Saudi Arabia’s Public Investment Fund (PIF) is negotiating to buy a stake in King Abdullah Economic City (KAEC), one of the country’s top real estate projects, as the kingdom restructures its economy on the back of lower oil prices.

The PIF will inject capital into KAEC, which is being built on the Red Sea coast near Saudi Arabia’s commercial hub of Jeddah, according to a report from news agency Reuters. Emaar the Economic City (EEC), the local affiliate of Dubai’s Emaar Properties, is the developer of the project.

Launched in 2005, KAEC had a population of about 5,000 people and 120 industrial tenants at the end of last year. In January, the CEO of the city, Fahd al-Rasheed, said KAEC’s population was projected to hit 50,000 by 2020, with an ultimate target of 2 million by about 2035.

However, with a slowdown in the economy amid cheaper oil, the kingdom intends to accelerate the development of these zones, create jobs and focus on sectors such as tourism, medical care and education to diversify the economy beyond oil.

Under economic reforms announced in April, the government said it would work with companies developing major business zones to “revamp” them. KAEC is likely to be one of the first of these initiatives.

“What they can do is inject cash. It’s no secret KAEC needs a lot of equity for this project,” Reuters quoted the source as saying of the PIF’s plan. KAEC, EEC and the PIF declined to comment.

The PIF could either buy a stake directly in KAEC as a partner to develop the project, or take a stake in EEC itself. EEC obtained a SR5bn ($1.3bn) riyal loan from the Saudi Finance Ministry in 2011, which has been extended until 2026. The company has a similar amount of debt to commercial banks.

Under the economic reforms, the plans to expand the PIF’s size to about $2 trillion, by transferring ownership assets such as Saudi Aramco. The PIF will invest at home and abroad to generate more income streams for the government. In June, it bought a stake in US ride-hailing firm Uber for $3.5bn.

The PIF will also take over Riyadh’s King Abdullah Financial District and restructure the project, according to reports earlier this year. It is also expected to get involved in developing a Saudi shipbuilding industry and in restructuring state firms such as Saudi Electricity Company (SEC).