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Hill Int'l and Makan in JV to develop MENA projects

JEDDAH - Hill International, the worldwide construction consulting firm has entered into an agreement with Makan Capital Group (MCG), a merchant banking and investment management firm, to form a new joint venture company that intends to develop commercial, mixed-use, residential, infrastructure and other projects throughout the Middle East and North Africa.

Engineering News-Record magazine recently ranked Hill as the 10th largest construction management firm in the US. Hill International provides programme management, project management, construction management, development management and construction claims services.

The company said in a statement, made available to Khaleej Times here, that the new company, to be named Makan Hill International Ltd., will be equally owned by the two signatory companies and will be headquartered in Abu Dhabi.

MCG, headed by Prince Abdul Aziz bin Fahd, intends to raise a fund targeted at approximately $500 million to invest in projects to be developed by Makan Hill.

"This new venture will bring Hill's project management resources and experience to the development of projects throughout the Middle East region," said Irvin E. Richter, Hill's chairman and chief executive officer. "It will also allow us to begin to develop projects as a principal with minimal investment by and risk to Hill," Richter added.

"The combination of MCG's financial expertise and Hill's project management expertise, together with our joint local market knowledge, will allow our new company to develop successful projects with the returns demanded by our investors," said Steven Koinis, managing director and chief executive officer of MCG.

MCG's special focus on the Middle East and North Africa provides superior investment products in a Shariah-compliant manner.

Real estate investments in Saudi Arabia have been witnessing a healthy revival in the past five years, which is mainly attributed to the return of capital as well as the soaring oil prices and increase in oil revenues.

The recently introduced regulatory framework covering investment laws for GCC nationals have also made freehold investment in the Kingdom highly attractive.

Professionals in the Saudi real estate market affirm that the capital invested in this sector runs into billions of riyals and is likely to go up in the light of phenomenal growth and development the sector is witnessing. The reasons behind such optimistic forecasts are varied, but foremost among them is the unprecedented support of the government for its nationals to build their own houses and apartments. Another reason is the high population growth rate which at present stands at 3.5 per cent per annum. According to a recent report released by the Ministry of Planning, the current population, which exceeds 22 million, is expected to reach 80 million by 2020.

Research and field studies estimate that the Kingdom will need four to five million housing units by 2020 to meet growing demands.

To satisfy this demand, it is estimated that around SR117 billion is required to be invested annually in the real estate sector. In order to build these houses and apartments, approximately 110 million square metres of suitable land will be required. Based on the recent market prices, the cost of this land alone will be around SR10 billion. This situation provides a unique opportunity to local businessmen and also those from the GCC to invest in this lucrative market as the investment will yield good returns in the medium and long term.