RIYADH: Knowledge Economic City (KEC) has agreed to borrow SR782 million ($209 million) from the Saudi Tourism Development Fund and Riyadh Bank for the development of the Knowledge City Hub project in Madinah.
The financing, which covers 79 percent of the project-development cost, will be repaid over 13 years with collateral in the form of plots of land from the company’s land portfolio, according to a stock exchange filing.
The Tourism Development Fund (TDF) will provide half the financing and Riyadh Bank the other half, the TDF said in a press release on Thursday. The SR1.3 billion development will cover 68,000 square meters at a site located about 6 km from the Prophet’s Mosque.
Knowledge City Hub will consist of a mall, and commercial, residential and entertainment services, as well as a 325-room 5-star hotel that will be managed by Hilton.
Construction is scheduled to start in August and to be completed by the end of 2023, except for the hotel, which should be finished by May 2024.
“This agreement is one of several successful agreements with local banks aimed at providing investors with attractive financial solutions that encourage investments into this promising sector,” Qusai Al-Fakhri, chief executive officer of the TDF, said in the press release.
“It exemplifies our commitment to delivering on the National Tourism Strategy, increasing the GDP contribution of the tourism sector from 3 percent to 10 percent by 2030 and creating 1 million new jobs.”
KEC has also agreed terms for the management of the Madinah Gate Fund Project Development with Riyadh Capital.
Madinah Gate is a vast redevelopment of land adjacent to the Haramain high-speed railway station in the city. It will include a 4-star hotel and a bus station connected directly to the train station, a commercial and entertainment center with 23,000 square meters of leasable area containing 78 shops, 39 restaurants and cafes, two entertainment centers, a cinema with 800 seats, and 800 parking spaces.
KEC also signed an agreement with MOBCO Group to develop Elite International Schools at Knowledge Economic City. The complex of schools will be built on a 20,000-square-meter plot of land as part of a 25-year lease agreement and will be able to accommodate around 1,700 students. The first school is scheduled to open in September 2022.
The TDF was established in June 2020 with an initial $4 billion in funding. Saudi Arabia opened up to international tourists in 2019, launching a new visa regime while appealing to foreign companies to invest in the sector, which it hopes will contribute more than 10 percent of gross domestic product by 2030, up from 3 percent at the time.
In September, the TDF announced that up to SR160 billion of tourism projects will be financed in the Kingdom after it struck a deal with local banks, the Saudi Press Agency reported.
The fund’s CEO Qusai Al-Fakhri said at the time: “This agreement constitutes an essential step toward supporting and developing tourism projects in the Kingdom.”
“The tourism sector is one of the most important sectors that support the economy, and we are looking forward to starting an active participation with the fund to support quality projects, which will have an impact on finding promising investment opportunities in the Kingdom,” the CEO of Riyadh Bank, Tareq Al-Sadhan, added.