North of Jeddah and close to Medina, Al-Rayis will be the first of a string of towns to be developed as part of the kingdom’s $40bn plan to encourage tourism on its Red Sea coast.

Osama Halawi, general manager of development areas with the Supreme Commission for Tourism (SCT), tells MEED the site has been selected following the approval of the tourism masterplan by the Council of Ministers at the end of June.

He says the development will cover 30 square kilometres and will seek to attract investment of SR22bn ($6bn). The development will be carried out in up to five phases over 25 years.

Halawi says the commission is now exploring further initiatives to develop tourism. This could include forming a body to oversee coastal developments. “We are looking at establishing an organisation that will oversee the development of the Red Sea coast,” he says. “At the moment, the management of the Red Sea is split. We are suggesting one unit to manage it, which will have representatives from all the various territories.”

The SCT is in talks with the local authorities over the land at Al-Rayis. “The site is not ours,” says Halawi. “We are negotiating with the Municipalities Ministry because it is our main partner. We cannot do anything without its blessing.”

SCT is planning to use both private and public sector support to develop the project at Al-Rayis and other sites. Private investors will provide the capital, while the government will provide the land.

The Red Sea masterplan involves developing 19 towns along the coast, from the Jordanian border in the north to Yemen in the south. Other sites earmarked for development include Al-Wajh, Al-Khuraibah and an as yet unnamed location south of Jeddah.

SCT is also moving ahead with plans to develop tourism facilities on the Gulf coast. Three bids were recently submitted for a 100 sq km site at Al-Auqair, south of Dammam. The SCT is now awaiting the decision of King Abdullah before launching talks with the bidders.

“Once the king gives the go-ahead, we will start negotiating with them and begin work on the masterplan,” says Halawi.

Once the plans for Al-Auqair are finalised, work is expected to begin on the Al-Rayis development.

The presence of millions of religious tourists travelling through Jeddah to Mecca and Medina is a key driver behind the development of the Red Sea masterplan.

According to the SCT, 51 per cent of visitors enter the country on religious visas, spending about SR10bn in the kingdom each year.

Tapping into this established market represents a clear opportunity for Saudi Arabia.

The tourism plan received approval from the Supreme Economic Council on 4 May, before being passed on to the Council of Ministers for final approval last month (MEED 16:05:08).