QIC: One step closer to reality
I wrote about Al-Qiddiya giga-project more than a year ago, expressing my thoughts on this unique entertainment, sports and cultural destination. Since then, the Qiddiya Investment Co. (QIC), as it is called now, has a new standalone legal structure and looks more appealing to global investors.
The QIC, backed by the Public Investment Fund (PIF) — Saudi Arabia’s sovereign wealth fund — will cover 334 square kilometers and be located just 40 kilometers from Riyadh. I recently visited the QIC headquarters in Riyadh and met with its CEO Michael Reininger. He came across as a seasoned real estate developer and a fellow investment banker. We discussed the QIC’s capital structure and the way forward to raise money.
The QIC aims to create the largest entertainment, cultural and sports city in the world. The estimated cost of the infrastructure is about SR30 billion ($8 billion), and the first phase is scheduled to open in 2022.
The number of visitors for the entertainment sector is expected to reach 17 million annually, and the project will contribute up to SR17 billion to the gross domestic product (GDP) by 2030. The master plan includes five major development zones, including the resort core, the city center, and a golf and residential complex.
With the international theme park Six Flags being the anchor operator, with an estimated SR1.5 billion of investment in the QIC, the latter will be a game-changer in the entertainment business for the local market and neighboring ones. Furthermore, because it is only 40 km from the capital, real estate developers should enjoy opportunities to build residential complexes for many Riyadh-based residents as a second home or weekend pad.
The QIC will contribute to diversifying the Saudi economy, reducing its dependence on oil, multiplying the private sector’s contribution to GDP, reducing the government sector’s role as a growth driver, and creating immense opportunities for local and international investors, as well as many jobs.
With the PIF as an enabler, the QIC and other giga-projects will have a significant impact on changing the culture of society, and making it more open to the world. Having said that, the success of the QIC and other giga-projects depends mainly on the government’s ability to take quick steps to reform the economy and promote transparency and credibility.
• Basil M.K. Al-Ghalayini is the Chairman and CEO of BMG Financial Group.
