Riyadh: Saudi Arabia is pushing ahead with a $20 billion tourism and culture project in its capital despite the kingdom's fiscal crisis, counting on a rebound in pent-up consumer spending when the global pandemic abates.
Officials have allocated funds for the mega-project in Riyadh, called "Diriyah Gate", and Crown Prince Mohammed bin Salman told planners to move "full speed ahead, no slowdown," according to Jerry Inzerillo, CEO of the project's development authority.
Several parts of the project are in construction and the first phase should be completed by the end of 2023.
"We don't know the economic impact of COVID over a 12-, 24- or 36-month period," Inzirello said. "But I can tell you one thing - It will not affect the planning of the principal city of Riyadh."
Eyes on Vision 2030
The government is still investing heavily in other elements of the Crown Prince's plan, called "Vision 2030". Officials recently announced a $4 billion tourism development fund and are moving ahead with several mega-projects, including Qiddiya, an entertainment city planned near the capital.
Similar efforts in the past have struggled to get off the ground, such as a $10 billion financial district in Riyadh.
The money to build Diriyah Gate will come from the government as well as Saudi, Gulf and foreign investors, but if they hesitate in the current climate, the state could front funds to get it done faster, Inzirello said. Excavation is underway for major infrastructure and the first hotel.
Local investors are willing
The public-private investment split is in flux now, with some foreign hospitality companies that committed before the pandemic saying they "need until the fall to ascertain what the fallout in the global tourism picture is" before deciding their equity level, Inzirello said. But there's also been more interest from Saudi investors, with "major Saudi entrepreneurs, royal family and non-royal family" stepping up, he said.
In pushing ahead with the original plan, Saudi officials are betting that consumer spending on tourism and leisure will surge as people emerge from their homes. Their target is for Diriyah Gate to house 100,000 residents and attract 25 million visitors per year by 2030, including Saudis and foreign tourists.
"I'm more optimistic than I was 18 months ago," Inzirello said. "Travel is going to boom again, you know why? Because people don't want to feel pinned in."