Unicorn Investment Bank closes innovative Saudi real estate fund
Bahrain, 14 November 2005 - Unicorn Investment Bank has successfully structured and closed an innovative US$ 52.5 million real estate fund, KSA Real Estate Fund- 1 (KSA 1).
KSA 1 is a two-year, closed-ended fund, and is one of the first to allow non-Saudi nationals to participate in the benefits of the Saudi Arabian real-estate market. The fund seeks to achieve mid-term capital appreciation and dividend payouts by investing in a residential real estate project located in the northern suburbs of Riyadh, which is to be developed and sold by 2007.
Jacques Bernard, Unicorn’s Managing Director of Asset Management, stated; “In our view the rapid increase in the value of real estate in the Kingdom of Saudi Arabia is sustainable in the medium to long term because it is driven by demographics, the increasing availability of mortgage lending and growing levels of wealth in the Kingdom. We do not see it as a speculative bubble, but a sustainable trend”.
The balance between supply and demand for property is rapidly shifting as Saudi Arabia’s population grows. Recent research shows 86 percent of the country’s population is under the age of 40 demonstrating the growing demand for new homes.
The fund’s structure complies with strict Shari’ah principles by funding the development of the residential real estate project through a Mudaraba agreement. Unicorn is the fund’s investment manager and placement agent. Gulf Bank (Kuwait) acted as placement advisor and Dar Al Arkan Real Estate Development Company (DAAR), KSA, is the fund’s real estate advisor and a founding investor with a 30 percent stake in the fund. DAAR is one of the leading real estate developers in Saudi Arabia with successful and proven credentials.
Majid Al-Sayed Bader Al-Refai, Chief Executive Officer of Unicorn Investment Bank, commented: “The KSA 1 fund fuses innovation, solid returns and Shari’ah law, demonstrating that Islamic finance is more than just a product, but a belief and a passion”.