The rationale for Saudi Arabia’s Riyadh renaissance

The plans hope to make Riyadh the hub for one of the 10 biggest urban economies in the world. (Arab News)
The plans hope to make Riyadh the hub for one of the 10 biggest urban economies in the world. (Arab News)
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Updated 15 February 2021

The rationale for Saudi Arabia’s Riyadh renaissance

The plans hope to make Riyadh the hub for one of the 10 biggest urban economies in the world. (Arab News)
  • Scale of vision for future development of Saudi capital may be mind-boggling but achievable and ultimately beneficial
  • A plan under preparation should provide solutions to the economic, social, demographic and financial challenges involved

DUBAI: The scale of the vision for the future development of Riyadh — unveiled by Saudi Arabia’s Crown Prince Mohammed bin Salman at last month’s Future Investment Initiative (FII) conference — is mind-boggling.

By 2030, the Saudi capital will at least double in size from its current population of around 7.5 million people. It will be the hub for one of the 10 biggest urban economies in the world. Plus, it will be a livable, human-centric city with green spaces, recreational facilities and an urban lifestyle to attract talent from around the world to the biggest city in the Middle East.

“True growth begins in the city, whether in terms of industry, innovation, education, services, or other sectors. I have no doubt that the world economies are not based on nations, but on cities,” the Crown Prince said at the event, organized under the theme “The Neo-Renaissance.”

The plans for a Riyadh renaissance are to be implemented by Fahd Al-Rasheed, the president of the Royal Commission for Riyadh City (RCRC), who is well aware of the challenges presented by the ambitious strategy. “Vision without execution is hallucination,” he said.

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A detailed road map for the transformation of the city is currently being prepared, likely to be unveiled in the second quarter of the year. It will have to add gritty detail and — hopefully — solutions to the economic, social, demographic and financial challenges the plan involves.

But experts in urban development strategy in the Middle East have told Arab News that, far from being an over-ambitious daydream, the strategy is practical, achievable and ultimately beneficial.

Karl Sharro, London-based architect and editor of the forthcoming book “The New Arab City,” said: “Historically, it is totally plausible. Riyadh is so important for the history of the country.”




A Riyadh street in 1937. The city has a long history of rapid growth. (AFP/File)

Todd Reisz, also an architect based in Amsterdam whose new work “Showpiece City: How Architecture Made Dubai,” has just been published, said Riyadh already has “a very substantial capacity to plan a city and organize its components.”

Jeff Merritt, a San Francisco-based expert in smart cities and urban transformation for the World Economic Forum, said: “Such rapid urban expansion is not implausible, but you have to learn from the experience of other world cities.”

The urban experts agreed that, while Riyadh’s plans were ambitious, they were not unprecedented. In fact, the Saudi capital itself has a long history of such rapid growth.

Writing in the journal Scientific Research, architecture expert Saleh Al-Hathloul said: “Riyadh had grown from a small town of less than half a million inhabitants into a large metropolis of 7 million during the past 50 years. The speed and scale of its transformation have had few parallels.”

Between the 1930s and the 1980s, Riyadh roughly doubled in size each decade. As the center of administration for the new Kingdom of Saudi Arabia, it attracted ministerial and other government buildings, as well as a diplomatic quarter and a central business district with all the financial and commercial apparatus of a capital city.




Passengers ready to board a train from Riyadh to Dhahran in 1955. (Three Lions/Getty Images)

In the 1970s, the booming city needed the skills of a master-planner, and the authorities called in Constantinos Doxiadis, an architect and urban planner who had worked on many projects in his native Greece, as well as in the Middle East and Pakistan, where he designed the new capital, Islamabad.

With Riyadh in the midst of oil-fueled economic and demographic growth, Doxiadis experimented with the idea of a US-style grid system, still in evidence in the Al-Olaya district of the city today.

By the 1990s, Riyadh’s development was taken over by the Ar Riyadh Development Authority (now a unit of the RCRC), which launched MEDSTAR — the Metropolitan Development Strategy for Ar Riyadh — seeking to bring structure to the city’s rapid expansion.

It aimed to create urban subcenters (one of which is the basis for the King Abdullah Financial District), new suburban developments, and the public transportation system being built around the Metro.

“Saudi Arabia and Riyadh have a history of urban planning,” Reisz said, pointing also to the development work at Jubail and Yanbu and newer economic and industrial hubs as examples of this tradition.




Construction underway in the capital in 1980. (François LOCHON/Gamma-Rapho via Getty Images)

Saudi Arabia also has the lessons of other cities around the world that have experienced such phenomenal expansion. In the Middle East, there is the model of Dubai, which achieved the Riyadh goal of doubling population in a decade more than once in its 50-year history as part of the UAE.

Reisz highlights the central role of architecture in Dubai growth: “Modern architecture made Dubai in the physical sense, but it also delivered an image easily conveyed and broadcast,” he wrote.

From further afield, the example of the dramatic demographic growth in China will also be in the Riyadh planners’ case-study folder. Several Chinese cities have grown from provincial towns to become megacities in the past few decades, matching the country’s rise as an economic superpower.

Chongqing, in the center of China, has become an urban giant of more than 30 million people in the space of a few decades, remarkable even for a country where 10-million-plus cities seem to spring up almost overnight.

“For Saudi Arabia, China is a nice parallel, because urban growth there has been driven by centralized government policy,” said Sharro.




An image of Riyadh from last year. By 2030, the city will at least double in size from its current population of around 7.5 million. (Reuters/File)

Merritt, however, urged some caution in applying the China model to Saudi Arabia. “In China, the growth was driven by the migration of a large rural population into cities. Saudi Arabia does not have such a large rural pool,” he said.

As Crown Prince Mohammed bin Salman highlighted at the FII conference, the driving force for the Riyadh expansion will be economic. Riyadh represents about 50 per cent of the non-oil economy in Saudi Arabia, and enjoys cost advantages over other urban centers.

The cost of creating jobs in the city are 30 percent less than other cities of Saudi Arabia. Reisz endorsed that rationale. “Cities are tools to reach economic goals. Cities build economies. Their development requires integration between economics, finance and urbanism,” he said.

The Riyadh plan relies heavily on the city’s ability to draw business in to take advantage of the size and growth of the Kingdom’s economy. The RCRC and the Saudi investment ministry have collaborated on a program to persuade big multinational companies to set up their regional headquarters in the city, and were able to unveil 25 such new corporate entrants last month.

Attracting more new HQs in the city will depend to a large degree on the incentives currently being finalized as part of a wide-ranging reform of corporate and financial law to further improve the Kingdom’s standing in the global competitiveness league tables.




Fahd Al-Rasheed, the president of the Royal Commission for Riyadh City. (SPA)

Private investment in the Riyadh project is a key factor. Al-Rasheed said that most of the first-stage capital would come from government investment, though it is clear that later multi-billion-dollar stages would expect a bigger contribution from private sources keen to get on the ground-floor level of the development.

The great cities of the world are human environments as well as economic centers, and the “neo-renaissance” strategy lays great emphasis on the “livability” factor.  The Crown Prince painted a picture of a green city with big public open spaces, where millions of trees would be planted to protect the environment and make urban life in a desert environment more comfortable.

The greening of Riyadh will also be accompanied by a boom in entertainment, cultural and leisure activities as part of the liberalization of the Kingdom’s social environment under the Vision 2030 strategy.




A detailed road map for the transformation of Riyadh is currently being prepared. (Shutterstock)

“For example, as more women feel free to go out alone or with their friends, that will change the social fabric of the city,” Sharro said, highlighting a factor that is likely to be reflected in the new urban design and architecture of the growing city.

“Riyadh now is a car-dominated city, but will they take the opportunity to move to a more European style, to densify? There is potential to grow population numbers without expanding outwards in an urban sprawl by having more apartment buildings and more social facilities available locally,” he added.

Merritt pointed to the ambition of Paris to become a “15-minute city” where most social, cultural and commercial amenities are reachable on foot, a concept that also has an echo in The Line, the central urban strip of the NEOM development. “You don’t want a city devoid of humanity dominated by cookie-cutter buildings,” he said.

The planners at the RCRC have other priorities too as they prepare to unveil detailed plans for the renaissance of the city: The provision of utilities and energy in a sustainable way, the expansion of Riyadh’s digital capability and, by no means the least, the formal opening and ultimate expansion of the metro system.

Much will depend too on the ability to generate jobs in the city to meet the aspirations of the growing, and increasingly youthful, population.

But the urban experts seem genuinely excited by the prospects for the Riyadh renaissance, as Reisz explained. “I would have to have a crystal ball to see how it will all work out, but if I was a young Saudi man or woman, I’d be delighted to be part of it,” he said.

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Twitter: @frankkanedubai

 


Saudi Arabia announces launch of Soudah Development Company

Saudi Arabia announces launch of Soudah Development Company
Updated 25 February 2021

Saudi Arabia announces launch of Soudah Development Company

Saudi Arabia announces launch of Soudah Development Company
  • The company aims to attract more than two million visitors annually, and create 8,000 direct and indirect permanent jobs by 2030
  • Investment of $3 billion in tourism infrastructure and attractions to create a world-class mountain destination in the Asir region

RIYADH: Saudi crown prince and chairman of the Public Investment Fund (PIF), Mohammed bin Salman, announced on Wednesday the launch of the Soudah Development Company (SDC) in the Asir region.

The new entity, fully owned by PIF, will lead the development of a luxury mountain destination with immersive cultural experiences. It will be a celebration of natural assets empowering the local and national economies.

Launched to be a key driver of the Kingdom’s Vision 2030 ambitions, SDC will infuse SR11 billion ($3 billion) into infrastructure and tourism projects, aimed at enhancing the visitor experience in Soudah and parts of Rijal Alma’a governorate.

The planned developments include 2,700 hotel rooms, 1,300 residential units, and 30 commercial and entertainment attractions.

SDC aims to develop Soudah and Rijal Alma’a into a repeat, year-long sustainable destination for residents and visitors that will contribute an estimated SR29 billion to the Kingdom’s cumulative GDP by 2030.

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Tourism

SDC to collaborate with the private sector to enhance tourism infrastructure with hotel, residential units and commercial and entertainment attractions by 2030.

The company also intends to partner and collaborate with the local community and private sector to build a robust and diverse network of year-long offerings across the hospitality, residential, commercial and entertainment sectors.

It aims to attract more than 2 million visitors annually, targeting adventure-seekers and culture travelers who are looking for one-off experiences. It is also forecast to create 8,000 direct and indirect permanent jobs by 2030.

“Our investment in the Asir region reflects our confidence in the character of the location, which is a rich amalgamation of identity, heritage and experience,” said Yasir Othman Al-Rumayyan, PIF governor. “Through careful and considerate development, SDC will provide yet another remarkable destination in the diverse and growing portfolio of Saudi Arabian experiences capturing the imagination of a broad range of investors and travelers.”

The fund will inject at least SR150 billion a year into the local economy and aims to grow assets under management to more than SR7 trillion by 2030.

The destination adds another dimension to Saudi Arabia’s ambitious tourism goals, and complements those destinations created on the Red Sea coast and around the capital city of Riyadh.

Preserving the environmental integrity of the destination will be a priority for the SDC, and the development will follow a rigorous regulatory framework and urban planning code.


PIF makes billions on its investment in Lucid Motors

PIF put $1 billion into Lucid in 2018, giving it a majority stake in the California-based company when it was at the early stages of designing advanced luxury electric cars. (Supplied)
PIF put $1 billion into Lucid in 2018, giving it a majority stake in the California-based company when it was at the early stages of designing advanced luxury electric cars. (Supplied)
Updated 24 February 2021

PIF makes billions on its investment in Lucid Motors

PIF put $1 billion into Lucid in 2018, giving it a majority stake in the California-based company when it was at the early stages of designing advanced luxury electric cars. (Supplied)
  • Saudi stake in Californian electric vehicle maker is proving a profitable step

DUBAI: The Public Investment Fund, Saudi Arabia’s premier investing institution, has seen a multi-billion dollar increase in the value of its investment in Lucid Motors, the fast-growing Californian electric vehicle manufacturer, as a result of recent transactions.

PIF put $1 billion into Lucid in 2018, giving it a majority stake in the California-based company when it was at the early stages of designing advanced luxury electric cars. With the first model, the Air, unveiled and set for first delivery this year, that stake is now worth a lot more.

In a complex financial transaction recently unveiled in the US, Lucid will merge with a special purpose acquisition company, or SPAC — a company specifically designed to get an initial public offering (IPO) and a valuation on a stock market.

The SPAC involved with Lucid is Churchill Capital Corp IV, a creation of investment banker Michael Klein, who is well known for his investment advisory work in the Kingdom, including the record-breaking IPO of Saudi Aramco in 2019.

The SPAC deal gives Lucid a formal valuation of $24bn, and the PIF remains the majority investor in the new set-up.

The Public Investment Fund, Saudi Arabia’s premier investing institution, has seen a multi-billion dollar increase in the value of its investment in Lucid Motors. (Supplied)

The PIF declined to give a detailed breakdown of the value of its investment, but the documents published in the SPAC transaction show it at around $15bn - and will possibly be worth a lot more once vehicles start being sold.

Shares in Churchill gyrated wildly in the days before the deal with Lucid was formally announced but settled well above the value at which PIF and other big investors bought into the company.

The influential Lex column of the Financial Times said: “The biggest winner is Lucid’s largest current shareholder, Saudi Arabia’s PIF.”

Peter Rawlinson, the chief executive of Lucid who formerly worked at rival electric car company Tesla, told journalists: “I think that the valuation is a reflection of our technology.”

Electric vehicles have been one of the big investment themes of the past year, with Tesla — the market leader — soaring to a market capitalization of $670bn, bigger than all the traditional car manufacturers combined and making its founder, Elon Musk, one of the richest men in the world.

Peter Rawlinson, the chief executive of Lucid Motors. (Supplied)

Rawlinson is unfazed by Tesla’s size or reputation. Last year, in the run up to the launch of the Air, he told Arab News: “We’ve got the best car in the world, but I’m more excited to know that we have technology that can cascade down to more affordable models for the man in the street. That’s what is going to change the world.”

For the PIF, the investment in Lucid is a demonstration of the value of its approach of taking strategic stakes in foreign companies. Last year, it spent $10bn buying US and European equities when they slumped in value after the pandemic crash, which it later sold when markets recovered.

There could also be an industrial benefit from the PIF-Lucid relationship. There has been increasing speculation that Rawlinson will choose Saudi Arabia as the first location for a manufacturing facility, with a site near Jeddah mentioned as a possible production plant.

Rawlinson said of PIF: “They put their faith in us, that’s why we’re here today thriving.”

The deal with Churchill will give Lucid the capital it needs to go into full-scale production of the Air from a new production facility in Arizona, and to move plans forward for an electric SUV.


IMF chief warns pandemic leaving some countries behind

IMF chief warns pandemic leaving some countries behind
Updated 24 February 2021

IMF chief warns pandemic leaving some countries behind

IMF chief warns pandemic leaving some countries behind

WASHINGTON: The crisis caused by the pandemic is leaving many economies lagging behind, increasing the plight of the poor, a problem made worse by “uneven” access to vaccines, IMF chief Kristalina Georgieva said Wednesday.
In a message to the Group of 20 meeting on Friday Georgieva urged governments to increase vaccine distribution, ensuring Covid-19 is brought under control.
“The economic arguments for coordinated action are overwhelming,” she said in a blog post.
“Faster progress in ending the health crisis could raise global income cumulatively by $9 trillion over 2020-25. That would benefit all countries.”
She said that should include financing for vaccinations, reallocation of excess supply to countries with a shortage, and scaling up of production.
The global pandemic death toll is approaching 2.5 million, according to Johns Hopkins University, and the shutdowns forced to control infections have devastated economies.
And while vaccine rollouts are raising hopes for a recovery this year, the IMF forecasts job losses in the G20 alone to total more than 25 million this year.
By the end of 2022, emerging market and developing nations — excluding China — will see per capital incomes 22 percent below pre-crisis levels, compared to just 13 percent lower for advanced economies, which will throw millions more into extreme poverty, Georgieva warned.
“That is why we need much stronger international collaboration to accelerate the vaccine rollout in poorer countries,” she said.
G20 finance ministers and central bank chiefs led by Rome will meet by videoconference to discuss the state of the recovery and how best to attack the problem.
The Washington-based crisis lender estimated more than half of the world’s 110 emerging and developing countries will see their incomes fall further behind advanced economies through the end of next year.
And the virus-driven economic crisis also will widen income gaps within developing nations, especially as millions of children are still facing disruptions to education.
“Allowing them to become a lost generation would be an unforgiveable mistake. It would also deepen the long-term economic scars of the crisis,” she warned.


Pfizer eyes investment, recruitment, R&D in Kingdom

Pfizer eyes investment, recruitment, R&D in Kingdom
Updated 24 February 2021

Pfizer eyes investment, recruitment, R&D in Kingdom

Pfizer eyes investment, recruitment, R&D in Kingdom
  • Pharma giant transforming its Saudi operations amid COVID-19 vaccine rollout

RIYADH: Pfizer is one of the world’s largest pharmaceutical companies and has been operating in Saudi Arabia for six decades, but many people in the Kingdom will have come to know the brand only as a result of its work developing a coronavirus (COVID-19) vaccine.

Patrick van der Loo, regional president for Africa and the Middle East, has worked at the company for 20 years and, in December, was appointed to lead the distribution of the vaccine across a challenging and wide-ranging group of countries.

“Saudi Arabia and the GCC kicked off their COVID-19 vaccination drive with the Pfizer/BioNTech vaccine in December as some of the first countries globally to do so. The allocation of doses and implementation plan within a country is a decision for local governments based on relevant health authority guidance,” he told Arab News.

“Pfizer and BioNTech are working relentlessly to supply the world with 2 billion BNT162b2 vaccine doses by the end of 2021. Our Belgium facility’s upscaling work included process improvements to our manufacturing lines, expanding our manufacturing facility with a new production unit, and increasing batch sizes to optimize efficiency,” he added.

Operating in the region for 60 years and with a workforce of 460 employees, Pfizer has a long partnership with the Kingdom. In October 2011, it signed an agreement with the-then Saudi Arabian General Investment Authority (SAGIA) — now called Ministry of Investment — to set up its first-ever manufacturing plant in the GCC in King Abdullah Economic City.

In 2016, SAGIA issued a “trading license” to Pfizer, the first multinational pharmaceutical company awarded such a permit. The license gave Pfizer “100 percent foreign ownership” of its legal entity in Saudi Arabia, with the ability to import, export and trade in wholesale and retail products, equipment and instruments, he said.

Construction of the new manufacturing and packaging facility was completed in 2017 and Pfizer is planning to expand further in coming years, as the Kingdom moves closer to realizing its Vision 2030 goals to diversify away from hydrocarbons and increase local production.

“Pfizer is an active player in Saudi Arabia, and is in a continuous dialogue with multiple authorities to explore new opportunities, including investments, to support its vision and objectives,” van der Loo said.

Arriving in the region at a critical time, van der Loo said he is relishing the challenge ahead.

“While this region is new to me, I will gladly welcome new challenges and devote my energy to finding solutions focused on patient outcomes. Working in the region is also offering me the opportunity to get involved in the Pfizer/BioNTech COVID-19 vaccine distribution across a wide range of countries, and it is gratifying to be part of something of this scale,” he said.

Patrick van der Loo, regional president for Africa and the Middle East, has worked at the company for 20 years. (Supplied)

According to Reuters, Pfizer is aiming to produce 2 billion COVID-19 vaccines this year, earnings it around $15 billion, or about a quarter of its sales.

While COVID-19 may be his immediate priority, van der Loo is also leading the transformation of Pfizer’s wider portfolio of products across Saudi Arabia and the wider Middle East region.

“Pfizer is shifting from a diversified company with a consumer health portfolio and comprehensive portfolio of legacy brands to a more science-focused biopharmaceutical powerhouse. In KSA and the Gulf, we aim to ensure the early introduction of breakthroughs — sometimes some of the earliest in the world, which truly demonstrates the innovative eagerness of specific markets in the Middle East,” he said.

There are currently multiple clinical trial protocols — phase two and three — under review, and some have reached the final stages of development and approval in oncology, vaccine, public health and gene therapy.

“We are also very proud of our collaboration with multiple Saudi research centers to access clinical trials and innovative treatments in the medical field. The trial of gene therapy in Duchenne’s disease at King Faisal Specialty Hospital and Research Center is a milestone,” he said.

Pfizer is also providing training and development opportunities for multiple Saudi entities operating in the healthcare, training and education sectors, as part of the National Transformation Program.

Looking ahead to 2021, van der Loo said Pfizer will have “several product launches in oncology, among other areas, to reach new patients with critical breakthrough treatments and prevention tools.”


Saudi Arabia sees 227% surge in wealthy individuals in last 5 years

Saudi Arabia sees 227% surge in wealthy individuals in last 5 years
Updated 24 February 2021

Saudi Arabia sees 227% surge in wealthy individuals in last 5 years

Saudi Arabia sees 227% surge in wealthy individuals in last 5 years
  • Saudi Arabia bucked Mideast trend, with number of people with over $30m growing in 2020

RIYADH: The number of ultra-high-net-worth individuals (UHNWIs) — those with $30 million or more — in Saudi Arabia surged 227 percent over the last five years, the fastest growth rate in the world.

According to The Wealth Report by real estate consultancy firm Knight Frank, the number of UHNWIs worldwide will increase by 27 percent in the next five years to 663,483, with the number of millionaires growing by 41 percent.

The report predicts that the number of UHNWIs in the Middle East will rise by 24.6 percent by 2025, with the region expected to remain the fourth-largest wealth hub in the world.

“The pandemic has impacted the fortunes of many in the Middle East, and the Middle Eastern HNWIs and UHNWIs were not spared, with the total number of each decreasing by 11.3 percent and 10.1 percent in 2020 respectively,” said Taimur Khan, head of research at Knight Frank Middle East.

“However, this decline was not uniform across all countries. In Saudi Arabia over this period, the number of UHNWIs increased by 9.6 percent, the 10th fastest growth rate globally. In fact, its UHNW population has grown by 227 percent over the last five years, the fastest growth rate globally over this period,” he added.

“As the region continues its various economic diversification programs, we expect that there will continue to be significant growth in the number of UHNWIs and billionaires residing in the region.”

According to a survey conducted by Knight Frank of private bankers and wealth advisers, half said their clients’ wealth had increased in 2020.

In the Middle East, 67 percent of respondents said their clients’ wealth either remained the same or increased. Sixty-nine percent said they expect their clients’ total wealth to increase in 2021.

The reports found that Asia is likely to see the largest rise in the number of UHNWIs, with growth of 39 percent, led by Indonesia (67 percent) and India (63 percent).

“The US is, and will remain, the world’s dominant wealth hub over our forecast period, but Asia will see the fastest growth in UHNWIs over the next five years. By 2025, Asia will host 24 percent of all UHNWIs, up from 17 percent a decade earlier,” said Liam Bailey, global head of research at Knight Frank.

“The region is already home to more billionaires than any other. China is the key to this phenomenon, with 246 percent forecast growth in very wealthy residents in the decade to 2025.”