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Sat 14 Sep 2019 12:02 AM

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Inside Saudi Arabia's King Abdullah Economic City

Nearly 15 years after its big launch, Saudi Arabia's King Abdullah Economic City remains a long way off from realising its dreams, but its plans remain as ambitious as ever

Inside Saudi Arabia's King Abdullah Economic City
Ahmed Linjawi, CEO of the King Abdullah Economic City.

I’m sitting on the leather seats of a black-and-grey corporate helicopter marked “Invest Saudi” several thousand feet in the sky. To my right are the vivid turquoise waters of the Red Sea. To my left is the coral-strewn coastline of Saudi Arabia, sparingly peppered with idyllic-looking residential developments, industrial plots and a luscious green golf course that stands in stark contrast to the vast expanse of desert that surrounds it.

In front of me is the man tasked with turning this still sparsely inhabited patch of the kingdom into a regional metropolis: Ahmed Linjawi, CEO of the King Abdullah Economic City.

We’re a bit constrained by the macro-economic situation. However, we’re very optimistic... We expect demand to pick up quite significantly

Announced in 2005 by the late King Abdullah, the city – commonly referred to as KAEC – was masterplanned by Emaar, The Economic City (a subsidiary of the Dubai developer). Located about an hour’s drive from Jeddah, it covers an area roughly the size of Washington, DC, with a planned population of approximately 2 million people, roughly the size of Brussels. It comprises King Abdullah Port, residential districts, the Haramain Railway district and an ‘Industrial Valley’.

It remains a work in progress. At the moment, only about 40 percent of the project – including residential, industrial and port facilities – has been developed, with a total population of about 10,000 residents. From the air, one can see row after row of tranquil looking – but empty – villas and entire city blocks full of construction sites, a lonely marina and two hotels.

Emaar Economic City is the master developer of the King Abdullah Economic City (KAEC)

Aside from that, it remains mostly flat desert and pristine, untouched coastline.

“There’s still quite a bit more to come,” Linjawi smiles and tells us as we step off the chopper onto a helipad and into a car waiting to take us to his nearby office.

Low-hanging fruit

For Linjawi – who was appointed as CEO of Emaar, The Economic City in late 2018 – KAEC’s fortunes received a welcome boost in January, when the city’s meticulously-kept golf course hosted the Saudi International golf tournament – a historic first in the formerly closed off kingdom. The event, Linjawi says, will help double KAEC’s visitor numbers from 500,000 in 2018 to an estimated 1 million by the end of this year. “Leisure visitors are a key performance indicator for us,” he explains. “One of our strategic pillars is to be a premier leisure destination on the Red Sea. That’s where the events and entertainment come into play.”

We cannot deny that there is a level of competition. It’s good to have that, because it puts everybody at their best effort

Among the most important aspects of the KAEC’s strategy, Linjawi adds, is to carve out a niche as a hub for “elite” sports, drawing in visitors with unique offerings not easily available elsewhere.

“That’s where the golf comes in, but it’s also racing. We’ve got a moto-track under construction,” he says. “It’s also everything that has to do with marine sports on an international level. That means international fishing competitions or diving.”

That isn’t to say that KAEC is focussing solely on jet-setting foreign sportsmen. Much of the project’s development, Linjawi says, is being done with Saudi visitors and their families primarily in mind – which he termed “low-hanging fruit” – as well as the five or 10 percent of Hajj and Umrah visitors who can afford to take on leisure activities after their pilgrimages in nearby Makkah and Madinah.

The world-class facilities at the Royal Greens Golf and Country Club are among attractions at KAEC

“This is something that’s for the whole family, from the children to the parents. I’d say that taps into some of our educational components,” he says. “We have a culinary academy that we’re building. It’ll be one of the top culinary academies, certainly in Saudi Arabia, and among the top in the GCC. It serves two purposes: it could develop the capabilities of Saudi talents required in the hospitality sector, but it could also be for leisure. A family could come here. The mother and the father can take a half-day or full-day cooking class.”

Rising demand

To date, much of KAEC’s success has stemmed from its growing role in the world of logistics – with its profitable King Abdullah Port named the world’s second fastest growing by Alphaliner in 2018  – and in attracting foreign businesses. Companies such as Sweden’s IKEA, pharmaceutical giant Pfizer, French oil company Total and chocolate firm Mars have set up shop there. According to Linjawi, these businesses, as well as KAEC’s prime seaside location, are driving increasing demand for housing in the area.

Imagine, for example, an institute of hyperloop studies as part of the university there as well. That could be really, really exciting

“We contribute a lot to driving our own demand. People are moving here because there are new jobs for them to work in,” he says.

“Also, a lot of people are buying because they see this as a good second home, a place for themselves or as an investment that they can lease out to people that are coming here.”

KAEC, for its part, has implemented a number of incentives to boost these growing numbers. Throughout August, for example, KAEC held what it billed as the ‘Own a Turquoise View and Get a Car Free’ campaign, which, as the name suggests, offered a free car along with the purchase of a residential unit, with flexible, zero-interest, five-year payment plans and low, 20 percent down payments.

KAEC is fully equipped to host bing-name sporting and leisure events

“We’re seeing a fairly good growth in demand. Of course, we’re a bit constrained by the macro-economic situation. However, we’re very optimistic,” Linjawi remarks. “We expect demand to pick up quite significantly.”

New competition?

KAEC is by no means the only high-profile Saudi mega-development to hit international headlines. Since it was announced in 2017, much of the spotlight has been focussed on Neom, the kingdom’s futuristic and still-under-construction $500bn mega-development north of KAEC, up the Red Sea coast.

With that comes talent and international people. It serves both those objectives simultaneously. We’re a living example of the Saudi Vision 2030

Despite the international attention and investment that Neom is getting, Linjawi is quick to acknowledge that some level of competition exists between the two – a fact he believes is ultimately beneficial for both. “We cannot deny that there is a level of competition; a good competition. It’s good to have that, because it puts everybody at their best effort.”

While each of the cities is intended to fulfil different roles, Linjawi acknowledges that there was some “overlap” between the two. He says that the nearly 900km of distance between them, however, means that isn’t a problem.

Virgin Hyperloop One is building ties with King Abdullah University of Science and Technology

“This is a very big country. You can have leisure and entertainment facilities here, but also have it there. There’s another portion of the population that’s there,” he remarks. “We look at each other in a way and see how we can be better. But the main goal is to complement and complete the full ecosystem that the country has to offer.”

Home to the hyperloop?

And while much of the public focus has been on Neom’s eye-catching proposed futuristic offerings – which the Wall Street Journal recently reported include everything from flying cars to glow-in-the-dark sand – KAEC has a trick up its sleeve: it may soon be home to the hyperloop, the high-tech, tube-based ultra-fast passenger and freight transportation system currently in development.

The King Abdullah Port can handle the world’s largest ships with its modern deepwater facilities

As a result of a partnership between California-based Virgin Hyperloop One and the Saudi Economic City Authority to study the possibility, KAEC may be the site of the world’s longest test and certification track, as well as an R&D centre and a hyperloop manufacturing facility.

Importantly, the fact that Virgin Hyperloop One is building ties with the nearby King Abdullah University of Science and Technology (KAUST) means that KAEC may play a very important part in making the technology a reality.

“[The partnership] is both from a research perspective and also from a student perspective,” Jay Walder, Virgin Hyperloop One’s CEO, tells Arabian Business. “Imagine, for example, an institute of hyperloop studies as part of the university there as well. That could be really, really exciting.”

A two-pronged approach

Throughout the Saudi International, golf event, officials and executives could be heard repeating to guests that KAEC “is a Saudi city for the world”, or, alternatively, “bringing the world to Saudi Arabia”.

Which is it? When this question is posed to Linjawi, he responds without hesitation: it’s both.

“The majority of the residents are Saudis. That’s very important. It serves a very important national objective,” he explains. “We are one of the few locations in Saudi Arabia at the forefront of offering affordable housing in a community setting, as well as premium communities for those who are able to spend more, instead of putting that investment abroad.”

On the other hand, bringing in foreign businesses is, in turn, bringing the rest of the globe to this tiny corner of the kingdom.

The King Abdullah Port is host to a number of global brands including IKEA, Pfizer and Total

“With that comes talent and international people. It serves both those objectives simultaneously,” Linjawi says with a smile. “We’re a living example of the Saudi Vision 2030.”

Bigger and better: King Abdullah Port

KAEC’s King Abdullah Port was ranked as the second fastest growing port in the world in 2018, according to maritime transport data analysis firm Alphaliner. It now ranks 83rd on a list of the world’s 100 largest container ports in 2018, up from ranking 87th the previous year.

According to Alphaliner, the port increased its throughput from 1.7 million TEU (twenty foot equivalent units) in 2017 to 2.3 million TEU last year, placing the port first in terms of container growth for the 12-month period.  Additionally, Saudi Cargo Airlines Company has signed a joint agreement with King Abdullah Port to establish a secure logistical operations zone and air-sea-air cargo corridor, following the model of Dubai’s Jebel Ali Freezone and Dubai South.

KAEC in popular culture

KAEC is the setting for internationally-acclaimed author Dave Eggers’ 2012 novel, ‘A Hologram for a King’. The book – which has been described by The New York Times literary critic Michiko Kakutani as ‘Hemingway-esque’ – features a down-on-his-luck American businessman who travels to Saudi Arabia to secure sales for a holographic teleconferencing system for the government.

In 2016, the novel was adapted into a film starring Tom Hanks, with the Moroccan city of Ouarzazate and Egypt’s Hurghada standing in for Saudi Arabia.

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