PIF-backed Diriyah awards $2bn contract for new mixed-use district

Project will include educational institutions, cultural venues, offices and a luxury hotel

Salwa Palace in the At-Turaif district of Diriyah, Saudi Arabia. The kingdom wants to turn Diriyah into one of its leading tourist centres. Bloomberg

Diriyah Company, the developer turning Saudi Arabia's historic district into a tourism centre, has awarded a $2 billion contract to build a mixed-use district in the northern area.

Established last year, the Public Investment Fund-backed company said on Wednesday that this is its largest single contract yet.

It has been awarded to a joint venture to build educational institutions, cultural venues, offices and a luxury hotel.

The joint venture contractors include Saudi Arabia-based El Seif Engineering Contracting (ESEC) and China State Construction Engineering Corporation (CSCEC), a statement said.

Construction work is expected to start in the third quarter of this year.

“This represents a major step in our accelerating development strategy and commitment to making Diriyah a place for the world to be able to learn, absorb culture, and experience a vibrant and welcoming visitor destination,” group chief executive of Diriyah Company Jerry Inzerillo said.

“The agreement with CSCEC is a further example of the ever-closer economic ties and constructive business partnerships that are being built between Saudi Arabia and China.”

Currently being developed by Diriyah Company, the $63.2 billion Diriyah project will span 14 square kilometres and have 42 hotels, more than 100 restaurants, nine museums and more than 30,000 homes when it is completed in 2030.

When ready, it should host 100,000 residents, workers, students, and visitors, offering cultural, entertainment, retail, hospitality, educational and residential spaces.

The mega development is also expected to create 178,000 direct jobs and contribute 70 billion Saudi riyals directly to the national gross domestic product by the end of the decade, according to the PIF.

In January last year, Saudi Arabia’s sovereign wealth fund PIF designated Diriyah as its fifth giga-project after the Neom, Red Sea, Qiddiya and Roshn developments.

The kingdom is developing its capital to become one of the world's biggest 10 cities as part of its economic reform strategy, with projections that Riyadh's population will double to 15 million by 2030.

To meet this growth target, it is adding real estate projects around the city, including a range of housing options at its Diriyah project.

Diriyah will also be home to Saudi Arabia’s version of Silicon Valley as it becomes a base to 500 technology companies, 100 media companies and 50 entertainment companies, Mr Inzerillo said earlier.

As the district expands its commercial offering, it is expected to create demand for studio apartments and one-bedroom and two-bedroom houses.

In December, the developer announced selling luxury homes in its Wadi Safar community as part of its broader residential strategy.

In June 2021, Diriyah awarded the ESEC and CSCEC joint venture another $1.8 billion contract, with infrastructure work already under way on site.