Related Cos., the New York developer founded by billionaire Stephen Ross, and its partner Gulf Capital plan to borrow as much as $130 million from a Saudi bank to fund a housing development in Riyadh.
Gulf Related, a joint venture between Related Cos. and Abu Dhabi’s Gulf Capital, expects to sign an agreement in less than a month, said Karim El Solh, chief executive officer of Gulf Capital. The United Arab Emirates-based private equity firm plans to borrow a similar amount for the second phase of the project, he said.
“Saudi banks have the liquidity and are interested in funding the tremendous growth in demand for residential product,” said Emile Habib, Gulf Related’s managing director.
Saudi Arabia, the Arab world’s largest economy, has a housing shortage and needs to build 1.25 million homes by 2014, according to the country’s development plan. Gulf Related will spend about $400 million building 550 homes, a community center, shops retail and possibly a school in the type of housing compound usually rented by expatriates, Habib said.
Gulf Related is in talks with investors to help fund 30 percent of the project, while the rest will be loans, CEO El Solh said. On Jan. 29, the company said it will build a $1 billion mall and two towers on Abu Dhabi’s Al Maryah Island., The Galleria, a high-end retail and dining district in Abu Dhabi that will be its first project, is set to open in August.
In 2014, the company is looking to build mixed-use developments in Riyadh and the port city of Jeddah that would include malls, homes, offices and hotels, Habib said.
“Saudi is a very strong market on many fronts and we are being encouraged by our retail tenants,” Habib said. Gulf Related is in talks with owners of large plots of land to develop, he added.
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