Enormous real estate and business projects are very much en vogue in the Middle East, with construction projects estimated at a cool $1 trillion in the Gulf states alone. Aside from massive real estate projects that run into the billions of dollars, the emerging Gulf markets are investing in new financial districts to attract capital and place their countries more firmly on the map.
One question that begs to be asked is why the region took so long to follow in the footsteps of the likes of London and New York, which redeveloped inner city areas, the London Docklands and Battery Park respectively, over a decade ago into prosperous financial centers.
Saudi Arabia is the latest Middle Eastern country to create a financial center, following Dubai's International Financial Center (DIFC), the Qatar Financial Center (QFC), Amman's Abdali district and Khartoum's $4 billion Al Mogran project. Although arguably joining the fray relatively late in the game, Saudi Arabia always had one up on the smaller Gulf countries due to its larger economy and massive energy reserves. Nonetheless, the kingdom's plan for a financial district for Riyadh, the King Abdullah Financial District (KAFD), comes at the right time to capitalize on the booming Gulf markets and promote private sector development to diversify away from oil.
The KAFD will effectively replace Riyadh's business district of Olaya, with the new location to house the Capital Market Authority, the Stock Exchange (Tadawul) the Commodity Market and 16 private banks alongside other financial institutions. The Central Bank (SAMA) may also move to the site.
The 1.3 million square meter project, with a floor space of 3.3 million square meters, is at the northern end of the King Fahd Road, just 15 minutes from the airport.
Excavation work is already underway, with the first buildings slated for completion early next year. The Public Pension Agency (PPA) is to bankroll the 28 billion Riyals ($7.4 billion) project, which is being touted as the Middle East's largest international financial center.
"The idea is to provide a financial center for Riyadh, and be the center of Saudi Arabia and of the Middle East by virtue of its size," said a KAFD representative.
The PPA has taken its time to develop such a project, eyeing how successful the DIFC and the recent QFC have fared, and visiting Battery Park, London's Canary Wharf and Singapore to get an idea of what the district needs.
The master plan, by Danish architects HLA, incorporates a bit of all of these centers, including the plan for a skywalk taken from Calgary, Canada a walkway running throughout the district connecting one building to another via pedestrian bridges. In Calgary the sky walk was to allow movement between buildings during the extreme cold, whereas in Saudi the walkway will be completely air-conditioned for the country's sweltering summer months.
"Once in the district, you will be able to go from one end to the other without stepping outside," the representative said.
The skywalk will be supplemented by a monorail planned by the Riyadh municipality to allow the KAFD to be a vehicle free zone through the use of park and ride system. There is also talk of the monorail running directly to the airport.
The master plan divides the district into three areas, connected by a wadi waterway that forms the spine of the project. "The Leaf" will be the center with a mixed-use area (23% residential, 5% retail and the remainder office space). Around two-thirds of the area will house an aquarium, museums, hotels, exhibition and conference centers, sports facilities and mosques.
"The idea was make this a day and night center so it's not a ghost town at night," said the KAFD representative.
The North West area will be support services, utilities and parking, while the South Area will contain residential and office space. The plan, said the representative, is for the center to accommodate 50,000 people, with some 4,600 residents and 43,000 office employees.
With Riyadh short of office space, and the country undergoing a massive population spurt, the district is hoping to cater to economic growth and provide jobs. Instrumental to this will be a CMA sponsored Financial Academy. "It will be an advanced university for finance under the umbrella of the higher education ministry," said the representative.
Unlike the QFC, the KAFD will not offer tax-free incentives for companies to set up shop. "There will be no tax breaks it is a great location so there are no incentives," the representative said.
Such a strategy has not deterred international players Deutsche Bank, Morgan Stanley and Goldman Sachs involvement in joint ventures at the KAFD. "People have signed up already without knowing the price," the representative said.
The district will differ from the DIFC, he added, by focusing on Saudi businesses first, followed by institutions of a "high international standard."
© Executive 2007
