MENAFN - Arab News
Saudi Arabia- $26.6bln project to attract FDI
(MENAFN - Arab News) Saudi Arabia has embarked on a major SR100 billion (26.6 billion) project to attract foreign direct investment (FDI) and transform the Saudi economy into a global economic powerhouse.
Last December, Custodian of the Two Holy Mosques King Abdullah laid the foundation stone of King Abdullah Economic City (KAEC) on a greenfield site in Rabigh, 200 km north of Jeddah. The largest of the four new economic cities planned in different parts of the Kingdom and designed to attract overseas investments and create job opportunities for Saudis, it also is the biggest construction project in the GCC — and is getting bigger all the time. Initial designs were recently substantially redrawn — to create a city five times the original plan. Reports now say that the project will cost not SR100 billion but SR200 billion. Even before it was expanded, the project was described as a "jewel in the crown of Saudi Arabia" by Dubai's ruler and UAE Vice President and Prime Minister Sheikh Mohammed bin Rashid Al-Maktoum. It is now the largest construction project in the Middle East, probably the largest in the world.
One of the major objectives behind the economic cities is the creation of new, strategically-planned industrial centers which have the capacity to develop and expand and be a magnet for overseas investors. When completed, the KAEC will house at least two million people and, according to latest projection, create nearly a million jobs. The talk is that it will rival Jeddah, becoming not merely an industrial city but, with its brand new infrastructure, a commercial center as well.
King Abdullah toured the site of the project, inspecting progress. Among work under way or already finished in this multistage project are the city's first boulevard — a 15 km stretch that will be lined with over 3,000 palm trees — and the excavation of the first canal to run through the Red Sea Village, a component of KAEC. Geo-technical investigations are under way for residential units and designs have been drawn up for one of the main entry gates. The first Corniche Park and marina have also been completed.
Work began on the project the very day King Abdullah launched the KAEC at the headquarters of Saudi Arabian General Investment Authority (SAGIA), the project's prime facilitator, in Riyadh on Dec. 20, 2005. Less than a year later the king was given an overview of the considerable progress that has been made.
"We're extremely thankful to King Abdullah for his generous patronage of the project and his keen interest in developing KAEC as a beacon of the Kingdom's future development," says Mohamed Ali Alabbar, chairman of Emaar Economic City (EEC), the company which was given the contract to build the KAEC. It was set up by Dubai-based Emaar Properties (the world's largest real estate company with over 40 billion worth of projects) in a joint venture with Saudi companies Aseer Trading, Tourism & Manufacturing and the Binladin Group.
King Abdullah's visit followed the completion of EEC's record-breaking initial public offering (IPO) of SR2.55 billion, 30 percent of the SR8.5 billion total capital, to which more than half of the Saudi national population subscribed.
This immense project, a new-age city built today for tomorrow's generation of Saudi citizens, will integrate itself into the Kingdom's ongoing drive to expand and diversify the economy and act as a hub for foreign investors, global trade, commerce and industry. It will include a new international airport.
EEC's Alabbar explains: "The six components — seaport, industrial district, educational zone, financial island, resorts and the residential areas — will work seamlessly together. They will make KAEC an important global destination and a focus for the development of both heavy and light industry and a range of services. These will bring in a greater level of local investment as well as regional and international foreign direct investment into the Kingdom."
Central to the mega project is the new seaport. "Covering 13.8 million square meters, a major increase of 11.2 million square meters from the original project, the seaport will be the largest in the region with a capacity of over 10 million containers per year," says Alabbar. "This is significantly higher than all other regional ports. The port will have facilities to handle cargo and dry bulk and will be equipped to receive the world's largest vessels."
With its strategic location on the Red Sea and easy access to key cities within Saudi Arabia, the port will have a designated zone for light industry and logistics. It is designed to serve as a transshipment center for onward movement of goods to Europe, Africa, Asia and beyond. It will boast an integrated transport system with seamless high-speed transition from sea to rail, road and air, making the city the main gateway to the Central and Eastern Provinces.
Being so close to the holy cities of Makkah and Madinah, it will also have a dedicated Haj terminal that can receive over 500,000 pilgrims every season. To cater to this flow of visitors there will be adjoining hotels, medical centers and other world-class amenities.
The educational zone will consist of a university, colleges and schools. There will also be research and development centers, a luxury holiday resort as well as residential and commercial centers.
The major modification of the KAEC master plan with substantial additions to its six major components will generate even more employment opportunities for Saudis. It now has the potential to generate one million jobs, twice the original target. The breakdown of jobs to be created is: Industrial and light industries 330,000; research and development 150,000; commerce 200,000; services 115,000; hospitality 60,000 and education and community services 145,000.
"We're creating a new nerve center for global businesses that look at the investment opportunities provided by the Kingdom," says Alabbar. "This aligns with the vision outlined by King Abdullah to make the Kingdom among the Top 10 most competitive nations in the world by 2010."
"This expansion is a landmark move for EEC, which has gained the trust of the Saudi citizens," affirms EEC CEO Nidal Jamjoom. "Every component of the project is being scaled up corresponding to the additional land. This expansion will eventually translate into more business opportunities for Saudis as well as overseas investors."
RSP Architects, principle planners of King Abdullah Economic City, revised the overall master plan of the project. Additional detailed planning was provided by WATG for the resorts and residential zones, by SOM for the city center and by Parsons International for the industrial zone.
Following the expansion, the Industrial District will now cover 40 million square meters, five times more than previously envisaged. There will be room for 2,700 industrial tenants. The industrial district will have specific start-up initiatives to encourage and attract local entrepreneurs. International experts have been consulted to ensure that the zone's development follows best environmental practices.
The Central Business District (CBD) will offer 3.8 million square meters of office space, hotels and mixed-use commercial space. The financial district, within the CBD, has now been doubled in area to cover 14 hectares. It will offer the largest regional financial nerve center to the world's leading banks, investment houses and insurance groups. The expectation is that new banks and financial institutions coming to the Kingdom will set up their headquarters there.
The retail component of KAEC takes a quantum jump following the project's expansion. From an area of 3.3 million square meters, the total retail space will now spread to 8.7 million square meters to house over 50,000 shops, nearly three times the earlier estimate.
The hospitality zone has seen the number of hotel rooms and suites increased from 12,000 in 60 hotels to 25,000 in more than 120 hotels. An ideal place to work and live, the KAEC will now have 250,000 apartments and 25,000 villas, a leap from 110,000 apartments and 16,000 villas. Foreigners will be able to buy property in KAEC.
Building on the socio-cultural environment demanded of living environments, KAEC will be provided with 550 mosques including several grand mosques in the residential zones. Schools will be opened to cater to the educational needs of children in each community in addition to a university campus for 18,000 students. A sports stadium with 45,000 seats is also part of the development.
All these figures are massive. It is like building a new capital city. EEC's Alabbar has reaffirmed that the company will meet its deadline to build the city on time. During this year's Jeddah Economic Forum, Alabbar promised that within two to three years the first people would start living in the city.
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