meed-logo

line1 line2 line3
SIGN IN / REGISTER

Legacy building at Diriyah

1 August 2024

It is impossible to talk about Saudi Arabia’s history without referencing Diriyah. Founded in 1446 in the Wadi Hanifa valley on the western outskirts of Riyadh, the historic town was the first capital of the Al-Saud dynasty and the launchpad for the kingdom’s unification campaign at the turn of the 20th century. In recognition, its central Turaif district was inscribed as a Unesco World Heritage site in 2010.

Today, the mud-brick settlement, built in the distinctive Najdi architectural style, has lent its name to one of the world’s most ambitious transformative developments. Sensitively conserving and building on its historical importance, it has created a unique cultural, educational, residential and tourism hub in the capital.

With an official budget of some $63bn, Diriyah is one of Saudi Arabia’s five official gigaprojects. It has held this label since early 2023, when responsibility for its development was handed to Diriyah Company, a project company formed as a Public Investment Fund (PIF) subsidiary a year earlier.

Covering an area of 14 square kilometres, Diriyah is targeting a population of 100,000 by its stated completion date of 2030. With more than 40 hotels, nine museums, 400 luxury boutiques, 100-plus restaurants and multiple educational institutions, it hopes to draw in more than 50 million annual visits.

Progress since ground was first broken four years ago has been rapid. As of May 2024, more than SR53bn ($14.1bn)-worth of construction contracts had been awarded. Today, visitors to the area can see hundreds of mobile cranes, plant and piling equipment rising over the boundary wall.

“We are in a good place,” says Mohammed Saad, Diriyah Company’s chief development officer. “We’ve finished our essential underground infrastructure and civil works, the super basement and all the tunnels that connect the basements together.”

But the real work has only just begun. Saad says a further SR30bn-35bn is scheduled to be awarded by the end of 2024, rising to SR40bn-45bn in 2025. By the end of this year, the public can expect to see substantial above-ground construction, particularly on the western side of the gigaproject, providing more tangible evidence of its advancement, which until now has been primarily below ground.

This is not to say that any vertical assets will be particularly tall. Because of the district's traditional low-rise nature, any building must be no higher than the historic structures. It should also emulate the Najdi style. For the same reason, most of the essential infrastructure, utilities and roads are hidden below ground.

Major project scopes

A significant step was made in early July when Diriyah Company awarded an estimated $2bn contract to a joint venture of El-Seif Engineering & Contracting and China State to build the North Cultural District. The deal, the largest let on the gigaproject to date, covers multiple assets, including hotels, the King Salman Foundation Library, King Salman University and the House of Saud Museum.

The work was originally planned as multiple construction packages until Diriyah Company took the commercial decision last year to bundle them into one contract. The decision to adopt super packages was driven by a dynamic market in which contractors have been almost overwhelmed with the volume of tenders from various gigaprojects and where cost inflation is taking hold.

“You will not get the attention of the big contractors if you offer small contracts,” Saad explains. By consolidating projects, contractors can focus their resources more effectively and efficiently and provide more competitive pricing.

“We have a hotel, we have an office building, we have a museum, and when we tendered them as one super package, there was a very solid response and interest from the big players because they could focus their resources and pricing and more efficiently engage their supply chains and subcontractors.”

The approach appears to be working. In late July, another estimated $2bn super package was awarded to a joint venture of local contractor Albawani and Qatar’s Urbacon to construct assets in the Wadi Safar district of the gigaproject. Featuring a mix of residential, residential farm plots, hotels, branded hotel villas, a golf course, an equestrian and polo club, and other leisure and entertainment facilities, including Aman, Chedi, Faena and Six Senses-branded hotels, Wadi Safar is positioned as the most upscale and exclusive development in Riyadh and indeed the kingdom as a whole.

The consolidated contract packages strategy reflects the supercharged nature of the Saudi projects market. With various clients, including the gigaprojects, all competing for a limited amount of contracting, material and labour resources, more innovative procurement strategies need to be adopted.

This is particularly critical for Diriyah and its enormous material requirements. For example, it has previously said that it will ultimately need some 350,000 doors, 1.5 million square metres of tiles, 1.2 million tonnes of rebar and 140,000 HVAC units.

Supply-side obstacles

Despite the progress, the project faces challenges related to contracting, engineering and material supply. The high demand for key materials, coupled with global supply chain disruptions, poses a significant conundrum. However, the delivery team has proactively secured and signed framework agreements with manufacturers to ensure a steady flow of required materials.

Transparent demand signalling is a core component of this. “We’ve analysed our material needs up to 2030 and prepared comprehensive requests for proposals for all key items,” says Saad. “We went out to the manufacturers and the supply chain in general to let them see the pipeline is tangible and secure. We are listening to vendors in order to speed things up and to lock down prices.”

Saad lists specific materials not naturally available in Saudi Arabia, such as finishing stones, as items that may be in short supply, in addition to some specialised MEP equipment that is only manufactured abroad. Overall, he is optimistic about the market’s ability to adapt. “The market will adjust itself,” he states. “Of course, there are challenges, but there are also opportunities for manufacturers to up their game.”

Likewise, contractors are being brought into discussions at earlier stages of contract planning. Diriyah is adopting strategies such as early contractor involvement in the design process to help better understand and manage construction risk. “We’re engaging with contractors and delivery partners as early as the concept design stages to get their feedback on the project’s constructability,” says Saad. “Later, these contractors can be invited to bid for the contract, which makes it easier for them and so they can be aware of any issues.”

Financial constraints

Another increasingly evident challenge is financing. As the gigaprojects programme steps up a gear, there have been growing strains on funding the huge costs associated with it, expenditure which in some cases is considerably higher than when first estimated during the initial master planning stages due to cost inflation and disruptions in the supply chain.

As with the other gigaprojects, Diriyah’s initial work has been fully funded by its PIF parent, but later phases will likely require other financing mechanisms. While some of this will come from the $100m in revenues it expects to make over the next year, the client company has been actively tapping into the capital markets, following in the footsteps of other gigaprojects such as Neom and Red Sea Global, which have concluded sizeable borrowing deals in the past two years.

This includes all options up to and including an initial public offering (IPO). The market consensus is that eventually all the PIF project company subsidiaries will go public when the time is right, and Diriyah is unlikely to be an exception.

For the same reason, the client is also exploring public-private partnerships (PPPs) to enable the private sector to take on some of the financial burden. For instance, City Cool Cooling Company recently won a $186m 25-year build-own-operate (BOO) concession to develop a 72,000-refrigeration-tonne district cooling plant. Future opportunities may include expansion of cooling capacity, other utilities and car parking operations.

“PPPs are a key component of our strategy,” says Saad. They provide a platform for private investors to participate in Diriyah's growth while leveraging the expertise and resources of the public sector. We realise we cannot build 10 million square metres alone. We need the private sector to participate and partner with us and give them an opportunity to be part of this journey.”

Another funding source will be off-plan property sales once its real estate offering comes to market. Based on the development plans, this is expected to be significant. With a mix of some 30,000 villas, apartments and townhouses, the ambition is to attract both local and expatriate residents, if or when the kingdom opens its property market to non-nationals.

Investment pathway

Eventually, third parties will also need to invest in the various real estate elements of the gigaproject. Diriyah Company, as a master developer, is actively seeking to attract other developers, family offices and financial institutions to develop land parcels for mixed-use, residential, hospitality, commercial, education and healthcare assets.

“We are already opening up to investors and meeting developers who are interested in partnering with us or buying land,” notes Saad. “It’s a good problem to have – there’s more interest than we can handle right now, which speaks volumes about the project's attractiveness.”

This is just as well. One criticism of the gigaprojects programme has been the shortfall in both local and international investment to date. A lack of understanding of what the gigaprojects are and will be, demand uncertainty, timeframe ambiguities and general market hesitancy have been identified as the stumbling blocks.

Diriyah is determined to change this situation. It is focusing on increasing public and investor awareness of the potential opportunity through initiatives such as its two-day Bashayer event last November, which showcased the masterplan and construction progress to selected key stakeholders. There has also been a push for greater transparency and publishing more specific details about the overall development to make it stand out from the crowded market.

The giant gigaproject is not being developed in isolation. Experience from successful developments worldwide highlights that connectivity and coordination with other government stakeholders are key. Diriyah is planned to be connected to an extension of Riyadh Metro’s Line 2 and a planned Line 7 linking it with King Khalid International airport and another gigaproject, Qiddiya. In total, four metro stations are planned for the development.

At the same time, talks are under way for Diriyah to be one of the main stations on the planned Q-Express high-speed rail link between the airport and Qiddiya, which will complement the metro network. For those arriving by car, there will be the opportunity to use the three-level, 1 million square-metre underground ‘super basement’ car park, which, with a capacity for 10,500 vehicles, will be the fifth-largest parking facility in the world, and by far the biggest in the region.

As Diriyah’s construction accelerates, it is already starting to define its identity more clearly. Building on the kingdom’s historical roots, it is set to create a new legacy for future generations.

https://image.digitalinsightresearch.in/uploads/NewsArticle/12260371/main.gif
Edward James

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Chinese firm wins Dubai drainage contract

    20 July 2026

    China State Construction Engineering Corporation (CSCEC) has announced it has won a contract to deliver a stormwater drainage pipeline package under Dubai Municipality’s Tasreef programme.

    The contract is for the TF-15-C2 stormwater drainage network project located along Umm Suqeim Road in the Al-Barsha and Al-Quoz areas of Dubai. 

    MEED exclusively revealed in May that the contractor had been selected for the engineering, procurement and construction (EPC) contract. The project is estimated to cost $162m.

    The scope of work includes the construction of about 20 kilometres of new stormwater pipelines, together with associated inspection and intake manholes. The project is located west of the Dubai Canal and will connect the Al-Quoz 3 and Al-Quoz 4 industrial areas with Al-Quoz 1.

    It is being delivered as part of Dubai’s Tasreef strategic plan, which supports the Dubai 2040 Urban Master Plan. Once completed, the new drainage infrastructure is expected to improve the emirate’s stormwater network, increase flood protection and enhance the resilience of Dubai’s infrastructure.

    In February, the municipality confirmed it had awarded contracts for five new projects under phase two of the programme to expand and strengthen Dubai’s stormwater drainage network.

    These include a separate contract awarded to CSCEC for the TF-11-C1 stormwater drainage project in the Dubailand area.

    Also in February, Dubai Municipality invited consultants to qualify for a contract to supervise construction on the TF-15-C2 stormwater drainage projects along with two other projects (TF-13-C1 and TF-16-C1) under the Tasreef programme.

    According to a source, a consultant has yet to be appointed.

    TF-16-C1 involves upgrading and rehabilitating the stormwater system east of the Dubai Canal, while TF-13-C1 involves building a water pipeline stormwater drainage system at Al-Marmoum, Al-Qudra and Al-Yalayis 2 & 3.

    Bids are currently under evaluation for the EPC contracts for both projects.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17705058/main.jpg
    Mark Dowdall
  • Firms given more time for Mid Island Parkway prequalifications

    20 July 2026

     

    Abu Dhabi’s Modon Infrastructure has extended the deadline to 31 July for firms to submit expressions of interest and prequalification statements for the next phase of Abu Dhabi’s Mid Island Parkway Project (MIPP), which will be developed as a public-private partnership (PPP).

    The previous deadline was 15 July. MEED understands the prequalification notice was issued in June, following Modon Infrastructure’s invitation in May for firms to register their interest.

    Modon Infrastructure will act as the lead developer and will hold a majority equity stake in the project company. It will award contracts for engineering, procurement and construction; operations and maintenance; and project advisory services.

    Phase two of the MIPP involves the construction of about 11 kilometres (km) of highways, comprising a mix of three-, four- and five-lane sections. The highways will connect the Um-Yifeenah, Al-Jubail, Al-Sammaliyyah and Sas Al-Nakhl islands to Khalifa City and the E10 road.

    The scope also includes the construction of three interchanges – E20, E10 and Dumbbell – on Al-Sammaliyyah Island.

    The project includes several major structures, including the E20 interchange, which will feature cast-in-place box-girder and void-slab bridges, and the E10 interchange, which will feature cast-in-place box-girder bridges. It also includes I-girder bridges between Raha Beach West and Sas Al-Nakhl Island, as well as a causeway at Sas Al-Nakhl Island.

    Further elements include a cast-in-place balanced cantilever bridge between Sas Al-Nakhl Island and Al-Sammaliyyah Island; a tunnel between Al-Sammaliyyah Island and Bilrimaid Island; and a cut-and-cover (open) tunnel on Bilrimaid Island. Another tunnel will connect Bilrimaid Island to Um-Yifeenah Island.

    Abu Dhabi awarded three packages for phase one of the MIPP in 2024. The contract for Package 1A was awarded to a joint venture of Turkish contractor Dogus Construction and UAE firm Gulf Contractors. Package 1B was awarded to a joint venture of Yas Projects (Alpha Dhabi Holding) and China Railway International Group. Beijing-headquartered China Harbour Engineering Company and the UAE’s Agility Engineering & Contracting Company won the contract for Package 1C.

    Phase one starts at the existing Saadiyat Interchange, connecting the E12 to the MIPP, and ends at the recently constructed Um-Yifeenah Highway.

    It comprises a dual main road with a total length of 8km, including four traffic lanes in each direction, two interchanges, a tunnel and associated infrastructure works.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17704765/main.jpg
    Yasir Iqbal
  • Aramco executive becomes Samref chairman

    17 July 2026

    Saudi Aramco Mobil Refinery Company (Samref) has announced the appointment of Abdullah Bin Saleh Al-Suwailem as the chairman of its board of directors.

    Al-Suwailem serves as senior vice president of Western Region manufacturing at Saudi Aramco.

    Prior to being appointed chairman, Al-Suwailem had been a member of the Samref board since .

    Samref is the downstream joint venture of Aramco and US oil and gas producer ExxonMobil. The entity owns a crude refining facility located in Yanbu on Saudi Arabia’s west coast, which entered operations in November 1984.

    The Samref refinery has a capacity of 400,000 barrels a day (b/d) and mainly produces propane and several grades of automotive diesel oil, two grades of marine heavy fuel oil and sulphur.

    In a , Samref said that Al-Suwailem “brings more than 30 years of leadership across the refining and petrochemicals sectors, having led some of the kingdom's most significant industrial joint ventures”.

    “We expect his deep expertise in governance and large-scale operations to be invaluable as Samref continues its journey of growth and operational excellence. We look forward to his leadership in steering the board's strategic direction,” Samref added.

    Aramco and ExxonMobil signed a memorandum of understanding (MoU) in May 2025 to evaluate a significant upgrade of the Samref complex and expand the oil refining facility into a world-class integrated petrochemicals complex.

    The MoU between Aramco and ExxonMobil to upgrade the Yanbu refinery and convert the facility into an integrated refining and petrochemicals complex was signed at the Saudi-US Investment Forum held in Riyadh on 13-14 May 2025, during US President Donald Trump’s state visit to Saudi Arabia.

    MEED understands that the Samref petrochemicals expansion project is one of the schemes that comprise Aramco’s $100bn liquids-to-chemicals programme.

    Aramco has divided its liquids-to-chemicals programme into four main projects and has taken steps forward this year by signing joint-venture investment agreements with foreign partners for these schemes:

    • Conversion of the Saudi Aramco Jubail Refinery Company (Sasref) complex in Jubail into an integrated refinery and petrochemicals complex through the addition of a mixed-feed cracker. The project also involves building an ethane cracker that will draw feedstock from the Sasref refinery. Front-end engineering and design (feed) on the project is under way and is being performed by Samsung E&A, although progress has been slow.
    • Conversion of the Yanbu Aramco Sinopec Refining Company (Yasref) complex in Yanbu into an integrated refinery and petrochemicals complex through the addition of a mixed-feed cracker. China’s Sinopec is a joint-venture partner in the project.
    • Conversion of the Saudi Aramco Mobil Refinery Company (Samref) complex in Yanbu into an integrated refinery and petrochemicals complex through the addition of a mixed-feed cracker. US oil and gas producer ExxonMobil, Aramco and Samref signed a venture framework agreement in December to begin preliminary feed work on the project.
    • Building a crude oil-to-chemicals complex in Ras Al-Khair in the Eastern Province. Progress on this project remains slow.

    The central aim of the strategic programme is to derive greater economic value from every barrel of crude produced in Saudi Arabia by converting 4 million b/d of Aramco’s oil production into high-value petrochemicals and chemicals feedstocks by 2030.

    Aramco and its subsidiary Saudi Basic Industries Corporation (Sabic) were tasked with establishing 10-11 large mixed-feed crackers by 2030. These petrochemicals crackers, which included greenfield developments and expansions of existing facilities, were to be built both in Saudi Arabia and in overseas markets.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17697004/main.gif
    Indrajit Sen
  • Accor expects Dubai hotel recovery by mid-2027

    17 July 2026

     

    Paris-headquartered hotel operator Accor expects Dubai’s hotel market to return to pre-conflict occupancy levels by the end of the first quarter or early second quarter of 2027, with room rates lagging the volume recovery by several months.

    Duncan O’Rourke, chief executive for the Middle East, Africa and Asia Pacific at the hotel operator (pictured right), said the group had maintained profitability across its Dubai portfolio during the conflict period through cost control and revenue management, but acknowledged that rates and occupancy had fallen materially from January and February levels.

    “There is no question that this crisis affected Dubai,” O’Rourke said at a media briefing in Dubai on 26 June. “As for occupancy in Dubai, we managed – through profit protection and cost control – to keep the hotels in a positive position, so we weren’t losing money.”

    He said the arrival of the summer low season provided a degree of relief. “If there is a time to slowly slide out of this crisis, it is the right time, which is now. What I see going forward is that volumes will come back. You will not have the rates immediately that you had in January and February. By the end of Q1 or Q2 next year, I think you will get close to where we were.”

    Luxury first

    O’Rourke said the luxury and upper-upscale segment was likely to lead the recovery, consistent with the pattern observed after previous crises.

    “Generally, when you have a crisis, the first segment to click back quicker is the high-end luxury. People then think: it is not about whether I should go – it is, let’s go. We saw that in Covid. Fairmont is well positioned to do that, and the Sofitel and Maison brands are in the stage of recovery going forward.”

    Jean-Jacques Morin, group deputy chief executive at Accor (pictured right), said the UAE’s underperformance had been contained within Accor’s broader international portfolio that continued to grow.

    “The Middle East is about 10% of the network,” he said. “That also explains why my tone on the capability of the results is so positive – not only do you have the hedging across geographies, but it is also, in the end, only one part of the business.”

    Rate outlook

    Morin dismissed concerns that the conflict had structurally weakened Dubai’s pricing power, drawing a parallel with the period following Covid-19.

    “When we came out of Covid, everybody said those prices would never hold. The question at every analyst call was always the same: your pricing strategy is unsustainable. Guess what? Nothing changed. The prices now, three or four years later, are still the same.”

    He argued that consumers consistently prioritise travel expenditure when reallocating budgets. “What you see when the economy goes sideways is that people reallocate disposable income differently. People are basically redirecting the way they do things and keeping the same amount they want to spend, but spending it differently.”

    Morin also said Dubai has a track record of outpacing expectations after previous disruptions. “The first part of the world, post-Covid, that came back to positive RevPAR was the Middle East – it was Dubai. People forget that. The capacity of this part of the world to rebound, and the capacity of the industry to rebound in general, is always misunderstood.”

    No pullback

    Accor said it had not paused or cancelled any development commitments in the region as a result of the conflict. “We did not change anything from a strategic perspective,” Morin said. “The last thing you want is to pull back, because this is going to rebound.”

    The group has also used the period to accelerate planned refurbishments and redeploy staff across the region rather than reduce headcount.

    “We have 380 hotels here – we are the largest player in the Middle East. Where we accelerated refurbishments, we were able to take key employees and move them to larger hotels elsewhere in the region. What people learned during Covid was the cost of layoffs afterwards – bringing people back and retraining them. There was a massive learning curve. This time, discussions with partners about layoffs were less challenging; it was more about accommodating staffing needs during that period,” O’Rourke said.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17695301/main.gif
    Colin Foreman
  • CCC selected for $600m Damascus Financial Centre

    17 July 2026

    Register for MEED’s 14-day trial access 

    Syrian developer Souria Holding has selected Consolidated Contractors Company (CCC) as the exclusive design-and-build contractor for the $600m Damascus Financial Centre (DFC) in Syria.

    The two parties signed a memorandum of understanding on 6 July. The agreement covers design management, engineering, procurement, construction, testing and commissioning, handover and defects liability services. Souria Holding chairman Haytham Joud and CCC chairman Samer Khoury signed the agreement.

    Souria Holding is developing the project in partnership with the Governorate of Damascus. The developer says the scheme is intended to support the city's long-term economic revitalisation and urban development.

    The mixed-use development sits on Plot 47 in the Western Hejaz regulatory area of Damascus' Baramkeh district. The site covers about 32,000 square metres (sq m) and the development will have about 380,000 sq m of built-up area, making it one of the largest mixed-use schemes planned in Syria.

    The DFC comprises a five-star hotel, including furnished apartments and serviced apartments; two residential towers; three grade-A office towers on a core-and-shell basis; retail and commercial space at ground and underground levels; and four basement levels for parking and supporting infrastructure.

    The first phase of construction involves the delivery of three office buildings with a total above-ground built-up area of 72,000 sq m. The completion deadline is the fourth quarter of 2028.

    Lebanon’s Dar Al-Handasah is the frontrunner for the design consultancy role, working for CCC as the design-and-build contractor.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17695284/main5621.jpeg
    Colin Foreman