JEDDAH: Removing its old strategy of carrying out all projects itself, the King Abdullah Economic City, KAEC, now welcomes outside developers and investors to develop the city faster.
KAEC wants to work as an enabler and facilitator for outside investors and developers to help them benefit from the city’s existing infrastructure, KAEC CEO Cyril Piaia told Arab News in an exclusive interview.
Piaia attributed this change in focus to KAEC’s partnership with the Kingdom Public Investment Fund and described the new strategy as a “renaissance for the city”.
“We welcomed PIF to our 25 percent shareholding and that is really the beginning of a new story, a rebirth for the city.”
We cannot be experts in everything.
Cyril Piaia, CEO of KAEC
The association with PIF will strengthen the status of the city in several ways, since when PIF invests “in a project, this is not in the short term, it is in the long term, it actually provides the stability that we need to develop our city”, the CEO said.
Piaia has served on several urban projects in the Gulf, including Orascom group cities in Oman, where he followed a strategy that limited the scope of work so that the company would only become a master planner, developing only primary infrastructure and leaving the rest of the development to external investors.
“We can’t be experts on everything,” he said, highlighting KAEC’s new strategy of relying on third-party developers.
Piaia said that by adopting this new strategy, KAEC will be able to generate capital and also speed up the city’s development.
“If I do everything myself, I will be limited by my own capital, I will slowly do one project after another, on the contrary, if I share the business with external developers, I can develop the city in a fast-track mode. Piaia said.
The 185 million square meter city is twice the size of Paris and includes three hotels, a university, a world-class golf club and an advanced school called “The World Academy”.
We welcomed PIF to our 25 percent shareholding and that is really the beginning of a new story, a rebirth for the city.
Cyril Piaia, CEO of KAEC
The school started in 2012 with 30 students, today it has around 600 students of 28 different nationalities.
KAEC and Giga projects
The CEO sees KAEC as a good opportunity for the PIF to start testing what it wants to do in its giant projects under development.
“We as a city are a vision-ready platform where you can come and test your initiative with us, and then you can replicate it at the country level,” he said.
KAEC’s main focus today is to take advantage of a special economic zone that combines its industrial valley with a port.
“What we need to do is integrate the port and the industrial valley into a 60 million square meter special economic zone,” Piaia told Arab News.
This project, he added, will be an added value for the city since it would help attract leading investors to carry out operations in the city.
The city recently welcomed Lucid’s first electric vehicle plant outside the US.
The plant will produce up to 150,000 electric vehicles a year and help create several thousand jobs in the city.
The move has accelerated negotiations with similar parties to follow in Lucid’s footsteps.
KAEC is in talks with another manufacturer to set up operations in the city, Piaia told Arab News without revealing the names of the companies.
The CEO’s new strategy is to focus on what is known as the center of KAEC, which would help create density.
The only way to live in a city is by creating density, adding a heart to the city, increasing the population in that area, and creating good business opportunities for retailers and food and beverage businesses, he said.
Piaia’s strategy aims to position the rest of the city as a world tourist anchor.
KAEC signed a SR1.6 billion ($480 million) deal with Rixos International Hotel. The CEO expects the hotel to become operational during the last quarter of 2023.
The CEO is not concerned about competition with other tourism projects in the Kingdom, as he believes that the target visitors are different.
“We don’t have the same customer segment, we like affordable luxury more,” Piaia said.
KAEC also enjoys a competitive advantage by being located within an hour by train from the holy cities of Makkah and Medina.
The city already has a train station next door.
“We will offer pilgrimage tourism where people will stay here, take the train and go directly to Mecca or Medina.”