Saudi Arabia’s Public Investment Fund (PIF) will be the kingdom’s most active client body in 2018, with spending of $22bn on new and existing projects.
The spending will make the PIF Saudi Arabia’s most active project owner. In 2018, Saudi Aramco, which is traditionally the busiest client body in the kingdom, is expected to award $15.3bn of contracts, according to regional projects owner MEED Projects. Aramco signed deals totalling $8.3bn in 2017.
Commenting on the state budget for 2018, Crown Prince Mohammed bin Salman al-Saud revealed that the PIF’s project spending will supplement SR205bn ($54.7bn) of capital spending made directly by the government and SR50bn by the National Development Fund, taking total public expenditure in the kingdom during 2018 to SR1.1 trillion.
The PIF is set to become the largest sovereign wealth fund in the world when it takes on the non-listed portion of Aramco after its initial public offering (IPO) in 2018
It is in the process of starting work on a series of major projects and has also taken over the development of King Abdullah Financial District.
Its largest scheme is the $500bn Neom city project, which will be funded by the PIF together with local and foreign investors.
“Neom will be backed by more than $500bn over the coming years by Saudi Arabia, the [PIF,] and local as well as international investors,” said Prince Mohammed when launching the project on 24 October.
The city will be developed across 26,500 square kilometres of land along 468km of coastline along the Red Sea and the Gulf of Aqaba. It will also cross into Jordan and Egypt. The plans also include the King Salman Bridge that will connect Saudi Arabia and Egypt – Riyadh and Cairo agreed to develop a causeway that will link the two countries across the Red Sea in 2016.
Progress has already been made on the scheme. In December, MEED reported that the UK’s Buro Happold has been appointed as the programme manager for the scheme.
In Medina, the PIF has established a new company to deliver projects that will allow more pilgrims to visit Medina and the city’s Prophet’s Mosque.
The company will be known as Roua al-Madinah. It aims to develop a 1.3 million-square-metre site about 1km away from the east wing of the Prophet’s Mosque.
The project includes 500 housing units, 80,000 hotel rooms, and prayer areas capable of accommodating 200,000 worshippers a day. Initial preparation works are currently under way, with construction due to start in 2018. The first phase of the scheme is anticipated to launch in 2023.
The PIF will also lead the SR18bn redevelopment of Jeddah’s waterfront corniche. Known as New Jeddah Downtown, the 10-year redevelopment scheme covers an area of 5 sq km.
The residential area will comprise 42 per cent of the new development, with 35 per cent dedicated to entertainment and retail areas, 12 per cent to office space, and 11 per cent to new hotel and hospitality facilities.
For housing, the project aims to deliver more than 12,000 housing units that will accommodate 58,000 new residents.
Another major scheme in the Western Region is the Red Sea project. It will incorporate 200km of coastline between the cities of Amlaj and Al-Jawh on the western coast of the kingdom.
The area for development 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.
The infrastructure required will be substantial. There will be a seaport, roads and airports, as well as infrastructure for boats and seaplanes,. The new development areas will need water, power, drainage and telecoms infrastructure installed.
Netherlands-headquartered Arcadis is the programme manager.
In Riyadh, the PIF is developing an entertainment city in the Al-Qidya area of the Saudi capital. The project will focus on cultural, sports and entertainment offerings, and will cover an area of 334 sq km, including a safari site.
US-based Parsons is the programme manager.
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