Crown of the Kingdomby Ben Roberts on Aug 13, 2011
The announcement from Kingdom Holding of the next world’s highest tower came as a thunderbolt of business news to a Gulf region about to enter the quieter summer period.
As one of the few mega projects in Saudi Arabia not directed by the high-spending government, it could only have come from HRH Prince Alwaleed bin Talal bin Abdulaziz Alsaud, chairman of the group and the Arab world’s most dynamic private investor. Money, indeed, never sleeps, and there is always a sense that the prince is only just beginning.
The surface financials say much about the scale of the project: SAR 4.6 billion to build the tower that will outreach Dubai’s Burj Khalifa by more than 200 metres, sitting within a new 530-hectare urban development to the north of Jeddah – Kingdom City – which will require a total of SAR 75 billion.
Funding Kingdom City is a new joint venture, Jeddah Economic Company, led by Kingdom Holding and Abrar International Holding Company, which will both hold a 33.35% stake, Saudi Binladen Group, which two weeks ago was awarded the main construction contract, will hold a 16.67% stake, as will Saudi businessman Abdulrahman Hassan Sharbatly. Samaual Bakhsh, director of the Traco group of companies in Egypt and a former director of Egyptian Gulf Bank, is also closely involved.
SAR 1.5 billion of equity capital from the partners will be invested, along with cash loans from banks, which will be repaid from the revenues that will be generated from the tower, according to Kingdom Holding.
JEC’s capital also includes SAR 8.8 billion in land value and assets worth 7.3 billion.
The tower will contain a Four Seasons Hotel as well as serviced apartments from the hospitality chain, office space, ‘luxurious condominiums’ and what will be the world’s highest observatory deck.
Perhaps the most surprising element to the tower and Kingdom City is its location, far north of the main city away from other hotels and offices. Essentially, Kingdom City will need to create an entire new centre of commerce to fill the tower and related buildings with residents.
The first two phases of construction are the building of the tower – over 50 hectares – and the construction of the infrastructure for the entire development. The third phase, according to Kingdom Holding, is yet to be finalised; one of many tantalising bits of mystery around the project.
The prince last week acknowledged that the project was a “big risk”, and the context of the commercial and hospitality sectors in the Jeddah region certainly supports this admittance.
CB Richard Ellis, the property firm, wrote in a recent report that the city traditionally had a “sustainable” approach, where office space mixed with retail outlets across the urban sprawl in the absence of a true commercial centre.