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Emaar gets SR5b Saudi loan for Economic City project

By Issac John DUBAI -- Emaar, The Economic City , an affiliate of Dubai-based property developer Emaar, received on Wednesday a SR5 billion loan from Saudi Finance Ministry to speed up construction of the second phase of King Abdullah Economic City, or KAEC.

The mega city, located on the Red Sea coast, is the largest of its kind private sector development in the region.

Mohamed Alabbar, Chairman of Emaar.E.C and Dubai's Emaar Properties PJSC, thanked the Custodian of the Two Holy Mosques King Abdullah bin Abdul Aziz Al Saud for his support to the project. Emaar Properties is a majority shareholder in Emaar. E.C .

"KAEC is a perfect complement to the Saudi Vision 2020, led by the pillars of economic diversification focused on manufacturing and exports, and creation of new jobs for Saudi nationals through the active involvement of the private sector," Alabbar said in 
a statement. KAEC, envisaged as a full-fledged development featuring a sea port, homes, offices, hotels, industrial facilities and leisure destinations, will serve as a catalyst to attract foreign investment, global trade, commerce and industry to Saudi Arabia, said Alabbar.

The development is expected to usher in a new era of socio-economic prosperity to the Kingdom. Dr Ibrahim Al Asaf, Saudi Arabian Minister of Finance, and Fahd Al Rasheed, Managing Director & chief executive officer of Emaar.E.C , signed the loan agreement.

Emaar.E.C said the commercial loan is for a tenor of ten years with repayment commencing after three years. The developer has provided guarantees to the loan by collateralising 24.7 million sq metres of land.

Repayments are to be made through returns from the project.

The first phase of the multi-billion dollar KAEC has already been completed with residents and businesses moving in to the development.

"The loan will expedite the development of the second phase of the project," said Emaar.E.C .

Located on the Red Sea coast, over a total area of 168 million sq m, KAEC has six zones - the Sea Port, Central Business District, Industrial Zone, Educational Zone, Resort District and Residential Communities. The project is closely connected with Saudi Arabia's ongoing initiative to expand the domestic economy. Unveiled in 2005, King Abdullah Economic City is among five so-called economic cities planned in the world's largest oil exporter to speed up job creation for the country's rapidly growing population. It is considered to be the single-largest private sector investment.

The mega city includes plans for an industrial zone, a seaport and residential community. A few days earlier, Emaar Economic City reached its highest share price in more than six months. The investment consortium rose 5.51 per cent to SAR 7.65, a price last reached at the close of December 10.

On Monday, KAEC witnessed the launch of an SR15 billion Rajhi steel complex. The steel complex covers four million square meters in the industrial area at KAEC and will contain a number of plants including a direct reduction iron plant with a capacity of 1.8 million tons a year. It will create 1,500 direct jobs and 3,000 indirect jobs.


© Khaleej Times 2011