Riyadh: Saudi Arabia’s Public Investment Fund is likely to make an offer next month to buy Riyadh’s unfinished financial hub as the government attempts to rehabilitate a project plagued by delays and cost overruns.
The fund may pay about SR30 billion ($7.9 billion) — the amount already spent on the King Abdullah Financial District by the Saudi Public Pension Agency — plus the cost of undeveloped plots, a person with knowledge of the matter said, asking not to be identified as discussions are private. The plan includes a new company to oversee the project’s completion and management.
The financial hub, which is about 70 per cent built and due for completion in 2017, has suffered a series of setbacks. Its main contractor, the Saudi Bin Ladin Group, has stopped working on the project, while little space has been taken up in the 73 buildings being constructed.
The wealth fund is a key pillar of the biggest economic shakeup championed by Prince Mohammed to prepare the kingdom for the post-oil era. Under the plan, the government wants to make the PIF the world’s largest sovereign wealth fund, with more than $2 trillion of assets including ownership of state-oil company Saudi Aramco. That would make it big enough to buy Apple, Google parent Alphabet, Microsoft and Berkshire Hathaway.
The government is aiming to salvage the financial district by offering incentives to banks and companies to take space there. It plans to transform the district into a “special zone that has competitive regulations and procedures, with visa exemptions” and directly connect it to the King Khaled International Airport, according to Prince Mohammed’s Saudi Vision 2030.
Various plans are under consideration, while the project’s pricing structure may change, the person said. A spokesman for the hub’s developer Al Ra’idah declined to comment, as did a spokesman for the Public Investment Fund.
“The concept of a free zone would certainly stimulate demand for the project,” said Ian Albert, regional director for property consultant Colliers International. “One of the biggest issues that foreign companies have in Saudi is residency permits and getting staff in easily. If free zones automatically allocated companies a number of residency permits for staff that would be very attractive to companies.”
The district was envisaged as a modern financial hub that would bring banks, financial-services firms, auditors and lawyers as well as the kingdom’s stock exchange and capital-market authority into one area. Five buildings at the district’s core, including the district’s tallest at 76 floors, will be surrounded by dozens of offices, apartments, hotels, conference centers and entertainment venues. On the ground, walkways below street level branch out to connect buildings and provide space that’s 8 degrees Celsius cooler than street level.