Riyadh hopes to entice private sector to landmark projects 

Reuters

• Riyadh seeking private sector funds
• World Cup and Expo raising demands
• PPPs central to Vision 2030

Riyadh is courting private-sector investors to fuel its ambitious development agenda, offering significant opportunities but grappling with resistance from companies citing financial risks, a senior official said.

The push to involve private firms highlights Saudi Arabia’s challenges as it transitions from government-led development to growth driven by the private sector, a pillar of its Vision 2030 economic transformation plan.

Mohammed AlWabely, assistant deputy mayor for iconic projects at Riyadh Region Municipality, said the government is introducing incentives to address investor concerns as it seeks to draw private funding into flagship projects, including infrastructure and cultural landmarks.

“There’s a huge opportunity for the private sector to come and fund projects,” AlWabely said at the Big 5 Global construction conference in Dubai. “The government wants to engage the private sector actively.”

The King Abdullah International Gardens project, envisioned as one of the world’s largest botanical gardens and a rival to those in Singapore and Kew in England, highlights the government’s efforts – and the challenges. 

The 2 million sq m project initially faced pushback from the private sector, AlWabely said, as investors flagged risks despite the government’s case study showing financial sustainability in which revenue would cover the operational expenses.

“We faced some resistance,” he said. “When the private sector does their own study, they see some risk. So we have to work with them to create incentives.”

To make the project more attractive, the municipality offered 500,000 sq m of undeveloped land as an incentive to the private operator tasked with managing the facility. 

“We tell them, ‘Here is the garden, we need to operate. Run the operation… and this land, you can take it and invest in it and [develop] it in the way you see [fit],’” he said. 

“[That created] a financial balance for [them], so they see it as an attractive offer for them.”

Nojood Al Aqeel/Unsplash

New Murabba

The Saudi capital has become a focus for investment since it was chosen as the site for the World Expo 2030 last November, and this year Fifa is set to declare formally that the kingdom will host the World Cup in 2034. 

“The World Cup and World Expo were never in the plan. All of a sudden you wake up and find you have these wins,” Turab Saleem, Saudi hospitality analyst at real estate consultancy Knight Frank, said in October.

“So, all the money has to go to Riyadh. Anything there is going to happen. It’s the best chance to show their muscle.”

Public-private partnerships (PPPs) are central to Saudi Arabia’s Vision 2030, which aims to diversify the kingdom’s economy and reduce dependence on oil revenues. 

Riyadh is at the forefront of this drive, with multi-billion-dollar projects aimed at transforming the capital into a global centre for business, tourism and culture.

• Salvator Mundi destined for Riyadh giga-park
• Saudi’s Diriyah adds cultural districts to $63bn plan
• GCC embraces public-private partnerships to drive projects

Last year, the National Center for Privatization and PPP approved a pipeline of 200 projects spanning 17 sectors, involving more than $50 billion in investment. 

These include four airports, seven desalination plants, six wastewater treatment plants, 10 strategic water reservoirs and a transit-oriented development project in Mecca. 

The government is also requiring developers to build essential infrastructure – such as roads, stormwater systems, and sewage – within their projects, AlWabely added.

“We try to be more flexible under the umbrella of the government and regulation and goal to utilise our project, and to involve the private sector and to have that PPP motivated.”