International Investment Bank (IIB), a globally focused investment bank based in the Kingdom of Bahrain operating in line with Shari’ah principles, announces the rapid progress of its new real estate initiative in Sarajevo, the capital of Bosnia & Herzegovina, comprising 3 main components: a state-of-the-art Shopping Mall & Leisure Complex (SMLC), a Commercial Offices Tower (COT) and a Five Star Hotel Tower (FSHT).
In August 2009, IIB acquired a 28.31% equity stake in the project in partnership with Al Shiddi Group (a well established business conglomerate based in Riyadh, Kingdom of Saudi Arabia, with extensive interests in real estate, agriculture, food and trading business). Since the acquisition, IIB is pleased to announce that the major piling and excavation works are now successfully completed, ahead of the initial time line projections.
The project, “Sarajevo City Center (SCC)”, with a total constructed area of 105,410 square meters, is situated in the prime location of Marijin Dvor across the Government and Parliament buildings overlooking the Sarajevo River. When completed, SCC will be the most iconic and largest commercial business attraction in the entirety of Bosnia & Herzegovina and is expected to accommodate a substantial market share of the higher end shopping, hotel and commercial space requirements of Sarajevo.
Mr. Aabed Al-Zeera, IIB’s Chief Executive Officer, stated: “We believe that the project will play a positive role in stimulating the Bosnian economy and contributing significantly to the new economic landscape of the country. Bosnia & Herzegovina’s very stringent banking and urban planning regulatory environment, which has minimized the impact of the financial crisis, has ensured that there is a balanced real estate development. Moreover, the crisis provided an excellent opportunity for us to lock-in contracts given that construction material prices are attractive and contractors’ terms are reasonable at present”.
Commenting on the key rationale of the project, Mr. Al-Zeera added : “We are extremely happy with the efficient progress of the project; our key strategy, notwithstanding the dramatically changed financial and economic landscape globally, is to explore niche and untapped markets that offer an attractive rate of return. Currently, Bosnia & Herzegovina faces a profound shortage in the supply of prime quality office space. Existing shopping and leisure infrastructure is very antiquated and significantly short of international standards in terms of not only size but also the depth and the variety of the facilities. This has created a considerable pent up demand for such infrastructure, especially amongst the upper and middle strata of Sarajevo’s population. Therefore, we are confident that SCC will attract and retain quality customers and tenants for the years to come underpinning the value proposition in this exciting project.”
Mr. Mohamed Hedi Mejai, IIB’s Executive Director of Direct Investment & Business Development, remarked: “The required quantities of steel and cement have been purchased at attractive rates and as stated earlier, the excavation and piling works are now completed. A highly regarded company, ANS Drive has been appointed as the main contractor of the project. ANS Drive is a Bosnian German company that has participated in the construction and reconstruction of over a hundred different projects across Bosnia & Herzegovina and has earned the trust of the Bosnian market through its accomplishments. The term sheet has also been issued by financiers and bank financing is expected to be accomplished by end of February 2010. Ongoing negotiations to appoint a reputable hotel operator, operating in line with Shari’ah principles, are in progress.”
“Our strategy for this deal is to build the project and once rented, sell it as an income generating portfolio in a 2-3 year time horizon,” Mr. Mejai said in conclusion.