Saudi ultra-luxury project may raise up to $2.7bn in 2022

Saudi Arabia’s ultra-luxury Amaala tourism project may raise up to SAR10bn ($2.7bn) next year as the kingdom presses on with Crown Prince Mohammed bin Salman’s programme to diversify the economy.

Amaala, on the northwestern coast of Saudi Arabia, won’t tap markets until next year, chief executive officer John Pagano said in an interview on the sidelines of Arabian Travel Market in Dubai.

The numbers haven’t yet been finalised, with the amount of debt likely to be in the “range” of 5-10bn, he said. The company has awarded more than SAR3bn in contracts.

Opening up to tourism is one of the ways Saudi Arabia intends to diversify its economy away from oil. Its other ambitious projects include an entertainment hub near the capital, and a new city in the north-west called Neom that’s expected to cost $500bn to build.

Another luxury project, The Red Sea Development Co., was set to close a SAR14bn loan from domestic banks, Bloomberg reported last month. Pagano, who is also the CEO of that developer, said proceeds will be used to fund the first phase scheduled for completion by the end of 2023.

Funding for the second phase hasn’t been determined yet but the developer could consider an initial public offering, asset sales, or tap debt markets, he said.

Owned by the kingdom’s sovereign wealth fund, the Red Sea Development will oversee a luxury tourism zone equivalent in size to Belgium and include a new international airport. When the entire project is completed in 2030, it will target 1 million visitors a year, split evenly between domestic and international tourists.

Pagano also said:

• Capacity at Red Sea International Airport will stand at 300,000 passengers at the end of the first phase
• “Driving direct flights is going to be challenging but we’re going to look at a hub and spoke arrangement”
  • Airports in Riyadh, Jeddah and Dubai could feed traffic
• Red Sea airport started the process of engaging with airlines