Knowledge Economic City and Its Subsidiary Sign Letter of Intent to Establish a SAR 7.5 Billion Fund for the Development of Knowledge Gardens
Knowledge Economic City (KEC), the publicly listed master developer leading Madinah’s urban transformation, and its subsidiary, Algharraa International Real Estate Development Company, has signed a letter of intent with BSF Capital and Fourmen Investment Company. The agreement sets out the general framework for establishing and managing a closed-ended private real estate investment fund, regulated by the Capital Market Authority (CMA), to develop Knowledge Gardens, one of the largest mixed-use developments within the Knowledge Economic City masterplan, with the opportunity for additional investors to participate under the preliminary principles and terms set out in the letter of intent.
Under the letter of intent, BSF Capital, one of the Kingdom’s foremost asset and wealth management firms, will act as the proposed fund manager, while Fourmen Investment will participate as a shareholder and lead developer, alongside Knowledge Economic City and its subsidiary Algharraa International as shareholder and co-developer.
The fund’s proposed financial structure is anchored by an in-kind land contribution valued at approximately SAR 1.66 billion, alongside direct cash contributions, bank financing and contributions from additional investors. Total fund deployment is estimated at approximately SAR 7.5 billion, covering the land value, construction works, indirect costs, reserves, fit-out works and developer fees, while preliminary studies point to total projected project revenues of approximately SAR 10.2 billion.
Knowledge Economic City and its subsidiary are expected to receive approximately SAR 800 million in cash, representing part of the value of the land contributed to the fund, while retaining the remaining balance as an in-kind contribution equivalent to a 39.9% equity stake. They will also earn development management fees in their capacity as co-developer of the project, all subject to the definitive agreements. Under the initial unit ownership structure, Fourmen Investment will hold 46.2% and other investors 13.9%. The financial impact will be recognized in the company’s financial statements in accordance with International Financial Reporting Standards (IFRS) once the accounting recognition criteria have been met and the related regulatory and contractual procedures completed.
Knowledge Gardens is planned as one of the largest mixed-use projects within the Knowledge Economic City masterplan, located in the Southeastern District, west of Prince Naif Road and south of Sheikh Ibn Baz Street, close to the Haramain High-Speed Rail station. The project will rise on a net land area of 332,054 square meters across four mixed-use development zones, with a total gross floor area (GFA) of approximately 897,542 square meters and a total built-up area of approximately 1,274,419 square meters, including parking.
The development will comprise approximately 4,198 residential units, 183 serviced apartments and a 450-room hotel, together with around 80,000 square meters of commercial and office space, a community center, a mosque, a kindergarten, and a network of parks and green spaces extending over more than 52,000 square meters, creating a vibrant, fully integrated urban community that serving residents, businesses and visitors, and raises quality of life in Madinah.
The letter of intent supports the company’s long-term strategy of developing its assets in partnership with specialized developers and investment funds managed by leading financial institutions, diversifying funding sources, attracting institutional capital, accelerating the pace of project delivery, unlocking value from its land portfolio and enhancing shareholder value. The collaboration also opens access to regional and international markets and strengthens opportunities to market the project beyond the Kingdom, drawing on Fourmen Investment’s strategic partnership with Tatweer Holding, whose presence and representative offices span several targeted international markets.
Dr. Moath Al-Yahya, CEO of Knowledge Economic City, said: “The letter of intent reflects our strategy of developing assets in partnership with first-rate financial institutions and developers, and paves the way for the launch of one of our largest and most integrated projects. Knowledge Gardens will form a vibrant urban community at the heart of the Southeastern District and alongside the infrastructure works already under way in the area, will help cement Knowledge Economic City’s position as a leading investment and residential destination in Madinah, enhancing value for our shareholders and supporting the goals of Saudi Vision 2030.”
The letter of intent runs for 120 days from signing, allowing the parties to complete negotiations, conclude definitive agreements and fulfil the necessary regulatory and contractual requirements. Under the preliminary framework, the fund is expected to have a four-year term from launch, three years of development followed by one year for marketing and exit with the option of two one-year extensions. The establishment of the fund and delivery of the project remain subject to the fulfilment of all regulatory and contractual conditions, including obtaining the necessary approvals and completing financing arrangements.
