Knowledge Economic City and its subsidiary have signed a letter of intent to establish a SAR 7.5 billion private real estate fund for a major mixed-use development in Madinah.The proposed closed-ended fund will finance the Knowledge Gardens project, one of the largest developments planned within Knowledge Economic City. Preliminary feasibility studies estimate that the project could generate total revenue of about SAR 10.2 billion.
Knowledge Economic City and Algharraa International Real Estate Development Company will participate as co-investors and co-developers. Fourmen Investment Company is expected to serve as the principal investor and lead developer, while BSF Capital will act as the proposed fund manager.
The agreement remains preliminary and is subject to regulatory approvals, the completion of financing arrangements and the signing of definitive contracts. The letter of intent will remain valid for 120 days, giving the parties time to settle the investment, development and governance terms.
Under the proposed structure, Knowledge Economic City and Algharraa will contribute land valued at approximately SAR 1.66 billion. They are expected to receive about SAR 800 million in cash as part of the consideration, with the remaining land value contributed to the fund in kind.
The in-kind contribution would give the two companies a combined equity interest of about 39.9 per cent in the fund. Fourmen Investment is expected to hold 46.2 per cent, while other investors could take the remaining 13.9 per cent. The ownership proportions may change before the final agreements are signed.
The fund is expected to draw on several sources of capital, including land contributions, direct equity investment, bank borrowing and possible participation by additional investors. The proposed bank financing would have a five-year tenor, covering a three-year construction period and two years for repayment from sales proceeds.
The investment vehicle is planned with an initial life of four years. This would include three years for development and one year for marketing and exit. The term could be extended twice, for one year each time, depending on the final fund documents and regulatory consent.
Knowledge Gardens will occupy a net land area of about 332,054 square metres in the south-eastern section of Knowledge Economic City. The site lies west of Prince Naif Road and south of Sheikh Ibn Baz Road, close to the Haramain High-Speed Railway station in Madinah.
The development will be divided into four mixed-use zones with a combined gross floor area of approximately 897,542 square metres. Its total built-up area, including parking facilities, is projected at more than 1.27 million square metres.
Current plans include 4,198 residential units, 183 serviced apartments and hotels offering around 450 rooms. The master plan also provides nearly 80,000 square metres of commercial and office space.
Community facilities will include a mosque, a kindergarten and a neighbourhood centre. More than 52,000 square metres will be allocated to connected parks, landscaped areas and public open spaces.
The project is designed to combine housing, hospitality, retail, workplaces and social infrastructure within a single urban district. Its location near the railway station is expected to improve access for residents, visitors and businesses while supporting Madinah’s continuing expansion.
Knowledge Economic City and Algharraa are also expected to receive development-management fees for their roles as co-developers. The size and timing of those fees will be fixed through the definitive contracts.
The transaction represents another step in Knowledge Economic City’s strategy of using institutional investment funds and specialist development partners to unlock the value of its land holdings. Such structures can limit the amount of direct funding required from the listed company while distributing construction and financing risks among several participants.
Private property funds have become an important financing instrument for large developments across Saudi Arabia. They allow developers to combine land, investor equity and bank debt within regulated vehicles, while giving financial institutions a larger role in project supervision and capital deployment.
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