A white elephant in the making, unlikely to attract tenants and possibly never even to be completed, the plan to build a financial district from scratch was viewed by Saudi Arabia’s neighbors as among the glossiest excesses of the kingdom’s oil boom profligacy.

Aimed to be a haven for foreign financial services and investors as well as local banks and companies currently doing business from offices all over Riyadh, the creators of the King Abdullah Financial District (KAFD) envisaged a kind of mini-Dubai.

While no business has moved in yet, most of the 1.6-million-sq-metre district on the edge of Riyadh is still a construction site even after more than 10 years, and a year after it was supposed to be finished.

He wants to salvage the $10 billion project, said reform-minded Deputy Crown Prince Mohammed bin Salman last month. Sources have said that reportedly the world’s largest sovereign wealth fund – the Public Investment Fund, will own the project and will be based there.

Through steps that the prince hopes will “increase the chances of … success”, the KAFD will have internationally competitive regulations, an easier visa regime and a direct connection to the airport and will become a “special zone”.

The amount of residential use from the 1.7 million sq meters now designated for office space would be another change. Rents are bottoming out in Riyadh’s current 2.5 million sq meters of office space but prices for residential units are rising according to a 2015 report by real estate analyst Jones Lang LaSalle.

Potential tenants and investors are both hopeful and skeptical about the plan.

“The potential is amazing. The inside is impressive. I’d like to live there. As an urban space it’s interesting, with its design and architecture,” Reuter quoted a Dubai-based expatriate who does business in Saudi and who has toured the site saying.

However given the current economic climate he had doubts about the success of the project. Saudi Binladen Group which has been struggling since last year and the biggest construction firm in the kingdom is the main contractor.

“It will not be finished. Decision-making is very slow (on the project, and) people don’t have cash,” he said. Reuter reported that the businessman, like other business people interviewed, didn’t want to be named expressing an opinion about such an important royal initiative.

Similar concerns were expressed to Reuter by a senior Saudi former banker.

“If the plan does create a genuine free zone and makes things smoother for newcomers, it’ll be ‘bingo!'” he said. However the key factor would be the recovery of the oil-dependent economy.

The original plans were flexible enough to transform space earmarked for offices into residences or retail space, said Jacob Kurek, a partner at the firm responsible for the KAFD masterplan, Danish firm Henning Larsen. He said that via Riyadh’s new metro, which will have a station at KAFD, a direct link to the airport would be easy to install.

However it would be a complex process to usher in the other changes like a different regulatory regime, visa exemptions and any blunting of Saudi Arabia’s strict social restrictions.

(Adapted from Reuters)

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