Saudi Arabia has approached banks to raise financing for two mega tourism projects as the kingdom pushes ahead with ambitious plans for life after oil, according to people familiar with the matter.
Red Sea Development Co. and Qiddiya Investment Co., which are managing the developments, have sent out so-called request for proposals to banks to see how much they could lend, the people said, asking not to be identified because the matter is private. The companies haven’t said how much they plan to borrow and are gauging how much they could raise, the people said.
Representatives for Red Sea Development and Qiddiya Investment didn’t immediately respond to requests for comment.
Saudi Arabia in 2017 unveiled plans to turn hundreds of kilometers of its Red Sea coastline into a global tourism destination. The project will cover 50 islands and 34,000 square kilometers — an area bigger than Belgium. It also announced plans to develop the kingdom’s largest cultural, sports and entertainment city, Qiddiya, southwest of Riyadh.
The developments are part of a list of mega projects that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, has committed to as Crown Prince Mohammed bin Salman tries to bolster non-oil revenue and attract foreign investors. Authorities are already relaxing rules on entertainment, and by 2030, aim to double household spending on recreation to 6 percent. Concerts, dance shows and even film screenings have drawn thousands of people over the past year.
The PIF is also spearheading efforts to develop Neom, a $500 billion futuristic city being built from scratch. Critics say some past mega projects have struggled to get off the ground or add value to the kingdom’s economy. Construction of the $10 billion King Abdullah Financial District in northern Riyadh began in 2006, but the 73-building hub remains unfinished.
The first phase of the Red Sea project is expected to be completed by 2022 with 14 luxury hotels. It’s anticipated to create up to 70,000 new jobs and to contribute as a much as $5.3 billion riyals to the kingdom’s GDP.
The Qiddiya entertainment city is being developed on 334 square kilometers and will include a safari area and a Six Flags Entertainment Corp. theme park. The country’s sovereign fund is the main investor, along with local and international investors. Construction of the project’s first phase should be completed by 2022.