Saudi developer Jabal Omar raises $135m sukuk from Dubai’s Shuaa


The five-year sukuk will support the developer’s plans for the Holy City of Makkah

The 2km² Jabal Omar megaproject is within walking distance of Saudi Arabia's Grand Mosque in Makkah.
The 2km² Jabal Omar megaproject is within walking distance of Saudi Arabia’s Grand Mosque in Makkah.

Saudi Arabian real estate developer Jabal Omar Development Company has secured a five-year sukuk worth $135m (SAR506m) from Dubai-based financier Shuaa Capital to support its construction plans for the Holy City of Makkah.

The sukuk will bolster development plans for one of Saudi Arabia’s largest publicly listed builders, which continues to look at ways to raise capital and finance construction in the kingdom.

Jabal Omar Development Company’s flagship megaproject is the 2km² mixed-use Jabal Omar, a 40-tower complex of hotels and homes being built in seven phases. The developer has claimed that up to 100,000 people could stay at the complex on any given day during the Hajj or Umrah seasons.

Shuaa’s sukuk issuance is part of a growing trend among property developers in the Middle East that view the instrument as a viable way to raise millions in development finance.

The global value of issued sukuks increased by an impressive 45% to $97.7bn between 2016 and 2017, according to a statement by Shuaa. Sukuks in Saudi Arabia raised more than $26m (SAR97.5m) during the same timeframe, it added.

Chief executive officer of Shuaa, Fawad Tariq-Khan, said the rise in the number of sukuks handed out in the last 18 months reflects the growing “dominance” of the Islamic financing mechanism in the real estate sector.

“In line with our growing role in both the Saudi financial and real estate markets, Shuaa Capital’s combination of expertise made us the natural partner for Jabal Omar Development Company.”

The Tadawul-listed real estate developer has not specified which projects it intends to support with the sukuk.

The issuance and private placement of the sukuk was announced in January 2019, but the deal was reached in the second half of last year.