Commentary
Colin Foreman
Editor

On 12 November, Saudi Arabia’s Al-Balad Development Company announced a SR13.5bn ($3.6bn) investment portfolio that includes developing hospitality assets in Jeddah Historic District.

The company, which is backed by sovereign wealth vehicle the Public Investment Fund (PIF), said that the projects will be implemented through several funding models, including investment funds, public-private partnerships and build-operate-transfer contracts.

The announcement signals how the Saudi projects market has changed over the past year. Since 2017, announcements have typically been projects to be directly funded by newly established subsidiaries of the PIF, and while Riyadh appears to remain committed to these projects, funding models are changing.

At the Future Investment Initiative forum in Riyadh in late October, it became clear that the PIF now intends for investors to deliver a growing amount of the Saudi projects pipeline, and the Al-Balad announcement of an investment portfolio reflects that change.

The proposition is that after heavy investment in preliminary infrastructure and key buildings, Saudi Arabia’s projects are now ready for the private sector to step in and assist with the delivery.

Deals are already being signed. On 14 November, Midad Real Estate Company announced a SR7.6bn joint venture with PIF subsidiary Jeddah Central Development Company and Kerzner International to develop the first Atlantis and One&Only projects in Saudi Arabia within the Jeddah Central waterfront master plan. 

Announcing projects ready for investment is not a new tactic in the region, most notably in Bahrain, which lacks the financial strength of its GCC peers. In early November, $17bn of investment-ready projects were announced at Bahrain's Gateway Gulf investment forum, following similar announcements that were made at last year’s event and at the first Gateway Gulf in 2018.

Bahrain has shown that announcing projects for investment does work. The $17bn total announced this year matches the foreign direct investment that the country has successfully attracted since 2018.