Dar Al Arkan Chairman expects total sales of $4.5 bln from Oman project, sees limited impact from higher interest rates

Dar Al Arkan Chairman Yousef Al Shelash

Yousef Al Shelash, Chairman of Dar Al Arkan Real Estate Development Co., said that the expected total sales from its Oman project with the Trump Organization will be $4.5 billion (about SAR 17 billion).

Speaking to CNBC Arabia, Al Shelash indicated that the project is vast with construction running over a long period. He, however, expected the completion of work on the project’s first phase, which includes the golf course, hotel and some villas overlooking the sea, within four years.

The Chairman pointed out that the project will be financed through multiple resources due to its large size, including the company's own resources and bank loans, in addition to other financing instruments such as off-plan sales.

"The company has a strong cash position and expects cash flows from future sales. We do not need to borrow now to finance our projects, but with the development of projects in the coming years, we may need that," he stated.

Asked about the impact of raising interest rates on the company, Al Shelash said that it is insignificant, as most of Dar Al Arkan's financing is at a fixed cost since it is sukuk. However, the increase in interest rates negatively affected sales in the Kingdom's real estate sector, which depends on long-term financing, but there is little impact on off-plan sales, which the company is counting on.

There is no need currently for the company to borrow (or issue sukuk), but it may tap the credit market in the future to fund expansions, he noted.

As for Dar Al Arkan's future expansions, Al Shelash said: "Moving on, we see a great opportunity to enter European markets in light of the pressure on prices as a result of the crisis and the Russian-Ukrainian war."

The company announced, on Nov 21, the signing of an agreement between its subsidiary Dar Al Arkan Global and The Trump Organization to develop Trump’s signature residential villas, a hotel and a golf course in the AIDA joint venture in Oman.

The ADIA project is expected to cost $4 billion, and will be developed over 10 years on an area of 3.5 million square meters, according to Argaam's data.