Sharjah's Arada raises $350m through sukuk and lists on London Stock Exchange

Offer attracts significant interest from investors with subscriptions more than double the offer

Arada's Aljada discovery centre in Sharjah. The developer is targeting Dh3 billion in property sales this year. Photo: Arada

Sharjah property developer Arada raised $350 million by issuing a five-year sukuk or Islamic bond.

The dollar-denominated sukuk is listed on the London Stock Exchange, and is the first real estate issuance from the Middle East and North Africa region in 2022, Arada said on Wednesday.

The issuance created strong demand from regional and international investors, with a subscription order of $720m, more than double the size of its offer.

Institutional investors, fund managers, high net worth individuals, and banks from Europe, the Middle East and Asia invested in the sukuk, which is the company’s first public financing deal since its inception in 2017.

Arada is 60 per cent owned by KBW Investments, controlled by Prince Khalid bin Alwaleed of Saudi Arabia, while the remaining 40 per cent is retained by the Basma Group, which is chaired by Sheikh Sultan bin Ahmed Al Qasimi, Deputy Ruler of Sharjah.

“The closure of our debut sukuk on the London Stock Exchange is an exceptional endorsement from international institutional investors of both Arada’s track record and its future prospects,” Prince Khalid, vice chairman of Arada, said.

Since its launch in 2017, Arada has launched three mega projects in Sharjah, with a combined sales value of Dh33.5 billion ($9.12bn). It also announced the purchase of a plot of land on Dubai’s The Palm Jumeirah for Dh240m as part of its expansion plans outside Sharjah.

The developer is targeting 25 per cent sales growth in 2022 to Dh3bn on the back of the UAE’s property market recovery from the coronavirus pandemic. It also aims to complete 4,000 homes during the course of the year. In total, Arada has sold just under 10,000 units since inception, valued at more than Dh7bn, it said.

Arada’s projects include Aljada, Sharjah’s largest mixed-use development with 5,000 units and Masaar, a community with 4,000 villas and townhouses.

"The proceeds for the sukuk will be used for the management of existing bilateral funding, general corporate purposes and to support the development of Arada’s existing projects," the developer said.

Standard Chartered Bank, Dubai Islamic Bank and Emirates NBD Capital acted as joint global co-ordinators on the deal, while Abu Dhabi Commercial Bank, Ajman Bank, Al Rajhi Capital, Mashreq, Sharjah Islamic Bank, Kamco Invest, and Warba Bank were the joint lead managers and bookrunners.

The UAE's property market is continuing to recover from the pandemic on the back of the government initiatives such as residency permits for retirees and remote workers, as well as the expansion of the 10-year golden visa programme and the economic boost generated by Expo 2020 Dubai.

The market has also benefited from the country's widespread Covid-19 vaccination programme, which has kept case numbers relatively low.

In Abu Dhabi, villa sales prices during the first quarter of 2022 grew 10 per cent annually, while apartment sales prices rose 4 per cent, according to Asteco. In Dubai, villa sales prices surged 40 per cent year on year and apartment prices increased 22 per cent in the three-month period amid a broader recovery in the country's property market.

The value of property deals in Dubai more than doubled last year and broke a 12-year record in terms of sales transactions, buoyed by demand in the secondary real estate market, according to listings portal Property Finder.

The emirate registered 61,241 sales transactions worth Dh151.07bn last year, compared with Dh71.87bn worth of transactions it closed in 2020, making 2021 the best year for total transactions since 2013 and the highest in value since 2009, Property Finder said. The total value of sales in 2009 was Dh155.6bn.

Arada secured Dh250m in funding from Dubai Islamic Bank to speed up the construction of its Aljada mega-project in Sharjah last year.