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
  • Contractor appointed for Oman power plants

    13 May 2026

     

    A consortium of China-headquartered Shandong Electric Power Construction No. 3 Company (Sepco 3) and South Korea’s Doosan Enerbility has been appointed as the main contractor on the Misfah and Duqm combined-cycle gas turbine power plants in Oman.

    The contracts cover the construction of two independent power producer (IPP) projects, with work scheduled to begin in the third quarter of 2026.

    State offtaker Nama Power & Water Procurement (Nama PWP) had previously signed power-purchase agreements (PPAs) for the development and operation of the plants.

    The developer’s contract was awarded to a consortium comprising Korea Western Power (Kowepo), Qatar’s Nebras Power, the UAE’s Etihad Water & Electricity (EtihadWE) and Oman’s Bhawan Infrastructure Services.

    The Misfah IPP will be led by Nebras Power and located in Wilayat Bousher in Muscat Governorate, with a planned capacity of 1,600MW.

    The Duqm IPP will be led by Kowepo and located in Wilayat Duqm in Al-Wusta Governorate, with a capacity of 800MW.

    According to Nama PWP, the total investment for the two projects is estimated at approximately RO1bn ($2.6bn).

    MEED reported last October that Nama PWP had received three bids for the development and operation of the gas-fired IPPs.

    The other bids included a consortium comprising China’s Shenzhen Energy Group and Oman National Engineering & Investment Company, and a lone bid from Saudi Arabia’s Acwa Power.

    Synergy Consulting is the financial adviser and lead adviser to Nama PWP for these projects.

    In November, Oman’s OQ Gas Networks received final investment approval to proceed with gas supply connections for the facilities.

    The Misfah IPP will receive 8.5 million cubic metres a day (cm/d) of natural gas. The Duqm IPP will be supplied with 4.5 million cm/d of natural gas.

    In March 2025, the same Sepco 3 and Doosan Enerbility consortium signed an engineering, procurement and construction contract with Saudi Electricity Company for the expansion of the Riyadh Power Plant 12 (PP12).

    Located about 150 kilometres northwest of Riyadh, the 1,863MW power plant is expected to be completed in 2028.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16816237/main.jpg
    Mark Dowdall
  • Financial challenge tests Iraq’s resolve

    13 May 2026

     

    On 21 April, as a fragile ceasefire held between the US and Iran, the Trump administration halted a $500m shipment in cash headed for Iraq, as it sought to clamp down on Iranian-backed Shia militias in the country. 

    That cash, derived from Iraqi oil exports and routed via the US Federal Reserve to the Central Bank of Iraq (CBI), is a vital cog in Iraq’s financial arteries, enabling it to cover foreign exchange demand.

    This was not the first time that Iraq’s financial system has felt the US’s warm breath on its neck.

    Back in February 2025, the US Treasury Department blacklisted five Iraqi banks from participating in dollar transactions, citing concerns about their role in illicit financial flows that benefited Iran’s Islamic Revolutionary Guards Corps.

    Iraq has also itself often circumscribed dollar use within its own financial system.

    In July 2023, the CBI banned 14 banks from conducting dollar transactions in a crackdown on dollar smuggling. In February 2024, it banned a further eight banks from dollar transactions as part of a crackdown on fraud and money laundering.

    Dollar pressure

    The recent halt in US dollar cash shipments has nevertheless added pressure to Iraq’s parallel currency market gap, says Lucila Bonilla, lead emerging market economist at Oxford Economics.  

    “The gap between the parallel exchange rate has widened noticeably against the official peg, to around 20%,” she says.

    “Dollar demand has risen as citizens and traders seek to hedge uncertainty – dollar deposits are up, and there are reports of a notable shift in the composition of cash holdings toward dollars.”

    Ratings agencies see the US move on Iraqi dollar use as a challenge, but one that might not prove too onerous.

    “Iraq can overcome a short-term war as it has $100bn of reserves and its debt profile is bearable,” says Gilbert Hobeika, a director at Fitch Ratings.

    “But a longer-term conflict will hurt Iraq as the economy is reliant on oil revenues and government involvement, while facing at the same time risk from the US stopping delivery of US dollars.”

    How persistent the pressure proves will depend largely on the duration of the Hormuz shock and how the relationship with the US evolves.

    “Forming a new government that is palatable to the US could ease the pressure, though Iraq’s protracted government formation process adds uncertainty to that timeline,” says Bonilla.

    The US-Iran war is putting even more pressure on banks.

    “There are uncertainties with regard to depositors,” says Hobeika. “The public sector banks have weak management and governance structures. Financial reporting is weak, and that puts pressure on asset quality and capitalisation.”

    If the conflict lasts a long time, the government will start withdrawing funds to pay salaries and contractors.

    “That will affect deposits at the public sector banks in the near term,” says Hobeika.

    State-heavy system

    Iraq’s banking system is dominated by a handful of state-owned banks with a market share of 75%-80%, and then 60-plus private banks competing for the remaining 20%-25% of the pie. 

    “Private banks have struggled to compete in a market with limited opportunities, small deposit bases and a narrow range of products, often focusing on very basic activities,” says Lea Hanna, an analyst at Moody’s.

    “In 2019, we had a wave of Islamic banks getting bans on dealing with US dollars – reducing what had been a primary source of business.”

    A few private banks have benefitted since then, namely those with majority ownership by foreign banks such as National Bank of Iraq, a subsidiary of Capital Bank of Jordan, and Bank of Baghdad, a subsidiary of Jordan Kuwait Bank.

    “Supported by their affiliates, these banks are relatively well run compared to domestic peers and have ample capital buffers,” says Hanna.

    “They have captured a large market share of US dollar transfers thanks to their strong US correspondent banking relationships that allow them easier access to US dollars. They have seen a surge in their profitability and an increase in their deposit base.”

    Financial reform

    The CBI has attempted to introduce reforms to the banking system, as part of a wider effort to enable it to channel funding to the private sector.

    In early 2025, it increased the minimum issued and paid-up capital requirement to ID400bn ($305m), along with a requirement to establish correspondent banking relationships for foreign-currency trading. The plan was to increase these in ID50bn increments every six months, to hasten sector consolidation.

    However, of Fitch’s rated banks, just two – state-owned Trade Bank of Iraq and Mansour Bank, a subsidiary of Qatar National Bank – met the full capital requirement.

    “While a lot of banks managed to increase their capital, a number of them didn’t and have been struggling to improve their systems and compliance with anti-terrorism and anti-money laundering regulations,” says Hobeika.

    “These systems take a long time to improve, and it costs the banks too. For that reason, they have agreed with the central bank to postpone implementation to 2027/28.”

    The expectation is that the number of private Iraqi banks will shrink from 60 to about half that number by 2028.

    “Iraq’s banking sector is undergoing a significant overhaul, with the Central Bank pushing through higher capital requirements, improved anti-money-laundering compliance, and a shift towards commercial banks managing their own international correspondent relationships. These moves are welcomed,” says Bonilla.

    But the harder work remains, argues Bonilla: state-owned banks still carry high levels of non-performing loans, weak governance and a history of politically directed lending, while private sector credit remains among the lowest in the region.

    “The stakes are high as the IMF estimates that a comprehensive reform of the financial sector, alongside broader governance and regulatory changes, could double Iraq’s non-oil growth potential over the medium term, adding around 4 percentage points to GDP,” says Bonilla.

    “For now, the reforms address the plumbing. The structural transformation of a banking system to serve the private sector is still largely ahead.”

    Clouded outlook

    So far, Iraq’s financial system seems to have averted a worst-case scenario of large-scale deposit withdrawals related to the Iran conflict.

    Any deposit withdrawals seem to be more related to the introduction of a digital custom system ASYCUDA (Automated System for Customs Data) aimed at helping the government collect revenues, which saw a lot of traders trying to bypass the custom charges.

    “This drove some exporters or traders to source US dollars outside the banking system, in the parallel market, to avoid stricter requirements and up-front payment of customs duties. That has now eased,” says Hanna.

    Looking ahead, Fitch anticipates that most government financing is likely to come from the CBI through indirect purchases of government securities.

    The central bank’s total claims on the central government represented about 52% of the domestic debt stock and 25% of the total debt stock at end-2024, notes the agency.

    It envisages that a smaller portion will come from the government’s cash deposits, anticipated to fall to an average 12% by 2027.

    Fitch says the CBI’s balance sheet limits refinancing risks, while the FX reserves are large enough to absorb the expansion of that balance sheet without putting pressure on the exchange-rate peg with the US dollar.

    Surging foreign direct investment comes as a source of comfort, with annual inflows rising from around $2bn in 2022 to $5bn-$7bn from 2023 onwards. 

    Reform of the financial system will remain at the top of the new government’s in-tray.

    The regional environment is unconducive to this mammoth task, and it can only hope that an end to the conflict would support ongoing Iraqi efforts to build a financial system comparable to that of some of its Gulf neighbours.

    MEED’s June 2026 report on Iraq also includes:

    > OVERVIEW: Iraq enters era of resilience, reform and rising risks
    > OIL & GAS: Iraqi oil and gas sector in crisis
    > POWER & WATER: Focus shifts to delivery of Iraq utilities expansion
    > CONSTRUCTION: Momentum builds in Iraq’s post-war construction sector

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16799540/main.gif
    James Gavin
  • JinkoSolar signs 2GW deal for Abu Dhabi solar project

    13 May 2026

    China’s JinkoSolar has signed an agreement with Abu Dhabi Future Energy Company (Masdar) to supply 2GW of photovoltaic (PV) modules for the round-the-clock renewable energy project in Abu Dhabi.

    The agreement covers the supply of JinkoSolar’s Tiger Neo series modules for the project, which is being developed by Masdar in collaboration with Emirates Water & Electricity Company (Ewec).

    The landmark $6bn project combines a 5.2GW solar PV plant with a 19 gigawatt-hour battery energy storage system (bess).

    It entered construction in October 2025 with India’s Larsen & Toubro and Power China working as contractors. It is known as the world’s first gigascale round-the-clock renewable energy project.

    Masdar had earlier selected JinkoSolar and JA Solar as preferred suppliers for solar PV modules, and CATL (Contemporary Amperex Technology) as preferred supplier for the bess segment.

    The project is designed to provide baseload renewable power and address intermittency challenges associated with solar generation. The developers said the scheme will serve as a model for similar projects internationally.

    JinkoSolar said the Tiger Neo modules supplied for the project are based on N-type TOPCon technology and have been adapted to meet the technical requirements of the development.

    Senior executives from both companies attended the signing ceremony in Abu Dhabi, including Mohamed Jameel Al-Ramahi, CEO of Masdar, and Charlie Cao, CEO of JinkoSolar.

    Jinko has won several major contracts in recent years, including a contract to supply solar PV modules with a capacity of 3GW for Saudi Arabia’s Haden and Al-Khushaybi solar projects.

    It also recently announced the signing of a 2GW solar PV module supply agreement with China Energy Engineering Corporation (CEEC) for Saudi Arabia’s Phase Six Khurais PV project.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16813268/main1816.jpg
    Mark Dowdall
  • Dubai opens prequalification for Jebel Ali STP expansion

    13 May 2026

     

    Dubai Municipality has issued a request for qualifications for the Jebel Ali sewerage treatment plant (STP) expansion – phase 3 project.

    The DS150/3 project will be delivered under a public-private partnership (PPP) model on a design, build, finance, own, operate and transfer basis.

    The project involves the development of a new water resource recovery facility with an ultimate treatment capacity of up to 1 million cubic metres a day (cm/d).

    It is being procured through Dubai Municipality’s Sewerage and Recycled Water Projects Department and will be delivered through a two-stage operational approach over a 30-year concession period.

    The bid submission deadline is 18 June.

    UK-headquartered Deloitte is acting as financial adviser, Aecom as technical adviser and CMS as legal adviser.

    Dubai Municipality said the project will also include additional land uses and community-focused amenities as part of broader sustainability and urban integration objectives.

    Phase one and two expansion

    In April, the deadline was extended for contractors to submit bids for an engineering, procurement and construction (EPC) contract covering the expansion of the Jebel Ali STP phases one and two.

    Located on a 670-hectare site in Jebel Ali, the original wastewater facility has a treatment capacity of about 675,000 cm/d following the completion of phase two in 2019, combining approximately 300,000 cm/d from phase one and 375,000 cm/d from phase two.

    The upgraded facility will be capable of treating an additional sewage flow of 100,000 cm/d, with the expansion estimated to cost $300m.

    The new bid submission deadline is 11 June.

    UK-headquartered KPMG and UAE-based Tribe Infrastructure are serving as financial advisers on the project.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16812872/main.jpg
    Mark Dowdall
  • Iraq LNG project delayed until next year

    13 May 2026

    Register for MEED’s 14-day trial access 

    Iraq’s first liquefied natural gas (LNG) import terminal, which has an estimated project value of $450m, is now expected to become operational in 2027 due to delays caused by the regional war and disruption to shipping through the Strait of Hormuz.

    Work on jetty reinforcement and fixed terminal infrastructure at the Port of Khor Al-Zubair has been delayed, according to a statement from US-based Excelerate Energy, which is contracted to develop the facility.

    In its statement, the company said: “We are revising our full-year guidance to reflect the delayed startup of our Iraq terminal due to the ongoing conflict in the Middle East.”

    It added: “The Iraq project fundamentals remain unchanged. Looking ahead, we continue to have confidence in our sequenced earnings growth through 2028.”

    In October 2025, Excelerate signed a definitive commercial agreement with a subsidiary of Iraq’s Ministry of Electricity for the development of the country’s first LNG import terminal.

    The integrated project includes a five-year agreement for regasification services and LNG supply, with extension options, and a minimum contracted offtake of 250 million standard cubic feet a day (cf/d).

    Excelerate said: “Jetty reinforcement and construction of the fixed terminal infrastructure have been delayed temporarily due to the conflict in the Middle East and the terminal is no longer expected to commence operations in the third quarter of 2026 as previously disclosed.

    “Project startup is now expected in 2027. The long-term fundamentals supporting the project remain unchanged, driven by chronic power shortages and limited domestic gas processing capacity in Iraq.

    “Current conditions further reinforce the country’s need for reliable and scalable LNG import infrastructure and construction will resume as conditions allow.”

    Earlier this year, Iraq’s Ministry of Electricity said that the terminal was on track to come online on 1 June, ahead of expected gas shortages during the summer months.

    Then, in late April, the ministry said the project had been delayed by several months and was expected to come online in August at the earliest.

    Although Iraq is Opec’s second-largest oil producer after Saudi Arabia, it is a net natural gas importer because its lack of infrastructure investment has meant that, until 2023, it flared roughly half of the estimated 3.12 billion cf/d of gas produced in association with crude oil.

    Iraq’s reliance on flaring associated gas instead of gathering and processing it has prevented the country from fully realising its potential as a gas producer and forced the Iraqi government to rely on costly gas and electricity imports from Iran.

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

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16803348/main.jpg
    Wil Crisp