Saudi Arabia's Tourism Development Fund to co-finance $346m tourism project in Madinah

Developer Knowledge Economic City receives backing from the fund and Riyad Bank for the 68,000 sq m project

Saudi Arabia’s Tourism Development Fund is co-financing a 1.3 billion Saudi riyals project in Madinah. Courtesy Tourism Development Fund

Saudi Arabia’s Tourism Development Fund (TDF) will jointly finance a 1.3 billion Saudi riyals ($346 million) project in Madinah aimed at capitalising the tourism potential of the holy city.

The fund signed an agreement on Thursday with Knowledge Economic City and Riyad Bank to finance the development of "KEC Hub", a 68,000 square metre tourism complex in Madinah.

“This agreement is one of several successful agreements with local banks aimed at providing investors with attractive financial solutions that encourage investments into this promising sector,” Qusai Al Fakhri, chief executive of TDF said in a statement.

“It exemplifies our commitment to delivering on the National Tourism Strategy, increasing the GDP contribution of the tourism sector from 3 per cent to 10 per cent by 2030 and creating one million new jobs.”

The project, formerly known as Madinah Downtown, is based on King Abdulaziz Road about 6 kilometres from the Prophet’s Mosque. It will contain a shopping mall, a five-star hotel, an interactive museum about Madinah, a cinema, health club and a commercial boulevard overlooking a garden and green spaces, developer KEC said in a statement to the Tadawul stock exchange, where its shares trade.

In a series of other statements, it said it had agreed a deal with Hilton Worldwide to manage the hotel, with engineering consultancy Ehaf to act as structural engineer and Al-Saad Contracting Company to build it.  The first phase of the project will be completed by 2024, KEC said.

As part of the deal, TDF will provide funding of 391m riyals to the development, while Riyad Bank will provide equal funding as a result of an earlier agreement signed with TDF to facilitate and finance tourism investments in the kingdom.

“With its rich culture and heritage and the government’s unwavering commitment to boost tourism, Saudi Arabia presents invaluable investment opportunities,” Mr Al Fakhri, said.

“Our mission at TDF is to unlock these opportunities by providing viable funding options, investment know-how and access to support services; all to make the investor experience more attractive.”

Saudi Arabia, the world's biggest oil exporter, is rapidly transforming its economy as it looks to reduce its dependence on oil, nurture domestic industries, boost jobs and diversify revenue.

It is developing a number of projects, including Neom – a $500bn futuristic city comprising a nature reserve, coral reefs and heritage sites on about 50 islands off the Red Sea – and a mega entertainment and sports project, named Qiddiya, in the capital.

The TDF was set up last year with an initial investment of $4bn to drive the growth of the tourism sector in the kingdom. It also signed an agreement with Riyad Bank and Banque Saudi Fransi, to finance tourism projects worth up to 160bn riyals in the country.

KEC also said on Thursday that Riyad Capital is providing an additional 97m riyals of funding to the Madinah Gate project – a scheme being built on land next to the Haramain High Speed Rail terminal. It will also have a mall, restaurants and entertainment space as well as a four-star hotel and hotel apartments.