Saudi Arabia’s Qiddiya to award 10bn riyals of contracts for Riyadh mega project

Exclusive: The Public Investment Fund-backed company plans to raise money through a bond or sukuk issuance

Saudi Arabia is expected to see the biggest rise in sovereign sukuk issuances from the GCC in 2020, Moody's says. AP

Saudi Arabia’s Qiddiya Investment Company, backed by the kingdom's sovereign wealth fund, plans to award at least 10 billion riyals ($2.66bn/Dh9.79bn) worth of contracts to various companies this year to speed up the construction of a mega entertainment and sports project in the capital Riyadh.

"We've awarded well over 1bn riyals contracts so far and that figure is going to jump, may be 10 times to 10bn riyals, which will all be construction related contracts," Michael Reininger, its chief executive told The National.

The Qiddiya project includes a number of facilities for sports, arts and entertainment activities. It is being constructed on a 334 square-kilometre site close to Riyadh and part of the Saudi Vision 2030 programme that aims to diversify the economy away from oil.

“We just awarded one of the major road contracts and are receiving major contract bids for the entirety of our utility system," Mr Reininger said. “We have strings of things that are coming up between now and the end of the year.”

In total, the project, which includes American theme park Six Flags, will be home to more than 300 recreational and educational facilities. They are centred around five major themes including parks and attractions, sports and wellness, nature and the environment, arts and culture, as well as motion and mobility.

Despite the coronavirus pandemic, construction at the site and work is ongoing.

“[The] schedule is still on, which is why you see this rapid escalation in the actual contracts being awarded. We are hoping to finish the project by 2023,” Mr Reininger said.

The project is being funded by the Public Investment Fund, the kingdom's sovereign wealth fund, as well as by the government. The company plans to raise additional money through a bond or sukuk offering. The exact size of the bond offering is not disclosed.

“Ultimately there is going to be a combination of additional equity capital that is going to come from third party investors, both regional and international," Mr Reininger said. "There will also be debt that will come from the foreign debt market as well as local and regional markets that will support the overall capital.”

Saudi Arabia is undertaking a number of projects spanning various sectors including real estate, entertainment and tourism. These comprise the $500bn (Dh1.8 trillion) Neom business and industrial zone extending into Egypt and Jordan and a Red Sea project, which includes a nature reserve, diving in coral reefs and heritage sites on about 50 islands.

The Discovery Springs land at Six Flags Qiddiya. Courtesy Qiddiya

Sirocco Tower which is said to be the world's tallest drop-tower ride. Courtesy Qiddiya

The Steam Town land at Six Flags Qiddiya. Courtesy Qiddiya

The Falcon's Flight ride is set to be the fastest in the world, at Six Flags Qiddiya, Saudi Arabia. Courtesy Qiddiya

The entrance to the Six Flags park. Courtesy Qiddiya

The Twilight Gardens land at Six Flags Qiddiya. Courtesy Qiddiya

Falcon's Flight at Six Flags. Courtesy Qiddiya

Tourism is expected to contribute more than 10 per cent of the kingdom’s gross domestic product by 2030 – up from 3 per cent currently – and provide one million jobs. The country recently set up a $4bn fund to develop the tourism industry.

Qiddiya will contribute “significantly” to the country’s economic growth, Mr Reininger said.

“This is going to be a significant contributor to the overall GDP in the form of revenues that are generated directly or indirectly by the project," he said. "It is also going to be the huge contributor to the economy."

Qiddiya accounts for more than 15,000 direct jobs in the first phase and 25,000 direct jobs by 2030 when the company plans to start the second phase of the construction with new hotels, clubs, food and beverage facilities, and entertainment spots.

The company aims to be profitable by 2024 following the opening of the project as revenue from tourism activity is generated.

“There are 33 million people in the kingdom and there is a huge pent up demand," Mr Reininger said. "They are young, they are switched on and have means and they want this kind of entertainment, sports and arts experiences that they haven’t been able to get before.

“And we are going to offer [this to] them at a larger scale and at a higher quality level than certainly anywhere else in the region and perhaps on par with [the] best of the best anywhere in the world“