EXCLUSIVE: Saudi Arabia plans 2km megatall tower in Riyadh
7 December 2022

Saudi Arabia’s Public Investment Fund (PIF) is considering plans for a 2-kilometre megatall tower as part of an 18-square-kilometre masterplanned development to the north of Riyadh.
The proposed tower will be more than double the height of the world’s tallest building – Dubai’s Burj Khalifa, which is 828 metres tall. Contractors that have priced megatall towers in the region say that depending on the final design, a 2km-tall structure could cost about $5bn to construct.
A design competition with a participation fee of $1m is underway for the record-breaking tower, according to multiple sources close to the contest.
The sources add that about eight firms have been invited to participate in the competition. The firms involved include some of the world’s leading names in architecture, which have been selected based on their experience working on other megatall towers and iconic designs around the world.
The prospective participants include US-based firms Skidmore, Owings & Merrill (SOM), Adrian Smith & Gordon Gill Architecture, Kohn Pedersen Fox (KPF) and Gensler; 10Design, which is part of France’s Egis; and Dubai-based Killa Design.
The project site is located west of the existing King Khalid International airport, and EY conducted the feasibility study for the development.
For the Burj Khalifa in Dubai, the cost of the tower was justified because it enhanced the land values of the surrounding Downtown district.
The developer of the Burj Khalifa, Dubai-based Emaar, used the strategy again when it launched The Tower at Dubai Creek Harbour in April 2016 to boost property sales of the surrounding Dubai Creek Harbour development. That tower, planned to be at least 928 metres tall, has not progressed beyond the raft foundation.
Riyadh’s proposed tall tower is just one major project planned for the northern outskirts of Riyadh. On 28 November, a masterplan for an expansion to the airport was announced.
It will be known as King Salman International airport, and if completed on time in 2030, it will become the largest airport in the world in terms of passenger capacity. It will cover an area of about 57 square kilometres, allowing for six parallel runways, and will include the existing terminals at King Khalid International airport.
Other tall buildings are planned elsewhere in Saudi Arabia, and the scale of the structures reflects Riyadh’s confidence as it moves to deliver the objectives set out by Vision 2030 with a series of self-styled gigaprojects.
WATCH: Saudi Arabia gigaprojects market outlook
At Neom, the first modules of the 170km-long buildings known as The Line are 500 metres tall. Other structures, such as the two hotel towers for the Gas Station Hotel at the Gulf of Aqaba, are planned to be 500 metres tall.
Saudi Arabia has planned tall buildings before. PIF was considering plans for a tower of up to 1.2km in height at King Abdullah Financial District (KAFD) on a plot known as KAFD X. Consultants were preparing designs for the project in 2019.
Another tall tower planned for Saudi Arabia is the 1,008-metre Jeddah Tower Scheme. Construction work on that tower began about 10 years ago and subsequently stalled after the structure reached about 70 storeys.
Attempts to revive the project have not proceeded as companies are reluctant to take on any liabilities from contractors and consultants that had previously worked on the scheme.
According to the Council on Tall Buildings and Urban Habitat (CTBUH), a supertall building is over 300 metres tall, while one that measures over 600 metres is considered megatall. Currently, there are 173 supertalls and only three megatalls completed globally, says the CTBUH.
According to tall building database Emporis, only two completed structures in the Middle East are megatall: the Burj Khalifa and the 601-metre-tall Mecca clock tower.
The PIF did not respond to a request to comment on the 2km-tall tower plans.
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Insurers are expected to cover only a fraction of the damage to oil and gas facilities in the Middle East caused by the regional war, according to industry sources.
Standard industrial property and business interruption policies typically exclude damage and disruption caused by acts of war. Companies therefore need specialist war-risk insurance or political violence and terrorism (PVT) insurance to be eligible for payouts.
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Even companies that purchased war-risk or PVT insurance before the US and Israel attacked Iran on 28 February are unlikely to be covered for the full extent of war damage.
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One source said: “If you had, for example, an oil refinery that’s worth $8bn, you couldn’t really buy a war insurance policy to cover the price of a complete rebuild.
“There just isn’t enough insurance capacity in the market to buy that level of cover.
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Payout timing
Full insurance settlements for war damage are expected to take significant time – potentially 18 months to two years for some policyholders.
Payments typically begin with an initial payout of around 20%-30% of the total claim. This is followed by a second payment mid-project – usually once engineering is complete – and then a final payment.
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One source said: “A lot of the owners of these damaged facilities don’t see the current situation as the right time to start rebuilding, but that isn’t because they are waiting for insurance money.
“The risk of new attacks and more damage is still high, and they are going to want to wait for signs of more stability before they start rebuilding.”
Experts believe that once the security environment improves, facility owners will begin tendering repair and reconstruction contracts even if insurers have not settled claims.
“A lot of the companies that operate oil, gas and chemical facilities in the region have access to funds that will allow them to rebuild without being reliant on insurers,” said one source.
“Even if they have a policy that they expect to pay out, it is likely that they will go ahead with the project before receiving full payment if they think it is the right time to rebuild.”
Once the security environment improves, the cost of rebuilding fully destroyed units is expected to be higher than when they were originally constructed, due to multiple rebuild projects progressing in parallel across the region.
This is likely to drive a spike in demand for skilled labour and materials, pushing up costs.
Market impact
Insurers providing this type of cover in the region have generally experienced several years of low payout levels, so they are expected to meet claims with limited financial strain.
However, the volume of claims stemming from the US and Israel’s war with Iran is expected to harden the war-risk and PVT insurance market, increasing premiums for owners of oil and gas facilities for some time.
Ultimately, the limited scope of coverage means the financial burden of the war will fall more heavily on asset owners than on insurers.
Even where cover is in place, policy limits mean insurers will only partially offset the cost of rebuilding large facilities, leaving companies and governments to bridge funding gaps.
The experience is likely to prompt a reassessment of risk across the region’s energy sector, with lenders and investors placing greater emphasis on potential political violence-related damage when evaluating projects.
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