Saudi Arabia breaks ground on entertainment mega city
WILL INCLUDE THEME PARKS AIMED AT CAPTURING PART OF MONEY SAUDIS SPEND ABROAD
Anew entertainment city that Saudi Arabia has started building southwest of the capital is seeking a broad range of financing from local and international sources, the project’s chief executive told Reuters.
Qiddiya is one of three megaprojects managed by the kingdom’s main sovereign wealth fund, the Public Investment Fund (PIF), as part of ambitious reforms aimed at overhauling the economy and providing jobs for an overwhelmingly young population.
The other two initiatives are NEOM — a $500 billion (Dh1,836.2 billion) business and industrial zone extending into Egypt and Jordan — and the Red Sea project, which includes a nature reserve, diving in coral reefs and heritage sites on about 50 islands.
Financial strategy
Qiddiya CEO Michael Reininger said the PIF’s contribution would probably exceed 50 per cent, with the rest likely financed through bonds, direct investment and other tools.
“Perhaps all at the same (time). All of those financial strategies are what we’re working on every day,” he said in an interview ahead of a groundbreaking ceremony on Saturday.
Reininger would not specify the expected investment value for Qiddiya except to describe it as “incredibly sizeable”.
Local media have reported the cost of the project’s infrastructure alone would reach up to 30 billion riyals ($8 billion) and the project would eventually be worth tens of billions of riyals.
Qiddiya will be built on a 334 square km site about an hour from Riyadh, making it 2-1/2 times the size of Disney World.
It will include a Six Flags
$8b estimated cost of project’s infrastructure alone
theme park and other attractions like water parks and motor sports. There will also be sports training, arts and cultural events, and vacation homes.
Already some 50 people are directly employed by Qiddiya, with hundreds more contracted as local suppliers and global advisers. Those numbers are expected to reach 55,000 when the first phase opens in 2022.
An official spokesman said Qiddiya expects to develop 34 square km of land and attract 1.5 million visitors annually by then.
The project aims to be the epicentre of entertainment, cultural and sports activity in a country that has historically shunned such activities on religious grounds but is now pursuing them to generate economic returns and open up Saudis’ lifestyles.
Giant market
With two thirds of the population under 35 and few local entertainment offerings, many Saudis flock to nearby Bahrain or Dubai seeking fun at the weekends. The state wants to secure up to a quarter of the $20 billion currently spent on entertainment overseas each year.
“Capturing as much of (those expenditures) as I possibly can is the objective and at the same time creating a bigger pie so that I can get the disproportionate share of that bigger pie that we create at the same time,” Reininger said.
“We’re not just going to go around the world, find things and copy them. We’re going to innovate and we’re going to stay ahead of the curve.” Reininger, an American who joined Qiddiya last month, previously worked on a high-speed rail system in Florida, oversaw largescale resort developments for the Walt Disney Company, and was a senior executive at engineering firm AECOM.
Asked about avoiding the pitfalls of other mega projects in the region, which have suffered long delays and cost overruns and sometimes fell far short of expected returns, Reininger said Qiddiya stood apart by fulfilling a clear economic need.
“It’s a giant market, there’s not a lot of competition, there’s a clear opportunity. That’s the kind of thing you want to invest in,” he said.
$20b currently spent on entertainment overseas each year