Saudi-based First Avenue for Real Estate Development Company has announced that its consortium has signed a framework agreement for the East Hindawiyah Project, one of Makkah's flagship sustainable urban developments.

This comes following the recent contract award by the Royal Commission for Makkah City and Holy Sites to the development consortium, for the project in co-ordination with Jadwa Investment Company participating as the fund manager.

The consortium is led by First Avenue for Real Estate Development Company with a majority 45% stake, along with members Dar Al Majed Real Estate Company (Almajdiah) with a 35% stake and Rekaz Real Estate Company with a 20% stake.

The agreement aims to regulate the relationship between the parties and establish the general framework for the development of the East Hindawiyah Project in Makkah by setting out the principal terms and conditions for the development of the project. 

It also provides for the appointment of a private closed-ended real estate investment fund manager (Jadwa Investment Company), including the mechanism for establishing the fund, acquiring the project land, and appointing the consortium as the developer and exclusive marketer of the project, in accordance with the applicable laws and regulations, it stated.

First Avenue said the consortium will receive a development fee equivalent to 15% of the project's actual costs, with the final amount to be determined under the development agreement to be signed with the fund manager after completion of the approved studies and engineering designs.

The consortium will also be entitled to a performance incentive equivalent to 14% above the fund's target internal rate of return (IRR) of 8%, it stated.

Lauding the agreement, Royal Commission for Makkah and the Holy Sites CEO Eng. Saleh Ibrahim Al Rasheed said: "Today, we are embarking on a new development phase, building on what has been achieved and opening a broader path for the development of priority neighbourhoods, through seven development sites and qualitative investment partnerships, which improve the quality of life and support the future of the holy capital."

The framework pact inked today also provides for the establishment of a closed-end private real estate investment fund to acquire and develop the project land, the appointment of Jadwa Investment as the fund manager, and the appointment of the consortium as the project's exclusive developer to carry out infrastructure works and prepare the site for future development and investment, he added.-TradeArabia News Service