Richard Branson is the first international investor to commit to taking part in Saudi Arabia’s Red Sea Project that involves the development of 200 kilometres of coastline.
French news service AFP reported that the Saudi Information Ministry issued a statement confirming that Branson will invest in project that was launched earlier this year.
The UK businessman has been visiting Saudi Arabia and wrote about his experiences and the economic and social changes being made in the kingdom on his blog.
Riyadh revealed plans to develop a tourism project known as the Red Sea Project in July. It was announced by Crown Prince Mohammed bin Salman bin Abdulaziz al-Saud, who said the scheme will incorporate 200 kilometres of coastline between the cities of Amlaj and Al-Jawh on the western coast of the kingdom.
Although the latest Red Sea scheme is still in the early stages and no budgets have been revealed, it has the potential to be the largest project announced since the drop in oil prices in 2014, and could offer billions of dollars of opportunities for contractors in the kingdom.
The underlying objectives are ambitious. It is aimed at repositioning the kingdom as a leading tourism destination that is not just reliant on the millions of pilgrims its holy sites welcome each year.
It aims to emulate the success of resorts in Egypt and Jordan, attracting 1 million visitors a year by 2035 and generating revenues of SR15bn ($4bn) annually. It is also hoped to create 35,000 jobs.
To support these goals, the area will be semi-autonomous, which means there will be no visa requirements for most nationalities, thereby overcoming the largest single obstacle that foreign tourists wanting to visit Saudi Arabia face today. There is also the possibility the kingdom could relax some of its conservative religious laws to attract Western tourists.
The plan to relax immigration rules highlights the importance that tourism now holds for policymakers in Riyadh. The sector has been singled out as one of the key components of Vision 2030 as it can create both opportunities for local private sector investors and jobs for Saudi nationals two of the fundamental challenges that the strategy document attempts to address.
The Red Sea Project area is vast and includes a wide range of attractions, among them 50 natural islands, heritage sites such as the ancient ruins of Madain Saleh, mountains, nature reserves, dormant volcanoes at Harat Alrahat, coastlines and beaches.
Construction work on the first phase of the scheme is scheduled to start in the third quarter of 2019, with completion in the fourth quarter of 2022. These initial works will largely involve establishing infrastructure and the first resorts. The infrastructure will be developed with seed capital from the Public Investment Fund (PIF).
The infrastructure required will be substantial. There will be a seaport, roads and airports, as well as infrastructure for boats and seaplanes, and the new development areas will need water, power, drainage and telecoms infrastructure installed.
The procurement process for the infrastructure is at the early stages, with consultants in the kingdom saying firms have been approached for design contracts and some early work has been completed on basic concepts for the project.
In addition to the infrastructure, the first phase also includes the development of hotels and luxury residential units that will be delivered in partnership with international companies. Construction work for these schemes is expected to follow the infrastructure.