Kele Contracting LLC, the joint venture between Dubai’s Enshaa and Australia’s Kele International, has signed a $1.3bn deal to develop about 30,000 low-cost homes in Saudi Arabia.
“It’s an affordable housing project and it has a five-year life,” Andrew Elias, CEO of Kele Contracting said on the sidelines of the CEO Awards 2011 in Dubai on Tuesday.
“It is a SR5bn ($1.33bn) project and there are 1,127 buildings, so about 30,000 units.”
Dubai-based Kele in June paired up with Saudi’s Al Suwaiket Contracting and Construction in a bid to diversify its operations outside its domestic market, where plunging house prices have spurred the collapse of the construction market.
Neighbouring Saudi Arabia has promised to spend about $130bn, or around 30 percent of its annual economic output, on social projects such as building new houses and creating jobs. Earlier this year, King Abdullah pledged SR250bn ($67bn) to be spent on 500,000 new homes.
“This has been a good year. We took advantage of the outcome and it probably forced us to look into new markets so we have been very active in the neighbouring GCC markets,” said Elias."[Saudi Arabia] is a particularly attractive destination for investors and developers at present, a situation expected to continue over the next few years."
Kele said in June its order book was valued at more than AED2.5bn, including around nine projects in Dubai.The Middle East and North Africa has an estimated affordable housing shortfall of 3.5 million with nearly half in Egypt, a report by property consultancy Jones Lang LaSalle said this week. High land prices coupled with the cost of infrastructure, limited home finance and poor financial returns have all contributed to a severe shortfall in midmarket housing, the report said.
Among the six Gulf states, the report saw the greatest need for low-cost homes in Saudi Arabia, compared to 40,000 homes in Bahrain, 20,000 in the UAE and 15,000 in Oman.