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Saudi giga-projects: ‘enough work for every sector of the industry’

Amaala
Saudi Arabia's Red Sea Global giga-project comprises the Red Sea and Amaala tourism projects
  • Projects rank as world’s largest tourist developments under construction
  • Red Sea and Amaala projects combined are estimated at $28bn
  • 13,000+ firms have signed up to project portal, and more are welcome
  • Saudi Arabia keen to procure work from companies in Europe and Asia 

While much of the global economy is reeling from a sharp slowdown in growth, Saudi Arabia recorded a GDP growth rate of 8.6 percent in the third quarter this year, with its economy being propelled forward by ambitious projects in its tourism sector. 

The Red Sea Global (RSG) giga-project, which comprises the kingdom’s flagship tourism Red Sea and Amaala projects, currently ranks as the world’s largest tourism development under construction, spanning 28,000sq km. 

RSG is expected to contribute around SR33 billion ($8.80 billion) annually to the kingdom’s economy upon completion and generate 120,000 job opportunities, playing a key role in Vision 2030

Phase one of the Red Sea project began in 2017 and is due for completion in 2023, while phase one of the Amaala project launched in 2018 with a targeted completion date of year-end 2024. Both are set to be finished by the end of the decade.

The value of the Red Sea and Amaala projects combined is estimated at $28 billion, with $6.6 billion of work currently under way at the Red Sea project, according to RSG. 

Ben Edwards, group head of cost, commercial and procurement at RSG, told AGBI: “We expect these projects to generate a significant boost to Saudi’s GDP – both during construction and once operational.

“The Amaala project has 25 hotels while the Red Sea project has 14 hotels in phase one, and another 36 hotels in phase two, so there’s going to be a steady release of new developments coming to the market between now and 2030 as we work to deliver the vision.” 

The two projects have awarded more than 1,300 construction contracts worth nearly $8.53 billion, with around 70 percent of the total value reportedly awarded to Saudi companies. 

“The majority of the applications we have received to date are from within the Middle East region because they’re more familiar with our projects,” said RSG procurement executive director Mohammed Al Fardan.

“However, there’s now a growing awareness in Europe, Asia and other regions of our projects and we’re keen to work with as many countries as possible.

“Saudi’s sovereign wealth fund, the PIF, is leading an initiative to unify the portal for registrations for all giga-projects in the kingdom and we are part of that initiative.

“As of today, more than 13,000 businesses have registered on the portal, half of which have qualified and are ready to work with us.” 

Amaala
Phase one of Saudi’s Amaala tourism project was launched in 2018 with a completion target of year-end 2024

RSG is fully funded and backed by the PIF but both the Red Sea and Amaala projects will be included within semi-autonomous Special Economic Zone (SEZ) governed by independent laws and a regulatory framework on par with international standards. 

“Although we are a semi-government entity, we are a private developer and we’ve been given the freedom to define our own procedures and policies,” said Paul Donaghy, executive director of group procurement at RSG. 

“We hate bureaucracy so we are trying our best to make ourselves a lean and agile developer. 

“What makes us unique and separates us from the other gigas is that we are our own management contractor, which means we are looking to engage with sub-contractors directly,” he said.

“That’s a benefit because we all know that the further you are down the chain, the harder it is to get paid. It makes us very supply chain friendly.” 

RSG is already working with top-tier international consultants and suppliers including MACE, Foster + Partners, Chapman Taylor, Buro Happold and Gensler, but Donaghy was keen to stress that many more will need to come on board. 

“All of Amaala’s assets are due to open by Q4 2024 and given the value of the project – the phase one budget alone is $13 billion – it’s quite a tall order,” said Donaghy.  

“We probably need to spend around $2 billion per year for the next two years to finish on time. Our expenditure on the project currently stands at only 4 percent of the total planned expenditure.

“We have a strategic pipeline of projects until 2030 and we have the capability to procure in very high volume by identifying specialist packages such as precast and FF&E [furniture, fixtures and equipment]. 

“There’s enough work for every sector of the industry globally – I actually don’t believe there are enough contractors in Europe and the Middle East to deliver just for RSG, let alone the other giga-projects in the Middle East.”  

Along with ironing out any bureaucracy, Edwards was also keen to highlight RSG’s commitment to paying contractors on time – something that numerous Gulf construction companies have been criticised for in the past.  

“I’ve previously worked on the other side of the fence where I’ve been a supplier of construction services into Saudi Arabia so I’m very sensitive to what some of the challenges are to doing business within the kingdom,” said Edwards. 

“Also, we are very much focused on delivering the projects that are required to achieve Vision 2030, and the SEZ’s that are being set up to operate the Amaala and the Red Sea projects give us some flexibility in terms of our engagement and rules for suppliers.” 

Red Sea Project
Kengo Kuma and Associates and Foster + Partners are among the architects designing for the Red Sea Project tourism development on an archipelago of Saudi Arabian islands

Another key focus of the RSG’s projects, explained Edwards, is “to put people and planet first in what we’re doing.” 

RSG aims to set new standards in sustainable development and regenerative tourism with the goal of being carbon neutral by 2030 as well as aligning with all 17 of the UN Sustainable Development Goals (SDGs). 

In November, RSG bought a fleet of carbon-neutral electric buses from international e-mobility pioneers Electromin and Energy International Corporation, making it the first Saudi company to do so. 

Two large-scale solar farms are currently under development at the destination, along with the world’s largest battery storage facility while the company is also developing supporting infrastructure for electric vehicle charging and maintenance facilities. 

“There’s always a bit of a question mark when giga-projects get announced as to whether they’re actually going to get built but RSG’s construction is really gathering pace today,” said Edwards.

“It’s a hugely exciting and significant project… These types of developments come along once in a lifetime when you work in the construction industry.”