Sudair: The $40bn mega city

04 April 2008

The industrial city planned for Sudair will be the largest in the kingdom, dwarfing even King Abdullah Economic City.

The Saudi Industrial Property Authority (Sipa) is drawing up plans to develop the kingdom’s latest industrial city in Sudair, which is set to become the biggest project in Saudi Arabia. Measuring 257 square kilometres, it will be 70 per cent larger than King Abdullah Economic City (KAEC), is valued at $40bn, and will be gradually expanded over 40 years.

Strategic studies have recently been completed by Singapore-based Jurong International, which is shortly to begin work on the concept masterplan. This is expected to take up to four months and is due to be finalised in September. The prequalification documents for the construction packages are being prepared by the US’ CRA International and will be completed by May.

Strategic location

Sudair is strategically positioned, with the North-South railway crossing the site linking Buraidah and Riyadh. There is also an established road network linking Sudair to Qassim in the north.

Despite the kingdom announcing its intention to develop six economic cities over the coming years, the Saudi Industrial Property Authority (Sipa) - formerly the Saudi Organisation for Industrial Estates & Technology Zones, set up in 2001 to manage and promote the kingdom’s industrial zones - is confident of commercial success at Sudair.

“We have had good interest from big names,” says Tawfig al-Rabiah, director general of Sipa. “What we are now trying to do is define the criteria that we should base companies on and what requirements we want the developers to achieve. It is a huge project. It is one of the biggest, if not the biggest, that will be built from scratch. It is certainly bigger than King Abdullah [Economic City], which is 160 sq km. That makes this 70 per cent bigger.”

Kenneth Lim, business development director at Jurong, says initial studies undertaken by the company suggest Sudair can become an industrial city of major significance. “It showed huge potential for Sudair,” he says. “The industry we are looking at is probably light-to-medium and the masterplan will show us where the relative industries should be located.

“It is a huge area, so the concept masterplan will illustrate whether an airport is viable or not, and whether we are going to have dry port facilities. It will also enable us to establish whether the medium industry should be located in the northwest or southeast, for example.”

Lim says up to 50 developers could be invol-ved in Sudair, based on current estimates, each developing a minimum plot size of 5.5 sq km.

“The next thing to ask is how to get developers in,” says Lim. “You have to ask which part of the land will developers have a preference for. Do they want to be close to Riyadh or further away? You must also consider the number of phases in which you will be developing the city, because it is such a huge area.”

“There are two differences [from the other economic cities],” says Al-Rabiah. “This is much bigger than the economic cities and there is even stronger support from the government. Plus we are considering a long lease of 99 years. That makes it very attractive.

“As opposed to the economic cities, the developer does not need to pay for the land. It is already there, which makes it easier. The services are already there - the roads, the crude, the rail.”

The bulk of investment is expected to come from the private sector. The project’s sheer size means it is not feasible for a single developer to carry out the work. It is anticipated that a consortium of local and international companies will be formed to operate as a single entity.

Sudair will be split into zones covering sectors including education, commercial, residential, industrial, leisure and entertainment. Industries that are favoured include telecoms and electronic components.

Investor incentives

Al-Rabiah stresses that all contracts will be awarded through open competition. “We will be inviting, not negotiating, bids,” he says.

Sudair is designed to alleviate growing congestion in Riyadh and reduce migration to the capital, and provide further stimulus to the Saudi economy.

With key infrastructure links already established, it is hoped that Sudair will offer good incentives for investors. “We need an industry to help the city grow, but we want to bring industry that is non-polluting and offers a good lifestyle,” he says.

Ideally, the developer will develop the industrial areas and then lease them at very low rates, possibly the lowest in the kingdom, he adds. “This is a project that will have a great impact; a project that will be considered a leader,” says Al-Rabiah. “It will be the biggest in the kingdom and heavily supported by the government.”

Key facts

  • Client is Saudi Industrial Property Authority (Sipa).

  • Strategic masterplanner is Singapore’s Jurong International.

  • A developer consortium will be contracted to manage the project.

  • All contracts will be awarded through open competition.

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