Saudi Arabia Builds Cities In The Sand To Move Beyond Oil

The Kingdom is turning to the desert for new revenue streams by creating cities as big as some countries

- Sarah Algethami

After relying on oil to fuel its economy for more than half a century, Saudi Arabia is turning to its other abundant natural resource to take it beyond the oil age – desert. The kingdom is converting thousands of square kilometres of sand into new cities as it seeks to diversify away from crude, create jobs and boost investment. In the past month alone, the world’s biggest oil exporter has announced two major developments, one covering an area bigger than Belgium and another almost the size of Moscow. That’s on top of plans to build a series of so-called economic cities, special zones in logistics, tourism, industry and finance, an entertainment city and a $10 billion financial district.

“The overall progress with the economic cities has been very slow, even before the collapse of the oil price,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank PJSC. “Since then, the pace of development has moderated even further with a number of projects being placed on hold.”

When “Saudi Vision 2030” was announced last April, the 84-page blueprint said the government would work to “salvage” and “revamp” economic city projects executed over the past decade that “did not realise their potential.”

One of the biggest areas of focus is The Red Sea where the kingdom last week announced plans to turn 50 islands and 34,000 square kilometres (13,127 square miles), an area bigger than Belgium, along its Red Sea coastline into a global tourism destination. Located between the cities of Umluj and Al Wahj, the project aims to attract luxury travellers from around the world and will be developed by the Public Investment Fund, the country’s sovereign wealth fund. Construction is expected to start in 2019 and the first phase completed by 2022. The development cost of the project wasn’t given.