The giga-projects initiative in Saudi Arabia, part of the country’s ambitious Vision2030 program, has been boosted by the news that soccer’s 2034 FIFA World Cup is to be held in the country.
Saudi Arabia was the only bidder for that year — the competition is held every four years — and the decision comes on the back of huge Saudi investment in sports both domestically and internationally over the past few years.
Only Australia had indicated it might make a rival bid, which was not forthcoming.
Ed James, head of content and research in the Middle East at business advisory MEED, said that a successful bid for the finals “will result in even more hotel rooms.”
There have been concerns and challenges in terms of supply chains and logistics, as the scope of the project is vast.
James said the success of Vision2030 depends on one main thing.
“The Saudi sovereign wealth fund, the Public Investment Fund, is initially funding most of the schemes. There are some green bonds, and also some individual giga-projects have the ability to attract private investment, but [Saudi Arabia] needs the price of oil per barrel to be above $80. Any lower than that, and there will be questions,” he said.
“At the moment, the giga-projects do appear to be approaching capacity to supply, and in the short term there is some stress. The projects need a doubling of labor numbers, and [giga-project executives] are going overseas to attract international companies and employees,” James added.
Desert Destiny
James said the Gulf Cooperation Council area of the Middle East, which includes Saudi Arabia, United Arab Emirates, Qatar, Bahrain, Kuwait and Oman, has had a good year in terms of investment in infrastructure, hotels and other construction projects.
“As of [late October], $151 billion of projects have been awarded in 2023 across the GCC countries, and the indication is that full-year 2023 will be a record, beating the previous high years of 2014 and 2015 and with investment records for both Saudi Arabia and the UAE,” he said.
James said high oil and gas revenues are being converted into construction projects.
He said in addition to the five original giga-projects — Diriyah Gate, NEOM, Qiddiya, Red Sea Global and Roshn — two more were announced in September and October.
The two new projects are Al Wadi and Soudah Peaks, which have boosted overall spending across all giga-projects to “approximately $884 billion, of which less than 10% ($60.6 billion) of contracts have been awarded. It is a massive program with huge opportunity," James said.
Soudah Peaks is to be in six different sites in the southwest of Saudi Arabia and contain more than 2,700 hotel rooms, while Al Wadi giga-project in the city of Abha has an initial capital input of $5.1 billion and will cover 2.5 million square feet.
Red Sea Global has announced the enlargement and renovation of its Al Wajh airport, and the Al-Balad giga-project will include an overhaul of Jeddah’s historical area, also a 2.5-million-square-foot project and with more than 1,800 hotel rooms.
Much of that area is UNESCO World Heritage-listed.
Last month, Red Sea Global announced the first of its in-house hotel brands, Thuwal Private Retreat, which will consist of a villa and three suites, open in 2024 and feature an approximately 125-foot reef drop in the Red Sea.
Then on Nov. 6, it announced the 73-room hotel Shebara, which it will also own and operate. That is also due to open next summer.
James said a dozen more giga-projects are likely to be announced over the next few months.
“And they will be large ones along the Gulf Coast, with a few more in and around Riyadh. This is just the beginning,” he said. “Red Sea Global has opened its first hotel, and two more are to open by the end of the year.”
He said that investment might hit a record by the end of the year, but numerous projects have not started key construction phases, which might point to challenges in delivery.
“Indications are that this will gather steam in 2024,” he added.
In terms of overall investment, he said NEOM remains the largest by some margin, with Red Sea Global the runner-up.
According to data from MEED, in investment awarded as of the end of the third quarter, NEOM has received approximately $2.158 billion and Red Sea Global approximately $2.157 billion.
Seven, a series of seven entertainment giga-projects around the country, has been awarded in the same period for approximately $1.59 billion, while Qiddiya and Roshn have received approximately $1.08 billion and approximately $879 million, respectively.
“The projects keep coming, easily past the trillion-dollar mark very soon,” James said.
In total since the giga-projects and Vision2030 were first announced, NEOM has had an injection of approximately $17 billion, he added.
In capital Riyadh, work has already begun on the creation of King Salman Park, which at 9.3 million square feet will be the world’s largest park.
“It will have 18,000 parking spaces, also a world record, and 16 hotels with a total of 2,300 hotel rooms,” James said, noting the area was a former military air base and training academy.