Qiddiya: The future of entertainment
This is not the first time I have written about the Qiddiya Investment Co. (QIC). Recently, I had the chance to attend an evening organized by the American Business Group where QIC’s CEO Michael Reininger was guest speaker.
Personally, I must admit that QIC is my favorite of what are described as the giga-projects of Saudi Arabia. From a Vision 2030 perspective, QIC will help diversify the economy, reduce dependence on the oil sector, multiply the contribution of the private sector to the gross domestic product (GDP) and reduce the role of the government sector as a growth driver. It will also add to creating investment opportunities for local and international investors with thousands of new jobs.
Under Vision 2030, the Saudi government is planning to capture up to a quarter of the $20 billion currently spent overseas every year by Saudis seeking entertainment. The government aims to increase the entertainment sector contribution in the GDP from 3 percent to 6 percent, while investments in entertainment are forecasted to continue booming significantly in the coming three years. The government indicated that infrastructure investments for entertainment, including QIC, may reach $64 billion over the next decade.
The Public Investment Fund (PIF), as the founder and owner, plays a key role in securing the necessary financing for the initial phases of QIC, particularly in terms of financing the infrastructure. QIC is planning to access a larger number of potential investors and financiers by applying appropriate financial and regulatory structures and incentives to increase the project’s attractiveness. QIC has introduced different legal and financial options for local and international investors to participate in these initial projects. These options range from the privatization of certain utility projects to full ownerships of certain facilities.
It is worth noting that with an over $500 million investment in QIC, the international theme park Six Flags will be one of the anchor investors and operators. Six Flags will be a magnet for the local as well as the international entertainment market. Furthermore, since it is only 40 km from Riyadh, real estate developers will have new opportunities to build residential complexes for many Riyadh-based residents as a weekend pad.
In line with the government’s plans to increase the number of entertainment means across the country, I see QIC has having massive opportunities over the next decade for local and international companies participating in this growing sector. Without being over-optimistic, I believe that QIC will be a game-changer which will set the future trend of the entertainment sector globally.
Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.