Riyadh’s unfinished King Abdullah Financial District (KAFD) located halfway between downtown Riyadh and King Fahd International Airport is headed for new ownership and a revised master plan.
KAFD – the city within a city that was originally designed to be home to the Kingdom’s banks and international financial houses – will soon be owned by the Public Investment Fund (PIF), transferred from the Public Pension Agency (PPA), according to a report in the Saudi Gazette, citing four unnamed sources.
Saudi Arabia’s PIF will be headquartered in the KAFD.
“The move is an attempt to rescue the project, started a decade ago with the aim of making the Saudi capital a global financial center, and is another example of the burgeoning power of the PIF, which the Kingdom wants to make the world’s largest sovereign wealth fund.”
The future of KAFD was directly addressed in Saudi Arabia’s “Vision 2030” document. The plan commits 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.”
Deputy Crown Prince Mohammed bin Salman.
“Challenges were deepened by the development of the real estate project in one single phase, which caused a significant increase in construction costs and several delays in delivery. This resulted in large oversupply of commercial space for the years to come. Without any dramatic shift in direction, renting the three million square meters of built-up areas at reasonable prices, or even achieving decent occupancy rates, will be very challenging. With this in mind, we have reviewed the economic feasibility of and designed a new fundamental strategy for the district in order to increase the chances of profitability and success.”
The Vision 2030 plan said that the government will seek to transform the district into a “special zone that has competitive regulations and procedures, with visa exemptions, and directly connected to the King Khaled International Airport.”
“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. We will seek to build and create an integrated and attractive living and working environment.”
According to the Vision 2030 plan, it will also house the headquarters of its new owner.
“The district will be the headquarters of the Public Investment Fund, the largest sovereign wealth fund, which will contribute to creating an environment attractive to financial, investment and other corporations,” according to the document.
