Saudi Arabia - Riyadh's new economic cities

04 April 2008

Since launching King Abdullah Economic City near Jeddah in December 2005, Riyadh has revealed the mammoth scale of its ambitions by unveiling a series of mega-city projects that include five other economic cities and several huge industrial clusters such as the $40bn Sudair Industrial City north of Riyadh.

Each of the cities is to be paid for by the private sector - albeit with the state providing cheap land and energy as inducements.

Riyadh is prioritising development at King Abdullah Economic City to prove the viability of the new city model - a move that it hopes will encourage and strengthen investor interest in the other cities.

Even so, a host of agreements have already been signed with private partners for the cities in Jizan, Medina and Hail, demonstrating that even without aggressive promotions, the potential of the cities is speaking for itself.

Despite this, Saudi Arabia has been criticised for making slow progress on some of these schemes. But it is right to proceed with caution.

In contrast to some of its more brash Gulf neighbours, Riyadh instinctively prefers to put in place its road, power and water infrastructure before pushing ahead with industrial and commercial developments.

It prefers demand to be proven and not speculative.

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