Brief introduction about HTREC
Hajar Tower Real Estate Company is a Kuwaiti shareholding company. The paid-up capital thereof is contributed by the following parties as follows:
- A'Ayan Real Estate Company: Holds 31.5% of the capital.
- Bin-Laden Group of Saudi Arabia: Holds 25% of the capital.
- Commercial Real Estate Company: Holds 20% of the capital.
- Al-Masa'a Company: Holds 16% of the capital.
- Shopping Complexes Company: Holds 7.5% of the capital.
Success partners - Movenpick
- The company runs over 80 Movenpick hotels and resorts chain in over 23 countries; this brilliance comes from a deep-rooted experience of 10,000 manpower on a high level of professionalism in customer service.
- The real distinction of Swiss hospitality logo is represented in Movenpick Hotels as a unique international brand of high standard Swiss Deep-rooted origin that exceeds your expectations day by day.
Information about the project
- Hajar Tower which is one of the towers of Abraj Al-bait project is located right in front of the Ka'abah.
- The project consists of 7 towers; one of which is Hajar Tower.
- The project directly falls on the first ring road through Kaddy and Barakah tunnels which facilitate the entry / exit process.
- Hajar Tower is built on the ground of the holy Haram, and is directly opposite king Abdul-Aziz gate.
- Abraj Al-Bait project is considered the biggest construction project in the middle east, and one of the biggest landscape in the whole world.
Features & services of the project
- The project includes a shopping mall of 6 floors containing over 600 shops with an overall area of 190,000 sq meters and with an ability to accommodate 200,000 people.
- A huge car park of 4 floors able to accommodate over 1400 cars and buses.
- A massive prayer hall of 2 floors able to accommodate over 30,000 people.
- A medical clinic working 24 hours.
- The biggest library specialized in the history of Makkah and the holy Ka'abah.
- A health club.
- Internet cafes.
- A business centre.
- 24 hours security.
- An underground tunnel for a future train station.
Hajar Tower specifications
- The Haram is only 100 meters away from Hajar tower
- The land of Hajar tower is 2795 sq meters, and the total construction area for the tower is 90,308 sq meters
- Hajar tower consists of 41 floors; 31 of which Hajar tower real estate company owns (the 1st till the 31st)
- The first 10 floors will be an asset for the company.
- The hotelier units start from the 11th floor till the 31st floor
- The whole of Hajar Tower is managed and operated by Movenpick hotels & resorts chain
- Special systems to broadcast the prayers live from the Ka'abah to every single room in Hajar Tower.
- The tower consists of 1292 units
- There are 36 elevators in Hajar Tower only
- Each floor contains 33 units , however they can be re-located as 42 units
- Total area for each floor is 2800 sqm divided into the following:
- Total suites area is 1600 sqm
- Total facilities and services area is 1200 sqm
- Ownership is not allowed for non-Muslims
- Prices include full furniture according to international hotel standards and under the supervision of the Movenpick Hotels.
Objective of the project
- Ownership is 25 years throughout the whole year.
- Ownership in this project can either be for investment or personal use only:
- Personal use: by utilizing the unit without renting it out for the 25 years.
- Investment: by renting the unit through the Movenpick management in order to get annual returns on investment.
Investment process of the project
- The unit is rented out through the Movenpick Hotel management for one full year renewable annually, through the "share pool system" similar to an investment fund granting annual returns.
- At the same time the owner is given a specific number of points redeemable as complimentary free stay whenever the owner wishes to use the apartment, the number of points set depends on the size and view of the unit.
- The net minimum annual rate of return expected is 15%; taking into consideration the inflation of rent rates of similar hotels in the centralized area of the holy Haram estimated at 3% annually.
The return calculated by Ernest &Young which is considered one of the biggest companies in the world in conducting feasibility studies and real estate consultations; was based on the following factors:
- Rent rates of similar hotels in regards to standards and distance and level of service, such as Intercontinental-Dar Altawhid and Hilton Makkah, also the occupancy ratios of those hotels all year round.
- Occupancy ratio estimated as 61% as a worst case scenario, even though in the other hotels it is around 85% annually.
- Appreciation on the return figures is calculated as 3 % annually as a worst case scenario; however the realistic percentage of the appreciation is 10 – 15 % annually.
- One reason for the conservative figures given by Ernst & Young for this study is the fact that this is the first project in this location in its kind, as there are no other similar real estate projects as Abraj Al-Bait project.
- taking into consideration that this feasibility study was conducted in 2005, as the rent rates in first class hotels located around the holy Haram has risen in the past 3 years especially since the start of 2008 due to the demolishing of over 1000 properties in the shamiya area and other surrounding areas; creating a big gap between the demand of rooms and the supply available, consequently leading to rapid increase in the rent rates which validates the high figures expected in the operational returns on Hajar Tower investment.
- The return is calculated through the "share pool system" which is very similar to an investment fund shared by all owners wishing to invest their units through the Movenpick management. The revenues of all the units placed in the share pool system will be collected and then divided equally to the owners. This is to prevent any predicaments from occurring in the operation process of renting the units, and to guarantee everyone's equal right to gain the same returns on their invested units accordingly based on the size and view of their unit.
There are 3 types of investment:
- Long-term investment: where the apartment is purchased now and rented out through the Movenpick Management throughout the whole lease period.
- Medium-term investment: where the apartment is rented out through the Movenpick Management for a few years then it is re-sold or utilized as personal use only.
- Short-term investment: where the apartment is purchased now and is re-sold after a short period as prices are expected to increase rapidly through the coming few years.