Al Majdiah, First Avenue sign framework deal for Makkah project

Logos of Dar Al Majed Real Estate Co. and First Avenue for Real Estate Development Co.

Dar Al Majed Real Estate Co. signed a framework agreement on June 24 for the development of the Eastern Hindawiyah project in Makkah with consortium partners First Avenue for Real Estate Development Co. and Rikaz Real Estate Co.

In a statement to Tadawul, Al Majdiah said the agreement follows the consortium’s award of the project by the Royal Commission for Makkah City and Holy Sites, with Jadwa Investment serving as fund manager.

The agreement sets the legal and regulatory framework for the project and defines the rights, obligations, and responsibilities of the parties, as well as implementation mechanisms under future executive agreements.

Under the agreement, the consortium will receive a development fee equal to 15% of the project’s actual costs. The final amount will be determined in the development agreement to be signed with the fund manager after required studies and design approvals are completed.

The consortium will also be entitled to a performance incentive of 14% above the fund’s target internal rate of return of 8%, in addition to a marketing fee of 2.5% of project sales.

The agreement will remain in force until all project-related obligations are fulfilled or terminated in accordance with its terms.

Al Majdiah expects the agreement to have a positive financial impact during the project’s development phases, although the value and timing of that impact cannot yet be determined.

The company said board member and Managing Director Abdul Salam Al Majed is a related party to the agreement through his board membership at First Avenue.

The Eastern Hindawiyah project is part of Makkah’s urban development plans aimed at upgrading neighborhoods, improving quality of life and supporting sustainable development.

First Avenue said the agreement will remain effective for 180 days from the signing date. It added that the project consortium consists of First Avenue with a 45% stake, Al Majdiah (35%), and Rikaz (20%).

The company expects the project to enhance the investment value of the participating parties by capitalizing on the promising opportunities it offers.

First Avenue also expects the agreement to have a positive financial impact during the project’s development phases. However, it said the value and timing of the impact cannot be determined accurately at this stage, as a clearer assessment will be possible after the fund is established, the development agreement is signed, and the project's final costs are approved.

The company added that any material financial impact will be disclosed in due course.

It also noted that related parties to the agreement include board member Abdul Salam Al Majed, Al Majdiah Managing Director, and board member Khalid Al Qahtani, who is Chairman of Rikaz.

According to Argaam data, Al Majdiah said earlier this month that the consortium had been awarded the project. The site is located about 1.8 km from Masjid al-Haram, covers roughly 235,000 square meters and is estimated to cost SAR 2 billion, excluding potential superstructure development works.