Until recently, local developers and city planners viewed urban expansion along horizontal rather than vertical lines. Before the completion of Riyadh’s Al Faisaliyah Centre in 2000, no building in the Kingdom topped 200 metres. Backed by a bullish economy and a surge of confidence following government spending on housing, infrastructure, health and education projects, developers have a keener interest in high-rise buildings.
Big Spender
In 2012 Saudi Arabia completed more buildings over 200 metres than any other country. This increased the Kingdom’s total from five to 12 buildings over 200 metres. A small number by global standards, but it is soon set to double with a further 12 mid-builds scheduled for completion by 2015. In late 2012 Prince Alwaleed Bin Talal’s Kingdom Holding Company announced that it had secured financing and approval for the Kingdom Tower, the world’s first kilometre-high building, slated for completion in 2017. Indeed, it is likely that to some degree the appetite for further skyscraper projects in Saudi will hinge on the success of this landmark building. Following a year in which skyscraper construction around the world has declined, Saudi Arabia has certainly bucked a global trend.
Social and economic factors are spurring activity on. First, a mix of government support, a confident banking sector and a buoyant debt market mean funding is available. A $4bn sukuk for the expansion of the King Abdulaziz International Airport at Jeddah in 2012 suggests strong investor demand for megaprojects. Kingdom Holdings and Jabal Omar Development Company, a Makkah-based firm, both announced that they would be leveraging debt for their megaprojects from bond issuances. On top of this, Saudi has a rapidly growing, youthful population including an emergent professional class with changing habits. Real estate analysts observe that younger generations are increasingly looking to move away from the traditional multi-generational family home, with vertical housing becoming increasingly attractive. The mortgage law, introduced in July 2012, will make this a reality for many. Zaki Farsi, the CEO of Jeddah-based engineering consultancy, told OBG, “Ownership of apartments has become a norm. Top-end projects are often completely sold before ground has even been broken.”
Meanwhile, land prices in urban centres in the Kingdom are soaring, and in many cities there is a shortage of hotel rooms. Nowhere is this truer than the Holy City of Makkah, the heart of Saudi’s recent skyscraper boom. Makkah’s Mayor Osama Al Bar told OBG that the area around the Holy Mosque is now the most expensive real estate in the world, valued at around $18,000 per sq foot. An estimated 12m religious tourists visited Makkah in 2012– huge demand for the hospitality sector – and the government plans to increase the number of pilgrims to 25m by 2030, according to Al Bar.
Clocking The Rush
This intensive pressure, combined with premium rates for rooms with views overlooking the Holy Mosque, has stimulated a rush of skyscraper building. Commanding a vast presence over the surrounding countryside is the 601 metre Makkah Royal Hotel Clock Tower, built by Saudi Binladin Group and opened to pilgrims in 2012. The Tower, part of the King Abdulaziz Endowment Project to expand facilities for pilgrims, is currently the world’s second-tallest building after Dubai’s Burj Khalifa. Flanking the main tower are six interconnected towers, all over 200 metres high. This complex, with over 1.5m sq metres of floor space, includes a 20-storey mall and prayer room with capacity for 10,000 people. A further megaproject of 28 hotel towers is currently being added to the west of the Mosque complex by Jabal Omar Development Skyscraper construction is a significant opportunity for specialised global firms. Local developers are taking the lead for these projects, but international experts are being called upon to help. The Kingdom Tower, for instance, is financed and led by Saudis, designed by Chicago-based AS+SG, managed by Los Angeles’ CBRE, and employs New York-based structural engineers Thornton Tomasetti. With skyscraper construction up, more foreign firms can be expected in the Kingdom.
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