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German Legal Expertise in the Middle East since 1981

Kingdom Tower, the Highest Building in the World 2016

Guiding Principle

In a region experiencing the highest rates of spending on real estate developments in the world, the Gulf region is going to be the platform for the world’s tallest building for the second consecutive time. The Kingdom Tower in Jeddah is going to overtake the title of Burj Khalifa as the current highest building in the world – with an overall height of 1 Kilometer. However, this will not happen any time before 2016 the estimated time for finishing the construction works of the new tower.

Driven by the oil revenue, and as a reflection for the increasing economic activities in the region, building skyscrapers has become the feature that distinguishes the cities in the Gulf.

In a further step to attract more attention, the Emirate of Dubai in the United Arab Emirates has started a new phase in building skyscrapers by building the highest tower in the world “Burj Khalifa” with an overall height of 828 metres (2,716.5 feet), more than 160 storeys, and $ 1.5 billion as the total cost for the constructions.

This step was under focus from Dubai’s neighbours in the GCC, where the first impact of this step has happened in Saudi Arabia the largest country in the Gulf region in terms of influence, area and population. On August 1st, 2011, it was announced that an agreement has been signed for the construction of the highest tower in the world “KingdomTower” in the city of Jeddah at the west cost of Saudi Arabia. Construction works for building the tower has already started in January 2012.

H.R.H. Prince Al-Waleed Bin Talal – the richest person in the Arab world, the 19th in the world and a member of the Saudi royal family – is the one who stand behind this project through his company Kingdom Holding, which owns 33.35% of the shares of Jeddah Economic Company (JEC). JEC is a company established for the development of the city of Jeddah including the tower project. The remaining shares were distributed as follows: Abrar International Holding Company holds 33.35%, Abdel Rahman Al-Sharbatly Company holds 16.67% and Bin Laden Group, which will be the contractor of the project as well, holds 16.63%.

This will be the second tower holding the same name “KingdomTower” in Saudi Arabia. Kingdom Holding company already owns another tower in Riyadh under the same name, which is the highest tower in the Kingdom currently with an over all height of 300 meter.

Based on the experience gained from the building Burj Khalifa, the total cost of building the “KingdomTower” shall be less than the cost for building the Burj Khalifa, with $ 270 million. The cost saving occurred as the project development is being managed by Emaar Properties PJSC, which was the same developer of Burj Khalifa, also the designer of KingdomTower. Adrian Smith is one of the designers who designed Burj Khalifa. The total cost is estimated at Saudi Riyal 4.6 billion ($ 1.23 billion). In accordance with the statement issued by the Kingdom holding company in regards to the project execution, Saudi Riyal 1.5 billion shall be funded by the cash capital, while the rest of the estimated cost shall be funded by banks and the project income.

Building the tower represents the 1st phase of a larger project for building the Kingdom city in Jeddah, where the tower shall represent the centre of this city. The 2nd phase shall include developing the infrastructure of the entire land of the project, which is estimated at 5.3 million square meters. The study for the 3rd phase is still not completed yet.

The project is expected to be finalized within 63 months from the date of starting construction works, being finalized approximately by January 2016.

January, 2012 Hany Kenawi
Meyer-Reumann & Partners,
Saudi Office

King Abdullah Spending US$ 128 Billion in Benefits for the Saudi Citizens

Guiding Principle

After the return from a medical treatment trip to the United States and Morocco on February 23rd, 2011, King Abdullah has issued several orders on convergent times aiming to improve life standards of the Saudi citizens. The orders includes handover cash grants directly to the Saudi citizens, raising the capital of the Real Estate Development Fund, raising the capital of the Saudi Credit & Saving Bank, raising the capital of the Public Authority for Housing – that was before announcing the establishment of the Ministry for Housing after about a month later, the set up of an Anti-Corruption Agency.

A. Direct Grants to Saudi Citizens

Upon King Abdullah’s return from convalescence in Morocco after a treatment trip to the United States, the Saudi King issued several resolutions including granting 2 months’ salary and 15% cost-of-living allowance to military & civilian employees of the state, 2 months bonus for all the students of the governmental higher education as well as granting job seekers a monthly amount of S.R. 2,000 (about US$ 533) starting from November 26th, 2011 corresponding to the start of the new Hijri calendar year.

The resolutions includes to set a minimum limit for wages of the Saudi nationals working in the state[1] by S.R. 3,000 (about US$ 800) and giving permanent employment for all Saudi nationals in temporary public sector jobs starting from the next financial year.

In addition to the resolution to extent the Outer Scholarship Program of the Custodian of the Two Holy Mosques[2] for the next five years, King Abdullah has decided to add all the students of the same fields of the Outer Scholarship Program who are studying abroad at their own expense to the program.

B. In-Direct Grants to Saudi Citizens

Furthermore, the new resolutions included raising the capital of the Real Estate Development Fund[3] by S.R. 40 billion (about US$ 10 billion) and exempting all borrowers from the fund for private housing purposes from 2 premiums for two (2) years.

The capital of the Saudi Credit & Saving Bank[4] was raised also by the new resolution by S.R. 30 billion (US$ 8 billion) exempting all borrowers from the bank for social purposes from 2 premiums for two (2) years.

C. Housing

In addition a new resolution issued by the King with regard to housing includes in-direct grants to the citizens through the allocation of the amount of S.R. 250 billion (US$ 66 billion) for building 500,000 housing units in all regions of the Kingdom, raising the capital of the Public Authority for Housing by S.R. 15 billion (about US$ 4 billion).

Moreover, the King has announced in a later resolution the establishment of a Ministry for Housing to be responsible for housing lands in all regions of the Kingdom. The resolution stipulates that all staff working in the housing field, financial allocations and duties related to housing shall be transferred to the newly established Ministry. 

D. Healthcare

King Abdullah has approved S.R. 16 billion (about US$ 4 billion) to implement and expand number of Medical cities, hospital and polyclinics all over the Kingdom, as well as raised the upper limit to fund private hospitals program of the Ministry of Finance from S.R. 50 million (about US$ 13 million) to S.R. 200 million (about US$ 53 million).

E. Security

Within the Ministry of Interior 60,000 new security jobs shall be created to reduce the unemployment rate among the young Saudis – up to date the unemployment rate in the Kingdom was estimated by 14% according to the IFC – as well as to face all the security risks arises from the turmoil in the region.

F.  Anti-Corruption Agency

Pursuant to the Transparency Policy followed by the Kingdom from several years for attracting Foreign and Domestic Investment to the Kingdom for the diversifying of sources of income, the King has announced the establishment of an Anti-Corruption Agency, where the manager of this new Agency will be on ministerial rank reporting directly to the King.

The tasks of the newly established Agency will include all sectors of the government with no exception at all. The Agency shall follow-up the implementation of the orders and instructions for the public affairs. Following-up the administrative and financial corruption aspects falls within the competence of the Agency

[1]     Several Saudi companies from the private sector have announced that they will raise the minimum limit of wages for their Saudi nationals employees to the same limit applied in the public sector.

[2]     The program is concerned with sending the elite students abroad to obtain Bachelor, Master or Ph.d. at the following fields: Medicine, Applied Health Sciences (Nursing, Radiology, Health Sciences, Medical Laboratories, Medical Technology), Pharmacy and Basic Sciences (Mathematics, Physics, Chemistry, Engineering, Computing, Law, Accounting, E-Commerce)

[3]     The Fund was established for providing loans to individuals and institutions for the establishment of real estate projects of private or commercial use.

[4]     The Bank was established for providing interest-free loans for small businesses and craftsmen and professionals as well as providing interest-free social loans for citizens with limited income to help them overcome their financial difficulties.

April, 2011  Hany kenawi
  Meyer-Reumann & Partners – Saudi Arabia Office

Economic Cities in Saudi Arabia

Guiding Principles

In 2006, Saudi Arabia announced the establishment of the so called “Economic Cities”. With total cost of US$ 60 billion, Economic Cities are cities designed to establish modern and civilized areas to suit both practical and recreational sides of life in intention to improve lifestyle in the Kingdom. Each city is established for different purpose with common target to attract more domestic and foreign investment to the Kingdom.

A. Introduction
In 2006, Saudi Arabia has published its decision to establish five new cities under the name of “Economic Cities”. The aim of these Economic Cities is to serve as Free Zones and also as Industrial Zones in a unique way. The Economic Cities are designed to establish modern and civilized areas to suit both practical and recreational sides of life to improve the lifestyle in the Kingdom of Saudi Arabia.

Building such cities with advanced infrastructure all over the Kingdom means to implement the policy of the Government to attract more Domestic and Foreign investments. Since Saudi Arabia is depending on Oil as the main source of income the new Economic Cities shall assist in the diversification of income sources to the Kingdom of Saudi Arabia and attract such investments. .

B. Vision
With more than US$ 60 billion costs, the final goal of such cities was to increase the Non-Oil economy in the Kingdom of Saudi Arabia. The government has identified the objectives of the Economic cities as follows1:

  • The establishment of new industries2 based on the competitive advantages of Saudi Arabia.
  • The establishment of the economic cities as integrated cities where all the requirements for modern life are available.
  • Providing modern infrastructure for the cities with global standards to increase the competitiveness of the Kingdom’s economy.
  • The full implementation of the cities shall be done by the private sector3.
  • Adopt and implement a clear strategy for human resources.

C. The Economic Cities

I. King Abdullah Economic City (KAEC)4
KAEC is the largest and first Economic City in Saudi Arabia. The city is developed by a company established on 2006 especially for this purpose under the name of “Emaar the Economic City” as a Saudi Joint Stock company with a capital of SAR 8.5 billion (€ 1 = SAR 4.9) managed by Emaar Properties5. The city is located on the coast of the Red Sea near the city of Rabigh in Makkah Province.

The main function of the city is to focus on the diversion industries based on power and transport. The total cost for building the city is estimated with about US$ 80 million.
KAEC comprises six main areas, namely the Port, the Industrial Zone, the Beach Facilities including a distinguished group of hotels, the Financial Island covering 500 thousand square meters of office space, three Residential Districts and the Educational City.

2. Prince Abdul-Aziz bin Mosa’ad Economic City (PAMEC)
PAMEC is earmarked for the transport and logistics support sector. The city is located in the Ha’il Province. The implementation of the city started in 2007. At the time of being totally finished, PAMEC is funded with SAR 30 billion (about US$ 8 billion).

3. Knowledge Economic City (KEC)6
KEC is located in Al Madinah Al Munawwarah. The city is established to provide investment opportunities in the Knowledge Industries sector. Same like PAMEC, at the time of being totally finished, the Knowledge Economic City is funded with SAR 30 billion (about US$ 8 billion).

4. Jazan Economic City (JEC)7
JEC is located in Jazan city and is focusing on four sectors: the Heavy Industries, Secondary Industries (processing), Human Resources in addition to Life Style.

5. Ra’s el-Zour Economic City (RZEC)
It is intended to establish the RZEC on the coast of the Arabian Gulf, 60 km north of Jubail Industrial City. The proximity of RZEC from Jubail Industrial city and the facilities for production and shipment of oil and gas in the eastern region of the Kingdom represent a strategic and logistical advantage for the city. The city is specialized in Mining Industries and shall be managed by the Royal Commission for Jubail and Yanbu.

January, 2011

Hany Kenawi

Department of Meyer-Reumann & Partners in Saudi German Development and Investment Company, Riyadh

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