Saudi Arabia’s Public Investment Fund (PIF) is reported to be prepared to make an offer for the King Abdullah Financial District (KAFD), situated between downtown Riyadh and the city’s King Khalid International Airport.
The offer, reported by Bloomberg citing unnamed sources, is 30 billion riyals ($7.9 billion) — the amount already spent on KAFD by the Saudi Public Pension Agency — plus the cost of undeveloped plots.
Saudi Arabia’s KAFD, an emblem of the ambitious development mindset of the Saudi government during a time of high oil prices, has come under critical review in the past 18 months as oil prices have crashed and the Kingdom’s leaders sought to reign in spending.
The newly-empowered PIF is headed by deputy crown prince Mohammed bin Salman to power Saudi Arabia beyond oil with investments. It has aims of becoming the largest sovereign wealth fund in the world and is a key element to Saudi Arabia’s “Vision 2030” strategy. The PIF was founded in 1971, but by becoming a cornerstone of the deep economic reforms announced by prince Mohammed, the fund is hoping to become a key vehicle to boost revenue, rejuvenate the Saudi economy and create jobs.
According to Reuters, prince Mohammed told Al Arabiya “[t]here will be no investment, movement or development in any region of the world without the vote of the Saudi sovereign fund.”
Deputy Crown Prince Mohammed bin Salman.
AS SUSTG reported last week, KAFD was directly mentioned in the Vision 2030 plan, which committed Saudi Arabia to a “restructured King Abdullah Financial District,” noting that in the last decade, “work started at the King Abdullah Financial District, without consideration of its economic feasibility. The objective was to prepare the land in order to allow the business and financial communities to invest and build real estate. When this objective was not reached, the government decided back then to develop and rent the real estate.”
The PIF is hoping to create financial incentives for businesses to lease the glut of office space coming online in the district, which will be serviced by Riyadh’s forthcoming metro system with a station designed by world-famous architect, Zaha Hadid. The PIF’s plans include transforming the district into a “special zone that has competitive regulations and procedures, with visa exemptions” and directly connect it to the King Khaled International Airport.
Once KAFD is finished, it will play host to the PIF’s headquarters.
According to Bloomberg, five buildings at the district’s core, “including the district’s tallest at 76 floors, will be surrounded by dozens of offices, apartments, hotels, conference centers and entertainment venues. On the ground, walkways below street level branch out to connect buildings and provide space that’s 8 degrees Celsius cooler than street level.”
