Tuesday, Aug 02, 2011
--Jeddah tower seen economically viable
--Construction to take 63 months
--Financing already in place
(Adds analyst comment in paragraphs 6, 7; details throughout.)
RIYADH (Zawya Dow Jones)--The world's tallest tower to be built in the Saudi Red Sea-city of Jeddah, is economically viable and will provide sustainable profits, billionaire Prince Alwaleed bin Talal, whose Kingdom Holding Co. (4280.SA) is a stakeholder in the project, said Tuesday.
"This project will provide sustainable profits to Kingdom Holding shareholders," Prince Alwaleed said at a press conference in Riyadh. "(It) has been in discussion since four years because of our emphasis to have it very economically viable...this project is very feasible for the shareholders and everybody is satisfied with the potential returns."
Riyadh bourse-listed Kingdom Holding earlier Tuesday announced that its associate firm Jeddah Economic Co. had inked a 4.6 billion Saudi riyal ($1.23 billion) deal with local conglomerate Bin Laden Group to build the world's tallest tower, which will have a height of more than 1,000 meters.
Construction on the project, which will take 63 month to complete, is expected to start soon and finances for the tower are already in place, Alwaleed said without providing any further details.
The tower would exceed Dubai's 828-meter tall Burj Khalifa, which is presently the world's tallest building. It will house a hotel, serviced apartments, luxury condominiums and offices, and will occupy an area of 500,000 square meters.
"It's ambitious and in planning phase for a while. The critics will say it's unnecessary when resources may be deployed for other much needed development and infrastructure," said Saud Masud, financial analyst at regional investment bank Rasmala.
"However as a symbolic undertaking this project may carry merit. Saudi is the largest economy in the Middle East with a need for socioeconomic advancement and development. The tower may reflect inspiration to that effect," Masud added.
Kingdom Holding said in its statement today that it had signed a shareholder agreement under which Bin Laden Group would take a 16.63% stake in Jeddah Economic Co., or JEC, which will build the tower. The Saudi firm will own 33.35% in JEC, while 33.35% will be held by Abrar International Holding Co. and 16.67% by investor Abdurrahman Sharbatly.
The planned tower will be part of the more than 5.3-million-square-meter Kingdom City, north of Jeddah, which is expected to cost $20 billion. Chicago-based Adrian Smith + Gordon Gill Architecture led an interdisciplinary team that designed the tower.
"Building this tower in Jeddah sends a financial and economic message that should not be ignored. It has a political depth to it to tell the world that we Saudis invest in our country," Alwaleed said.
Kingdom's shares closed up 1.91% at SAR8.05 Tuesday on the Riyadh bourse.
-By Summer Said, Dow Jones Newswires; +966-546-842373; summer.said@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
02-08-11 1300GMT
