Regional News

$1.3bn boost for Saudi economic city

June 2011

SAUDI ARABIA’S government has given King Abdullah Economic City’s (KAEC) master-planner Emaar EC a loan worth SR5 billion ($1.33 billion) to launch construction of the second phase of its mega project.

A168-sq-km development on the Red Sea north of Jeddah, KAEC is being developed by Emaar The Economic City (Emaar EC), a joint venture between Saudi investors and the Dubai-based developer Emaar. The $13.3-billion project is said to be the largest private-sector development in the kingdom.

The loan is expected to boost development activity in the city after a sluggish 2010, analysts at Deutsche Bank said.

KAEC will include an 800-hectare industrial sector, a new port, office towers, resorts and a residential area for 2 million people.

The Saudi Ministry of Finance is giving Emaar EC 10 years to repay the loan, with repayment starting after three years.

Emaar EC has provided guarantees to the loan by collateralising 24.7 million sq m of land. Repayments are to be made through returns from the project, Emaar said.

“KAEC is a perfect complement to the Saudi Vision 2020, led by the pillars of economic diversification focused on manufacturing and exports, and creation of new jobs for Saudi nationals through the active involvement of the private sector,” Mohamed Alabbar, chairman of Emaar EC, said.

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