Saudi mega project set to attract $16 billion investment

20 June 2005

RIYADH — A real estate project on Saudi Arabia’s Gulf coast should attract around 60 billion riyals ($16 billion) in investments over the next ten years, the developer said yesterday.

The Khalid S. Shobily Group spent 7 billion riyals to develop the 6 million square metre strip of coastline in the city of Al Khobar.

“We aim to create a commercial, housing and leisure hub that’s on par with the best in the world,” Khalid Al Shobily, the firm’s chairman and founder, told Reuters in an interview.

Work began four years ago on developing Al Shobily Port, which covers a prime spot next to a causeway connecting Saudi Arabia to Bahrain. It has been split into sections and sold off in phases.

“Demand has been excellent,” Shobily said. “Investors spent 1.8 billion riyals buying plots over a five-hour sale held last week.”

Several global companies have already signed deals worth 4 billion riyals to build shops, high-rise apartments, a medical centre, a university and two hotel resorts.

Shobily was pleased the Saudi government was gradually introducing new

regulations to encourage more international firms to relocate to the oil-rich kingdom. “This project will meet the requirements and needs of these firms and their employees,” he said. “I expect a lot of them to choose Al Khobar over places like Dubai as Saudi Arabia is the economic powerhouse in the Gulf.”

Historically, Shobily added, Al Khobar has had strong links with firms with large numbers of Western employees, such as oil giant Saudi Aramco.

“This project will build on these links and help usher in a new stage in the city’s development.”

Some have questioned the viability of projects similiar to Al Shobily Port in attracting foreign tourists to ultra-conservative Saudi Arabia, the home of Islam.

Shobily dismissed these concerns, pointing out that the project would mainly target Saudi families.

“We lose 80 billion riyals a year from Saudis going abroad. We only need to tap into a fraction of this to be successful.”

The firm is also working on a 1.8 million square metre real estate project in the holy city of Mecca.

Saudi Arabia is experiencing a construction boom fuelled by a strong economy and high prices for its crude.

Shobily said huge demands were being placed on the real estate and construction sector.
“I estimate around 1.5 million new homes need to be built over the coming years to accommodate the kingdom’s fast-growing population,” he said.