Al Futtaim to build logistics centre at King Abdullah Economic City

A model of King Abdullah Economic City, which will be as big as Washington DC. Peter Kneffel / AP Images

Al Futtaim Group has signed a deal to build a logistics and distribution facility at Emaar's King Abdullah Economic City on Saudi Arabia's Red Sea coast.

The Dubai-based conglomerate is acquiring a 325,400-square metre plot of land in the 168-million square metre mega-project, which is being developed by Emaar Saudi Arabia (The Economic City).

The plot is in the project’s Indus­trial Valley light industrial and manufacturing zone next to the King Abdullah Port, which opened in 2014.

Al Futtaim Group, which has franchises in the region for brands that include Ikea and M&S, said it would use the facility as part of the group’s ambitious plans to expand in Saudi Arabia and across the Middle East.

It did not disclose the purchase price for the land.

“Our decision to invest in the Industrial Valley component of the visionary Kaec development was made in consideration of the valuable strategic location it occupies on the Red Sea coastline and adjacent to King Abdullah Port on one of the world’s busiest shipping routes,” said Omar Al Futtaim, the vice chairman of Al Futtaim Group.

“From Kaec we will be able to execute our expansion plans and meet the ever-increasing demand for our highly diverse portfolio of products,” he said.

In January, Al Futtaim Group said it was planning to expand its department stores and e-commerce operations in the populous areas of Saudi Arabia, Egypt, Malaysia and Indonesia as it seeks to develop outside the highly competitive Dubai market.

The company has signed a joint venture agreement with a luxury retailer, the Chalhoub Group, to bring Singapore’s Robinsons department store to the Middle East region. A second store in Saudi Arabia is likely to follow an initial store opening in Dubai Festival City mall.

The group has a presence in 19 countries, with 1,000 retail stores – one-third of them in Asia and the rest in the Middle East.

King Abdullah Economic City, which is being developed by the Tadawul-listed unit of Emaar Properties, Dubai’s largest developer, is a US$100 billion city the size of Washington DC. The city’s purpose is to help diversify the Saudi Arabian economy away from its reliance on oil.

When completed, it will include 63 square kilometres of industrial land, a 13.8-square kilometre port, thousands of flats and villas, a tourist resort, an education zone and a central business district.

According to Kaec officials, the city has so far attracted more than 110 national and international businesses, of which 20 are in operation and 30 are under construction.

Kaec is just one of an increasing number of ambitious overseas projects being developed by Emaar.

As Dubai’s property market slows, it is looking to high-growth markets in countries such as Saudi Arabia, Egypt, Jordan, India, Lebanon, Morocco, Pakistan and Turkey.

Yesterday, it emerged that Emaar has named Jeremy Lester, the former international chief executive of the Australian construction company Grocon, as its new international chief executive, charged with growing and developing Emaar Properties’ overseas business.

According to Emaar’s website, Mr Lester will also be responsible for securing opportunities in other “strategically important markets”.

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