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Planned Investment in King Abdullah Economic City Surpasses All SAGIA-Licensed Investments for 2005 by 45%

Beirut (APD) - The proposed investments by Saudi Arabian and Gulf-based companies into the $26.6 billion King Abdullah Economic City outshine all the investments which the Saudi Arabian General Investment Authority (SAGIA) licensed in the first nine months of 2005, by 45%.

Touted as the biggest economic center in the region and Saudi Arabia's largest private sector development ever, projected investments into the 55 square kilometer cities would exceed the Kingdom's investment volume for both the entire year of 2004 and the first nine months of 2005, which SAGIA described as $18.3 billion.

King Abdullah Economic City, proclaimed on Tuesday in a ceremony in Riyadh, will be realized by Dubai-based real estate firm, Emaar, as master developer and by SAGIA as prime facilitator, Emaar said in a statement.

Two main Saudi corporate participants in the venture will be the Aseer company and the Saudi Binladen Group.

Aseer is an investment company affiliated with the Dallah Albaraka Group of Sheikh Salah Kamel.

The Saudi Binladen Group, one of the Kingdom's leading construction conglomerates, has been involved in many public sector projects and developments important to Saudi Arabia, including the expansion of facilities at the religious sites in Mecca and Medina, Islam's holy cities.

The Emaar announcement did not specify how large its and the other two companies' stakes in the project would be.

SAGIA stated that 30% of the equity of the consortium will be raised through an initial public offering.

The Saudi government will allocate 55 million square meters of coastal land close to the city of Rabigh to develop the project.

Rabigh is located between the Kingdom's commercial hub, Jeddah, and the Yanbu industrial city. The project will be 173 kilometers away from Mecca city.

Main features in the futuristic city on the Red Sea will be a new mega-seaport, an 8 square kilometers industrial zone, and a financial island with 500,000 square meters of office space.

The new port is projected as a 2.6 million square meters development that could compare in size to the world's top 10 ports.

A key aspect of King Abdullah Economic City is the expectation that it could provide jobs to around 500,000 individuals, which would qualify it as the single largest project in the world in providing job opportunities.

Another remarkable aspect of the plan is that it would support both Saudi Arabia's ambitions to develop conventional tourism and the Kingdom's commitment to the religious travels of the world's Muslims who are estimated to account for about 20% of global population.

The project for the new city's seaport includes pilgrimage facilities to serve up to half-a-million pilgrims who arrive by sea each year on their way to the holy city of Mecca, which would reduce congestions that occur annually during pilgrimage rites.

Completion of the overall project will take place in stages. First businesses and residents could move into the city within 24 to 36 months.

With announcement of King Abdullah Economic City, the cumulative worth of investments licensed or announced by SAGIA this year would increase to at least $50 billion. [TS-FC]

By Nadim Issa, APD Staff Writer in Beirut

© APD (Arab Press Digest) 2005