Jabal Omar Development, the real estate company that owns a number of mixed-use towers close to Makkah’s Grand Mosque, reported a steeper loss in the first quarter as revenue declined amid coronavirus pandemic-related movement restrictions.
The company’s net loss for the three months to March 31 rose to 345.3 million Saudi riyals ($92m), from 237.86m riyals during the same period last year, it said in a statement to the Tadawul stock exchange, where its shares trade. Revenue during the period plummeted 89 per cent to 21.57m riyals due to lower occupancy rates at hotels and commercial malls in the wake of the pandemic.
The developer also faced higher financial charges “due to non-capitalisation of borrowing cost, as there were no significant development activities during the period”, it said.
Jabal Omar, which is one of the biggest publicly-listed real estate companies in Saudi Arabia, is developing a multi-use, mega-project spanning 2 million square metres overlooking the Grand Mosque in Makkah. The development has been taking place over several phases for more than a decade. The loss incurred during the three-month period meant the company’s accumulated losses grew to 2.4 billion riyals as of March 31.
“The group is dependent on the successful execution of management’s plans to generate sufficient cash flows to enable it both to meet its obligations as they fall due and for the continuity of its operations without significant curtailment,” it said in the statement.
Jabal Omar expects to generate about 4.46bn riyals in cash over the next 12 months by selling land plots in phase 7 of the development. It is currently in talks with real estate brokers and “specific potential buyers”, the statement said.
Its total assets dropped to 25.6bn riyals by March 31, from 25.7bn riyals at the end of last year.
Saudi Arabia is beginning to ease pandemic-related movement restrictions to welcome more visitors to the country. Earlier this week the kingdom said that foreign visitors arriving by air from most countries will no longer need to quarantine if they have been vaccinated against Covid-19.
However, visitors from 20 nations including the US, India, Britain, Germany and France are currently not allowed into Saudi Arabia under measures to curb the spread of the pandemic.
The kingdom said last week that the Hajj will be held this year and that overseas pilgrims will be welcomed, subject to health and safety measures being met. Details will be announced at a later date, a Hajj spokesman said.
Residential real estate prices fell by 1.4 per cent year-on-year in Makkah during the first quarter, according to Jadwa Investment.