Gulf Construction Online - KAFD to transform into ‘special business zone’

Saudi Focus

The King Abdullah Financial City ... parts of the area will now be turned over to residential housing, hotels and commercial establishments.

Saudi Focus

KAFD to transform into ‘special business zone’

01 May 2016

Saudi Arabia is revising plans for a glitzy financial district in Riyadh and the creation of six industrial cities, after the projects were plagued by delays and a lack of enthusiasm among potential tenants and investors, according to a Reuters report.

The government’s frank, public assessments of the projects suggest Deputy Crown Prince Mohammed bin Salman is not hesitating to tackle projects which once enjoyed top-level political support as he pushes an economic reform drive launched last month. the report added.

The project to build the King Abdullah Financial District (KAFD) began in 2006; skyscrapers were to house banks and the Capital Markets Authority (CMA), the kingdom’s financial regulator.

Parts of the area will now be turned over to residential housing, hotels and commercial establishments.

A document outlining Prince Mohammed’s Vision 2030 reform plan also said authorities would “strive to salvage” the industrial cities, which were designed to diversify the economy beyond oil and create jobs.

It said the financial district had been started “without consideration of its economic feasibility” and that the project had failed to convince the financial community to invest. The government will therefore aim to transform the district into a special business zone with competitive regulations, visa exemptions for foreigners working there, and direct connections to Riyadh’s international airport, it said.

“We will also seek to repurpose some of the built-up areas and change the real estate mix, increasing the allocation for residential accommodation, services and hospitality areas.”

The reform document also acknowledged difficulties in efforts to create the six “economic cities”.

One of these cities is the high-profile King Abdullah Economic City (KAEC), which lies 100 north of Jeddah by the Red Sea.

“Work has halted in several cities, and others face challenges that threaten their viability,” the document said.

“We have worked in cooperation with Aramco to restructure Jizan Economic City,” it said, referring to the state oil giant.

Meanwhile, a report in the Korean daily Pulse News stated that work on the $324-million stock exchange centre being developed by Samsung C&T Corporation at the KAFD has been on hold for the past seven months owing to financial difficulties amid the oil slump.

About 70 per cent of the stock exchange project has been completed, reported Pulse News.

In 2012, Samsung C&T had been awarded the 230-billion-won ($196 million) contract for the Saudi stock exchange centre project with the deadline set at September 2015, said the Korean daily.

It was working on the project with Saudi Arabia’s largest construction company Binladin Group, which along with developer Al Ra’idah had co-headed the KAFD development for Saudi Public Pension Agency (PPA).

However, some time back Binladin Group and Al Ra’idah stopped the work after PPA delayed making payments for the project, stated the report, citing an unnamed Samsung C&T official.