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 03 March 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.

Opinion

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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 Sharro, the London-based architect, 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

Note: An earlier version of the story had wrongly attributed the last quote to Todd Reisz instead of Karl Sharro.


Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO

Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO
Updated 13 min 55 sec ago

Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO

Mubadala to invest $100m in a Chinese on-demand trucking startup before IPO
  • Mubadala to take part in private placements before IPO
  • Ontario Teachers’ Pension Plan Board also investing $100 million

NEW YORK: UAE sovereign investment vehicle Mubadala plans to invest $100 million in Full Truck Alliance Co., a Chinese trucking startup that styles itself as “Uber for trucks,” Bloomberg reported.
Full Truck Alliance (FTA) said on Tuesday it is aiming for a valuation of over $20 billion in its US initial public offering, marking another high-profile Chinese stock market listing in New York this year.
This coincides with a private placement in which the Ontario Teachers’ Pension Plan Board and Mubadala will each purchase $100 million worth of Class A ordinary shares, Bloomberg said.
FTA, more popularly referred to as Manbang in China, said it is offering 82.5 million American Depositary Shares (ADS) at between $17 and $19 per ADS. Each ADS represents 20 Class A ordinary shares.
At the top end of the price range, FTA could raise as much as $1.57 billion from the IPO,which would make it the largest US listing for a Chinese company this year, according to data provider Refinitiv. Chinese vaping firm RLX Technology Inc. raised $1.4 billion in its US IPO in January.
Those figures are expected to be dwarfed in the coming weeks when China’s largest ride-hailing company Didi Chuxing launches its IPO, which is expected to be the biggest share sale of the year. Reuters has previously reported that Didi could raise as much as $10 billion from its stock market flotation.
A spate of richly valued Chinese tech startups have targeted IPOs in the US in recent years, as they can tap into the deepest capital pool in the world and avoid tighter regulatory scrutiny in major Asian exchanges like Hong Kong.
Last year, Chinese companies raised $12 billion from US listings, nearly triple the amount raised in 2019, according to Refinitiv data. This year is expected to comfortably surpass last year’s tally.
Chinese companies have so far raised $5.82 billion in the United States this year, according to Refinitiv data.
FTA, formed out of a merger in 2017 between two digital freight platforms, Yunmanman and Huochebang, is led by former Alibaba executive Peter Hui Zhang.
The company runs a mobile app that connects truck drivers to people that need to ship items within China. It was the world’s largest digital-freight platform by gross transaction value last year, according to research from China Insights Consultancy that was commissioned by the company.
In November, FTA was valued at nearly $12 billion after a $1.7 billion investment, Reuters reported. That investment round was led by Japanese conglomerate SoftBank’s Vision Fund, Sequoia Capital, Permira Capital and Fidelity.
China’s tech giant Tencent Holdings Ltd. is also one of the company’s backers.
Morgan Stanley, CICC and Goldman Sachs are among the underwriters for FTA’s offering in New York. The company plans to list on the New York Stock Exchange under the symbol “YMM.”


Saudi Arabia dominates slow MENA IPO market in Q1

Saudi Arabia dominates slow MENA IPO market in Q1
Updated 24 min 43 sec ago

Saudi Arabia dominates slow MENA IPO market in Q1

Saudi Arabia dominates slow MENA IPO market in Q1
  • MENA IPOs lagged the global market in Q1, which was the best first quarter in terms of both deal numbers and proceeds for the 20 years

DUBAI: Saudi Arabian companies accounted for two of the three initial public offerings in the Middle East and North Africa region during the first quarter of 2021, representing 96 percent of the amount raised, according to consultancy EY.
The two listings on the Tadawul in Q1 raised $281.6 million. That compares with $1.45 billion from four listings for the whole of 2020, which represented a 78 percent share of the MENA IPO market, EY said in a report.
Alkhorayef Water & Power Technologies raised $144 million after its retail offering was oversubscribed by 1,511 percent and the institutional offering by 6,320 percent. Theeb Rent a Car Company collected $138 million from its IPO, which was oversubscribed by 6,010 percent for the institutional tranche and 3,385 percent for the retail offering.
MENA IPOs lagged the global market in Q1, which was the best first quarter in terms of both deal numbers and proceeds for the 20 years, generating $105.6 billion from 430 offerings, EY said. MENA IPOs raised $294.8 million, a 64 percent decline from the same period in 2020 and down from $925 million Q4, 2020.
“The MENA region’s IPO market was off to a slower than expected start in 2021, despite expectations for an increase in IPO activity after an uptick and stronger performance in Q4 of 2020,” said Matthew Benson, EY MENA strategy and transactions leader. “We expect IPO activity to bounce back over the coming months while economic conditions in the region continue to improve, aided by the accelerated vaccine rollouts and the possibility of reaching herd immunity against COVID-19.”


Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups

Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups
Updated 45 min 41 sec ago

Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups

Aramco’s entrepreneurship arm launches $27m roadshow to find KSA’s next big startups
  • Wa’ed has up to SR100 million ($27 million) at its disposal to hand out in loans and venture capital investments to commercially feasible ventures

DHAHRAN: Saudi Aramco’s entrepreneurship arm Wa’ed on Wednesday launched its first roadshow event to unearth and fund the next generation of Saudi entrepreneurs.

Wa’ed has up to SR100 million ($27 million) at its disposal to hand out in loans and venture capital investments to commercially feasible ventures that would fill existing gaps in the Kingdom’s economy.

Aiming to support game-changing ideas that will create new jobs, the Wa’ed entrepreneurship roadshow will hold a series of events in six Saudi cities from September to December.

Jubail, Yanbu, Riyadh, Jeddah, Makkah, and Madinah will play host to the tour being organized in association with some of Wa’ed’s key partners, including the Royal Commission for Jubail and Yanbu, Monsha’at, the Saudi General Authority for Small and Medium Enterprises, development firm Namaa Almunawara, and investment company Wadi Makkah.

“These shows are a coordinated effort with our partners to find and fund new entrepreneurs who will add value to the Saudi entrepreneurial ecosystem and accelerate the pace of economic diversification in the Kingdom,” said Wassim Basrawi, Wa’ed managing director.

Wa’ed’s aim is to seek bold ideas with potential to positively contribute to the development and diversification of the Saudi economy.

“Seventy out of over 100 startups we supported were the first of their kind and received their first-ever investment from us, and this is what we are targeting now; distinguished and not yet supported startups and ideas,” Basrawi added.

Online applications for all Saudi-based entrepreneurs were due to open on Wednesday. After two selection rounds, successful applicants will be invited to participate in the roadshows in their cities, where events will include startup pitch competitions in the style of TV’s “Shark Tank,” and industry discussions and debate.

The tour will focus on sectors such as financial, agricultural, and environmental technology, industrial applications, reverse engineering, drones, petrochemicals, supply chain, and tourism.

In addition to Wa’ed’s incubation and mentoring services, participants will either earn fast-track funding, including loans for up to SR5 million or venture capital investments with up to SR19 million, and non-refundable grants of SR25,000, SR50,000, and SR75,000.

Amin Nasser, chief executive officer of Aramco, said: “Wa’ed has come a long way since 2011 to support talented Saudis to help them turn their business ideas into real drivers for growth and innovation.

“But the next 10 years will be even more crucial for our entrepreneurial ecosystem as the pace of transformation in-Kingdom accelerates with opportunities emerging in new business growth sectors such as technology, e-commerce, and renewable energy.

“That’s why the roadshows by Wa’ed in six cities across the Kingdom are important to make the most of these opportunities to nurture and enable a more vibrant entrepreneurial culture in Saudi Arabia.”

All those taking part in the roadshow will be able to join and benefit from Wa’ed’s Innovation Ecosystem Society which has more than 1,500 local and international members and around 400 mentors.

Enrichment events and meetings with inspirational speakers, as well as interview-based podcasts, workshops, and webinars will start ahead of the competition and will continue until the end of the program in order to provide value to as many potential beneficiaries from the initiative as possible.

Through the scheme, Wa’ed intends to expand its portfolio more evenly throughout the country. Currently, around 60 percent of its investments are in the Eastern Province, with the remainder distributed around the Kingdom.

Wa’ed has also set a goal to double its annual loan and venture capital deal volume by 2023 in a bid to support the Kingdom’s entrepreneurial ecosystem and keep up with the pace of transformation and emerging opportunities in crucial sectors including technology, e-commerce, and renewable energy.

Wa’ed currently supports more than 100 entrepreneurial businesses in Saudi Arabia by providing the necessary financial support, guidance, and tools for entrepreneurs with creative ideas and startups.

Saudi Aramco’s entrepreneurship center was established in 2011 with a mission to nurture Saudi entrepreneurs and their businesses to strive and help develop the Saudi economy. Since its inception, Wa’ed has invested more than $100 million.

It is the only no-collateral lender and largest institutional venture capital investor in Saudi-based startups.


Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai

Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai
Updated 16 June 2021

Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai

Indonesia lists three Islamic bonds worth $3bn on Nasdaq Dubai
  • The new listings bring Indonesia’s total value of listed sukuk to $19.75 billion

DUBAI: Three sukuk tranches, amounting to $3 billion, have been listed on Nasdaq Dubai by the Indonesian government.
The new listings bring Indonesia’s total value of listed sukuk to $19.75 billion, the Dubai Media Office reported.
“This mounting presence of international issuers clearly underscores Dubai’s active role in promoting Islamic economy, shariah-compliant financial markets as well as supporting sustainable economic development across the world,” Hamed Ali, CEO of Nasdaq Dubai, said.
The three sukuk tranches include one of $1.25 billion yielding 1.5 percent on a five-year maturity; a $1 billion bond with a coupon of 2.55 percent yield and 10 years maturity; and a $750 million green sukuk yielding 3.55 percent yield over 30 years.
Many central banks and sovereign wealth funds in Southeast Asia and the Middle East have expressed strong interest in the paper, with a combined order book exceeding $10.3 billion.


Saudi Electricity approves Apple Pay for settling bills

Saudi Electricity approves Apple Pay for settling bills
Updated 16 June 2021

Saudi Electricity approves Apple Pay for settling bills

Saudi Electricity approves Apple Pay for settling bills

RIYADH: The Saudi Electricity Company has made it possible for its subscribers to pay their electricity bills through Apple Pay, SPA reported.

The Kingdom’s electricity provider already offers payment through credit and debit cards through its website, through a bank account, by phone, certified bank check and through point-of-sale locations.

Apple Pay launched in Saudi Arabia in February 2019.