and from Holy Mosque street in the east to Jabal al-Qaaba road in the west.

It is the one remaining area in Mecca’s central district that has not been subject to redevelop-ment efforts by the public or private sectors.

Al-Shamiya is being developed by a consortium led by the local Al-Oula Group.

It is due to be completed in 10 years and will feature a series of hotels over-looking the Haram square, along with residential and commercial buildings.

A further major project is Rawabi Abraj al-Bait, which is being developed by Jiwar Real Estate Management & Marketing Company, a subsidiary of Saudi Binladin Group.

Work on the scheme, which features 21 towers in total, is due to begin by March 2009 (MEED 6:10:08).

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