Saudi Arabia has transferred ownership of Riyadh’s King Abdullah Financial District (KAFD) to the Public Investment Fund (PIF) from the Public Pension Agency (PPA).

It is understood the move is an attempt to rescue the project, which was launched 10 years ago. It is also another example of the growing powers being transferred to the PIF, which Riyadh has said it is aiming to make the world’s largest wealth fund.

The PIF has chosen US-based JPMorgan as its adviser on the transfer and a feasibility study is currently being undertaken, which will establish a valuation of the district and how much compensation will be paid to the PPA, according to UK news agency Reuters.

According to the government’s Vision 2030 plan, it also plans to directly connect KAFD to King Khaled International airport in Riyadh, as well as turn it into a special zone with “competitive regulations and procedures”, and visa exemptions.

It is understood the district’s development is about 70 per cent complete, and the developer is struggling to lease space to financial institutions.

Riyadh says the problems stem from historical decisions: “In the past decade, work started at [KAFD] without consideration of its economic feasibility. The objective was to prepare the land in order to allow the business and financial communities to invest and build real estate.

“When this objective was not reached, the government decided to develop and rent the real estate. Challenges were deepened by the development of the real estate project in one single phase, which caused a significant increase in construction costs and several delays in delivery.

“This resulted in a large oversupply of commercial space for the years to come. Without any dramatic shift in direction, renting the 3 million square metres of built-up areas at reasonable prices, or even achieving decent occupancy rates, will be very challenging.”

In an attempt to make the scheme more successful, the government plans to repurpose some of the built-up areas and change the real estate mix, increasing the allocation for residential accommodation, services and hospitality areas.

It is understood that total investment into the project had reached SR31bn ($8.27bn) by May 2014. The PPA currently fully owns KAFD through its Al-Rayadah investment arm.