Saudi Arabia’s Public Investment Fund (PIF) is forming two real estate development firms to boost the capacity of the holy cities of Makkah and Madinah to receive pilgrims, in projects expected to create billions of dollars of business, it said on Monday.
The plans are part of an array of commitments which the PIF, the country’s main sovereign wealth fund, is taking on under economic reforms designed to reduce Saudi Arabia’s dependence on oil exports.
The government is mobilizing the fund, believed to have about $180 billion of assets, to lead urban development and industrial projects around the country, even as the PIF manages stakes in top Saudi companies and makes foreign investments such as last year’s purchase of a $3.5 billion stake in Uber. The scope of the PIF’s activities has caused concern among some private Saudi businessmen. The reforms aim to stimulate the private sector but with so many huge projects going to the PIF, some businessmen fear they could be crowded out by the deep-pocketed fund.
The PIF said the first phase of its development of an area near the Grand Mosque in Makkah would cover 854,000 square meters and deliver 115 buildings. It is to include 70,000 new hotel rooms and 9,000 housing units. Construction will start this year with the first phase expected to open in 2024. By 2030, the area will contribute $2.1 billion annually to gross domestic product, the fund said.