The firm had borrowed 14.1 billion riyals in 2021 to fund construction for the first phase. — Bloomberg
RIYADH: The firm developing luxury tourism projects on Saudi Arabia’s Red Sea coast is planning to raise at least 14 billion riyals (US$3.7bil) over the next year.
The fresh financing will help roll out construction in Amaala, a 29-hotel destination focused on wellness, Gregory Djerejian, the group head of investments and legal at Red Sea Global, said in an interview in Dubai.
The Red Sea project, first announced in 2017, covers 28,000 square km – an area about the size of Belgium – and will target regional and international luxury travellers. The Red Sea coast includes an archipelago of 90 islands and the government is building new resorts in the region, as well as on the green mountains in the south, near Yemen.
The firm had borrowed 14.1 billion riyals in 2021 to fund construction for the first phase. The development is key to Saudi Arabia’s plans to transform itself into a top tourism destination.
To help achieve its ambitious targets, the kingdom has pledged to spend billions of dollars, but some of those initiatives have been facing cutbacks, Bloomberg News reported in July.
Red Sea Global will have six hotels operational before the end of 2024 and around 20 more will be opened next year, including eight at Amaala, Djerejian said.
The developer will likely finalise plans for the Red Sea Zone this year, Djerejian said, though it won’t be a special economic zone as originally envisaged.
Instead, it would be a “geographical authority” that’ll provide resources for municipal permits and environmental regulations “to help facilitate the operational execution of the asset and help investors preserve the value of what we’re creating,” he said.
Foreign investors are starting to actively look at Saudi Arabia’s large development projects for opportunities in hotel ownership, staff accommodation, utilities and other infrastructure, he said. The company has already seen two investments through joint ventures.
“I think there will be more foreign direct investment coming in, up and down the Red Sea coast and in other areas as well,” he said, declining to specify a target.
Visitors at Red Sea Global’s hotels have come mostly from within Saudi Arabia and the rest of the Gulf, he said. But demand is growing from other parts of the world.
“Ultimately, we want to have a tourism product for a broad range of customers, not just people that can necessarily afford a slightly keener price point,” Djerejian said. “As a developer going forward, we will probably be active in the upper-mid market as well.” — Bloomberg
