• Saudi Developers Eager To Build 1 Million New Homes By 2014


    DUBAI, July 8 (Reuters) - Saudi Arabian property firm Dar Al-Arkan will raise its capital by 50 percent to help fund expansion to take advantage of a growing population and housing shortage in the largest economy in the Gulf Arab region.
    The largest real estate developer in the region by market capitalisation will raise its capital to 10.8 billion riyals ($2.88 billion) through issuing 360 million bonus shares, it said in a statement on the bourse website.
    "They (Dar Al-Arkan) are essentially doing it to fund expansion in Saudi Arabia. Saudi Arabia is probably the best market in the GCC," said Bobby Sarkar, analyst at Al Mal Capital in Dubai, referring to the six-member Gulf Cooperation Council.
    "The government is spending a lot of money on infrastructure and we have seen several UAE contractors looking at Saudi Arabia."
    The firm's shares eased 0.29 percent to 17.20 riyals at 0803 GMT. Saudi Arabia's benchmark TASI was 1.2 percent lower at 5,393 points.
    The capital hike, which will be funded from reserves and retained profit, will help "ongoing and future expansion in the company's projects", the company said in May.
    Dar Al-Arkan was not immediately available for comment.
    The shortage of real estate in Saudi Arabia is providing opportunities for construction firms in Dubai, who are looking at Saudi Arabia to drive their business as work dries up at home.
    Dubai's Arabtec Holding said last month it had won a $533.3 million contract to build towers in Jeddah, its latest contract in the kingdom.
    Saudi Arabia needs 1 million new houses by 2014 to meet the needs of its growing population, HSBC said in a report last month.
    The raise will increase Dar Al-Arkan's capital from 7.2 billion riyals, it said.
    "The appetite for debt has become a lot less, so firms are seeking alternatives," said Saud Masud, real estate and construction analyst at UBS.
    "I am not surprised they have done this but 50 percent is a big number ... it brings equity dilution of minority shareholder to the forefront."
    The company said in May it had concluded the issue of an Islamic bond worth 750 million riyals to help fund growth and projects.
    The country's bourse said in a separate statement it would set a fluctuation limit of 10 percent for the company on Wednesday, on a share price of 17.25 riyals.

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