JEDDAH: Abandoning its old strategy of doing all the projects itself, the King Abdullah Economic City, KAEC, is now welcoming third-party developers and investors to develop the city faster.
KAEC wants to work as a facilitator and enabler for third-party investors and developers to help them benefit from the city’s existing infrastructure, Cyril Piaia, CEO of KAEC, told Arab News in an exclusive interview.
Piaia attributed the change in approach to KAEC’s partnership with the Kingdom’s Public Investment Fund and described the new strategy as a “rebirth for the city”.
“We have welcomed PIF into our shareholding with a 25% share and this is really the start of a new story, a rebirth for the city.”
We cannot be experts in everything.
Cyril Piaia, CEO of KAEC
The partnership with the PIF will strengthen the status of the city in several ways because, when the PIF invests “in a project it is not for the short term, it is for the long term, it is in fact to bring stability that we need to develop”. our city,” the CEO said.
Piaia served in several urban projects in the Gulf, including Orascom Group Cities in Oman, where he followed a strategy that limited the company’s scope of work to become only a senior planner, only developing the primary infrastructure and leaving the rest of the development to external investors.
“We cannot be experts in everything,” he said, criticizing KAEC’s old strategy of developing all aspects of the city on its own.
Piaia said that by adopting this new strategy, KAEC will also be able to generate capital and accelerate the development of the city.
“If I do everything myself, I limit my own capital, I will do one project slowly after another, on the contrary, if I share the company with third-party developers, I can develop the city in accelerated mode”, said Piaia.
The 1.8 million kilometer city is twice the size of Paris and includes two hotels, a college, a world-class golf club and a top school called “The World Academy”.
We welcomed PIF into our shareholding with a 25% share and it really is the start 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 about 600 students from 28 different nationalities,” Reham Shehata, head of operations and marketing, told Arab News.
KAEC and Giga projects
The CEO sees KAEC as a good opportunity for PIF to start testing what it wants to do in its giga 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 nationally,” he said.
The main objective of KAEC today is to create 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 single larger entity of 60 million square meters,” Piaia told Arab News.
This project, he added, will be an added value for the city as it will help attract leading factories to carry out operations in the city.
He said an agreement had already been signed with a huge logistics company which had agreed to set up in the special economic zone.
The city recently hosted Lucid’s first electric vehicle factory outside the United States.
The plant will produce up to 150,000 electric vehicles per year and help create 4,500 jobs in the city.
This move has accelerated negotiations with like-minded parties to follow in Lucid’s footsteps.
On March 20, another electric vehicle maker signed an agreement to establish operations in the city, Piaia told Arab News without giving the company’s name.
Read more: PIF-backed Lucid targets 150,000 electric vehicles a year from its first $3.4 billion Saudi factory
The CEO’s new strategy is to focus on what is known as KAEC’s downtown area, which would help create density.
The only way to make a city alive is to create density, add a core to the city, increase the population in that area, and generate good business opportunities for retailers and catering businesses, a- he declared.
Piaia’s strategy aims to position the rest of the city as a global tourist anchor.
KAEC has signed a SR1.6 billion ($480 million) deal with the international hotel Rixos. The CEO expects the hotel to become operational in the last quarter of 2023.
The CEO is not worried about competition with the Red Sea development project, as he believes the targeted visitors are different.
The Red Sea project is really about luxury tourism, with seven-star hotels and high rates, while KAEC seeks to offer normal tourism, he said.
“We don’t have the same customer segment, we’re more into affordable luxury,” Piaia said.
KAEC also enjoys a competitive advantage being centered an hour by train from the holy cities of Mecca and Medina.
The city already has a train station nearby.
“We will offer pilgrimage tourism where people will stay here, take the train and go straight to Makkah or Madinah.”