Pagano sees contribution of TRSDC-AMAALA tourism projects to Saudi GDP at $9bn

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Updated 11 May 2022
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Pagano sees contribution of TRSDC-AMAALA tourism projects to Saudi GDP at $9bn

  • TRSDC is on track to open three new hotels this year and receive its first guests in early 2023.
  • There will be 13 more hotels inaugurated by the end of next year.

DUBAI: The Red Sea Development Co. is on a bigger mission now after it added AMAALA to its portfolio with the two projects expected to contribute around SR33 billion ($8.8 billion) to the Saudi economy in five years.

TRSDC is on track to open three new hotels this year and receive its first guests in early 2023. There will be 13 more hotels inaugurated by the end of next year.

What’s more? The archipelago of 90 islands in the Red Sea, which houses the fourth largest barrier reef globally, will focus on sustainable tourism with a twist of luxury. The giga-project has already signed up nine global brands, and more will follow suit.

What’s interesting about what we’re doing is that it’s not a built-up urban area; it’s a part of Saudi that is untouched.

John Pagano

“What’s interesting about what we’re doing is that it’s not a built-up urban area; it’s a part of Saudi that is untouched,” said John Pagano, CEO of TSDRC and AMAALA, in an interview with Arab News at sidelines of the Arabian Travel Market, the international travel trade show in Dubai.

“Our first guests can choose between two luxurious island resorts or a desert resort next year,” he added.

The two island hotels are in the hyper-luxury segment, both boutique hotels with 80 rooms in one and 90 in the other.

Positioned like high-end Maldives offerings, they will be highly serviced and attract discerning luxury travelers.

Pagano revealed that the St. Regis brand would operate one of the hotels, while the other island resort will be announced soon. The desert resort will be managed by the Six Senses group, which shares a commitment to green practices.

High sustainability standards

Sustainability is a crucial offering for TSRDC, both in terms of catering to consumer demand and as a differentiator in a crowded regional tourism market.

The Red Sea covers an area the size of a country like Belgium; however, Pagano confirmed that the company would only develop less than one percent of that to respond to an ecological ceiling based on what the environment can handle without incurring damage.

“Rather than overdevelop simply because we can, we actively monitor the environment using artificial intelligence and data to watch out for warning signs if something we are doing is not going according to plan,” he said. “We do not want to cause any lasting damage.”

Sustainable travel is in demand now, with 81 percent of 30,000 travelers in a Booking.com survey released this year saying that sustainable travel is essential to them. Fifty-nine percent of travelers wanted to leave the places they visited better than when they arrived.

“Luxury doesn’t mean what it used to. We have moved away from luxury being ostentatious: It’s about experiences and the traveler today wants more sustainable experiences,” said Pagano. “So we give people a choice to go to a destination that puts nature first. We aim to be the biggest tourist destination in the world powered 100 percent by renewable energy.”

Even the company’s financing efforts were green; last year, The Red Sea Development Company secured an SR14.120 billion green loan, marking the first-ever Riyal-denominated Green Finance credit facility.

“We are fully capitalized at the moment for phase one of the development and have a good track record in the market if we need to raise more for other projects, including AMAALA,” said Pagano.

Sea change in development

Merged under the TRSDC brand, AMAALA is a megaproject along the Red Sea coastline that is now managed under the Red Sea Development umbrella. The project plans to award $319.9 million in contracts in the second quarter of this year to create a new wellness-focused tourism destination. There are currently eight hotels under construction for AMAALA, aiming for completion by the end of 2024.

A new international airport is being built to cater to expected rising demand in the Red Sea area. Designed by award-winning, sustainability-focused architecture firm Forest + Partners, the airport will have a 3.7-kilometer runway and can handle up to one million passengers per year.

“The air site is virtually complete now,” said Pagano. “We will have a temporary terminal at the beginning of next year. We will also have operational seaplanes for our first guests on the island resorts.”

Working closely with the Ministry of Tourism, Pagano said TRSDC is part of a dozen similar projects planned along the Red Sea coastline. This will have a positive trickle-down effect on the economy; The two current projects, TRSDC and AMAALA alone, will generate 120,000 new jobs and contribute SR33 billion to GDP within the next five years, according to Pagano.

Though tied together by a commitment to sustainability, each development is distinct. For example, Sheybarah Island, the furthest from the mainland in the south of the Red Sea, is currently under construction with futuristic, shiny stainless-steel pod-like villas manufactured in the United Arab Emirates. The island resort will open at the end of 2023.

“We are privileged to build sensitively around nature,” said Pagano. “Sustainability will set us apart.”

 


Saudi Arabia building the ‘most complex structure known to man,’ says the developer

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Saudi Arabia building the ‘most complex structure known to man,’ says the developer

RIYADH: Saudi Arabia is set to build the “most complex structure known to man” as part of a major architectural project within the New Murabba development, according to the head of the company behind the project

Positioned at the heart of the large-scale urban project, the Mukaab is designed to be a futuristic mixed-use landmark that will contribute to Riyadh’s evolving skyline. 

In a panel discussion during the Real Estate Future Forum, Michael Dyke, CEO of New Murabba Development Co., described the ambitious scale and vision of the building which is being developed under the patronage of the Crown Prince Mohammed bin Salman. 

“Mukkab is a structure, it will be pound for pound, I think the world’s most complex structure ever created known to man or woman in the history of time,” said Dyke. 

“We have a structure which is 400 meters by 400 meters above the ground. We’re talking about a structure which will look at more than 1,000 meters above sea level,” he said.  

While much of the focus is on the Mukaab’s above-ground presence, Dyke began dissecting the project by emphasizing the vast underground development.  

“Below the ground is enormous as well. It’s a complete cavernous labyrinth of various different asset classes,” he explained, adding: “One example, the retail under Mukaab and around Mukaab is the size of Dubai Mall today and will be capable of extending to be bigger. So that’s just a small example of what you don’t see because it’s under the ground.”   

The design is set to feature multiple skyscrapers within the structure.

“We will have something like two to three Empire State Buildings on each corner, which anchor the four corners of Mukaab,” said Dyke, adding: “We will have a dome which will be something in the order of about 360,000 sq. meters, which will be 380 meters high by 340 meters in diameter inside what effectively is the equivalent of Empire State Buildings.”   

At the center of the Mukaab, a tower will stand as a unique architectural feat, which, according to Dykye, “will be the only skyscraper in the world that lives inside another building, which will be an equivalent size of the Eiffel Tower, but will be fully inhabited.” 

There will be 27,000 people moving around the lower levels of the tower at any point in time. The structure will also feature “the world’s largest roof on the top at 16 hectares, which will be a fully living space.”

Additionally, the Mukaab’s design incorporates Riyadh’s architectural heritage with a fully activated Najdi facade, he said, adding that it is “the most beautiful Najdi facade that reflects the architectural history of the Kingdom.”  

Inside the Mukaab, Dyke described an immersive experience unlike any other, sauing: “When you are inside the dome, you will be transported to other worlds. The worlds will change frequently, and you will not be able to see the dome when you’re inside it because we’re creating that.” 

He explained that the project incorporates advanced technological layers to create an immersive experience, with applications in hospitality, retail, and entertainment.  

In a separate panel, Marco Macagnano, head of Digital Real Estate Canada at Deloitte, highlighted the importance of innovation in real estate, emphasizing that modern developments should go beyond static assets.  

“It means additional capital to the bottom line innovation products, and it also importantly provokes a new approach to real estate, where we’re not just maintaining or stabilizing our assets, but we’re investing in constant improvement— buildings that upgrade, not just flexible, but upgradable buildings that can automatically turn on new features with a software update, as opposed to installing new systems,” he said.   

This perspective aligns with the vision behind Riyadh’s Mukaab, which aims to integrate latest technology and flexible infrastructure.   

Macagnano further pointed out that large-scale projects, when designed with a systems-thinking approach, have the potential to redefine business and economic environments.  

“The bold approaches to massive investments in infrastructure, big projects that can think about the ecosystem as a whole put Saudi Arabia in an incredible position to differentiate,” he said.  

He emphasized that new developments should not be constrained by outdated infrastructure but instead be designed for future adaptability. 

Beyond its architectural complexity, Dyke highlighted the economic and social impact of New Murabba as a whole.  

“The economic stimulus that New Murabba will create upon full completion, when all three phases are built out, we’re talking about 400,000 people living in New Murabba. We’re talking about tens of millions of people visiting Mukaab every year. And we’re talking about a whole economy that will not be separate from Riyadh,” he said.  

A key element of the development is the introduction of higher-density living in Riyadh. “New Murabba will have a characteristic of mid and high-level living,” Dyke noted.  

“That’s one thing which creates an opportunity, which creates this livability aspect, and above and beyond that, the density of people within New Murabba will be in the order of 20,000 people per sq. km, compared to 4,000 today,” Dyke added.  


Saudi insurance industry thrives with 16.9% revenue growth in Q3 2024

Updated 20 min 13 sec ago
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Saudi insurance industry thrives with 16.9% revenue growth in Q3 2024

  • Revenues surge as motor, medical, and property coverage expand

RIYADH: Saudi Arabia’s insurance sector saw a 16.9 percent year-on-year revenue growth in the third quarter of 2024, driven by increases in motor, property, and medical coverage, according to a new report.

The analysis, published by KPMG, attributes this growth to ongoing economic reforms under the Kingdom’s Vision 2030 initiative, emphasizing regulatory measures that have strengthened the sector’s development and stability.

Medical insurance played a key role in the overall growth, with revenues rising by 13.6 percent, largely due to the government’s implementation of mandatory health coverage regulations.

Motor insurance also experienced a significant boost, with revenues up 22.7 percent year on year. This growth is linked to an expanding auto market and regulatory measures ensuring compliance with insurance requirements.

The property and casualty insurance segment also saw significant growth, with a 20.4 percent increase in revenues, reflecting the ongoing expansion of infrastructure and real estate projects across Saudi Arabia.

This growth comes as the Kingdom’s regulatory body works to improve the sector’s efficiency and stability, while supporting local infrastructure and fostering a thriving business ecosystem.

According to data compiled by Arab News from Bloomberg, Saudi Arabia’s insurance sector delivered a strong performance in the first half of 2024, with earnings rising by 25 percent to SR2.2 billion, compared to the same period in 2023.

The report also noted that the sector continues to attract both local and international investors, thanks to favorable market conditions and robust regulatory frameworks.

“Saudi Arabia’s insurance industry is at the forefront of the Kingdom’s economic transformation, aligning with Vision 2030’s ambition to diversify the economy,” Ovais Shahab, partner and head of financial services at KPMG in Saudi Arabia, said.

He added: “The sector’s impressive growth, driven by regulatory reforms, technological innovation, and expanding market demand, underscores its critical role in shaping a resilient and diversified financial landscape.”

KPMG highlighted that, despite the sector’s growth, challenges such as pricing competition and market fragmentation remain.

However, advancements in digital insurance solutions and improved customer engagement strategies are expected to drive continued expansion and help the sector navigate these challenges.

“As insurers embrace digital transformation and sustainability, they are not only enhancing customer experience but also addressing emerging risks, positioning the industry for long-term success in a rapidly evolving market,” Salman Chaudhry, partner and insurance lead at KPMG Professional Services, said.

Platforms like Tameeni and BCare are simplifying access to insurance policies, while artificial intelligence-driven solutions are improving claims processing and fraud detection.

The report also noted the rise of telematics-powered, usage-based insurance, which is driving a shift toward more personalized coverage options.

The establishment of the Insurance Authority in November 2023 has laid the groundwork for deeper reforms, enhancing governance, product innovation, and reinsurance frameworks. This move underscores the Kingdom’s commitment to building a strong and resilient insurance sector in line with the goals of Vision 2030.

Additionally, the recent implementation of IFRS 17 and IFRS 9 standards has strengthened transparency and financial comparability among insurers.

This is reflected in a strong third-quarter combined ratio of 93.69 percent and a 25.9 percent year-on-year increase in net profit before zakat and tax, reaching SR3.90 billion.

The sector’s total assets also saw a 20 percent rise, reaching SR84.91 billion.

“As Saudi Arabia’s insurance sector continues to evolve, it is well-positioned to play a pivotal role in the Kingdom’s economic transformation,” Shahab remarked.

He added: “Supported by regulatory foresight, innovation, and the Vision 2030 framework, the industry is poised to further contribute to Saudi Arabia’s diversification and growth.”

According to credit rating agency S&P Global in December, Saudi Arabia’s insurance sector is expected to remain resilient in 2025, with top-line revenue growth forecasted between 10 percent and 15 percent.

S&P also reported that the net profit of insurance companies in the Kingdom grew by 17 percent in Q3 2024, compared to the same period in 2023.


International mortgage firms set to transform Saudi Arabia’s real estate sector: top official

Updated 30 min 4 sec ago
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International mortgage firms set to transform Saudi Arabia’s real estate sector: top official

  • Kingdom’s property market expected to reach $101.62 billion by 2029
  • Recent approval of CMA will increase international investment in the Kingdom

RIYADH: Top international financial institutions Apollo and BlackRock are set to enter Saudi Arabia’s mortgage market, potentially transforming the Kingdom’s real estate market, a top official said. 

During a panel discussion at the Real Estate Future Forum in Riyadh, the adviser to Saudi Arabia’s minister of municipalities and housing, Hossam Redwan said that lower interest rates could also propel the mortgage sector in the Kingdom. 

Redwan’s comments align with Saudi Arabia’s Vision 2030 goal to strengthen the real estate sector as part of its efforts to diversify the economy and position the Kingdom as a global tourism and business destination.

Saudi Arabia’s Real Estate General Authority expects the Kingdom’s property market to reach $101.62 billion by 2029, with an anticipated compound annual growth rate of 8 percent from 2024. 

“Foreign entities are now ready to deploy capital by buying mortgages directly from banks and financing institutions. In a way, they would be performing a role similar to what the Saudi Real Estate Refinance Co. has been doing for the last few years,” said Redwan. 

He added: “However, SRC cannot fulfill its role on its own. So, hopefully, by the first quarter of 2025, you will hear of institutions like Apollo and BlackRock entering the mortgage market in Saudi Arabia directly. I am very excited about it.”

He also underscored the exponential growth of the Saudi mortgage market and said that its value has now reached SR750 billion ($199.96 billion). 

Redwan added that the recent approval of CMA, which allows foreigners to invest in Saudi-listed companies owning real estate in Makkah and Madinah, will increase international investment in the Kingdom. 

The new amendment by CMA, effective from Jan. 27, aims to boost the capital market’s competitiveness and align with the Vision 2030 economic diversification objectives, the authority said in a statement.


Sports and entertainment driving Saudi real estate boom, say Deloitte experts

Updated 41 min 38 sec ago
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Sports and entertainment driving Saudi real estate boom, say Deloitte experts

RIYADH: Saudi Arabia’s real estate sector is gaining momentum as investments in sports and entertainment create new opportunities for infrastructure development and economic stability, according to industry experts.

During a panel discussion on the final day of the Real Estate Future Forum, Chris Styring, director of the Sports Business Group at Deloitte, highlighted the potential for long-term benefits from sports infrastructure projects.

The Kingdom’s real estate sector is growing, with 192 project licenses issued in 2024, totaling SR147 billion ($39 billion), while the sports market is set to grow from $8 billion to $22.4 billion by 2030. 

This surge in sports investment is driving real estate expansion, fueling demand for stadiums, training facilities, and mixed-use developments.

With the nation preparing to host the FIFA World Cup in 2034, Styring emphasized the urgency of upskilling local professionals. 

“The World Cup seems a long way away, but it’s not. You’ve got to prepare. You’ve got to upskill the next generation of people who will be the event managers, the commercial managers, the people who deliver, the hospitality sector, and the real estate sector that’s actually building the infrastructure,” he said. 

The Deloitte official believes there is “a great opportunity” to build sports infrastructure that can “give back”, adding that Saudi Arabia is well-positioned to host major sporting events in the future. 

“I foresee that one day you’ll have a world-class marathon,” he predicted at the Riyadh event.

Simon Oaten, lead partner for Travel, Hospitality, and Leisure at Deloitte UK, underlined that preparations for such large-scale events are already accelerating. “Deadlines really focus the mind, and we’re starting to see that in a way that we weren’t seeing it nine to 12 months ago,” he observed. 

Beyond sports, regulatory clarity and tax planning are crucial factors for investors in Saudi Arabia’s real estate sector, according to Hadeel Biyari, partner for Indirect Tax at Deloitte Middle East. 

“All investors, whether they’re local or foreign, they look for certainty,” she said

Biyari also pointed out that Deloitte is actively developing local real estate expertise, adding: “That’s not only from a tax perspective but also from a legal perspective because I deal with tax disputes and litigation.”

As Saudi Arabia continues to drive innovation across all sectors in line with Vision 2030, the experts agreed that preparation, investment, and strategic planning will be key to ensuring the real estate sector thrives alongside the Kingdom’s growing sports and entertainment industries.


Saudi-UK aviation ties set for growth amid investment push

Updated 46 min 9 sec ago
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Saudi-UK aviation ties set for growth amid investment push

JEDDAH: Saudi Arabia aims to strengthen aviation ties with the UK as officials from both countries met to boost investment and collaboration, amid the Kingdom’s push to upgrade its airports and expand global connectivity. 

A senior Saudi delegation, led by Mohammed bin Fahd Al-Khuraisi, executive vice president for strategy and business intelligence at the General Authority of Civil Aviation, participated in a Saudi-British roundtable in London, the Saudi Press Agency reported.  

The meeting, which brought together top British aviation companies, CEOs, and experts, focused on enhancing strategic cooperation and unlocking new opportunities in the aviation sector, aligned with Saudi Arabia’s Vision 2030 goals. 

These initiatives align with Saudi Arabia’s National Aviation Strategy, which aims to double passengers capacity to 330 million annually, increase air cargo capacity to 4.5 million tonnes, and expand connectivity to over 250 destinations worldwide. 

In his speech, Al-Khuraisi highlighted the UK’s role as a key European market for Saudi Arabia, with passenger traffic between the two nations more than doubling in 2024 to 1.338 million, compared to 2022. This surge in demand underscores the need for continued investments in aviation infrastructure and international partnerships. 

The two nations maintain strong trade and cultural ties, with Al-Khuraisi highlighting that in December, both countries agreed to increase bilateral trade to $37.5 billion by 2030, underscoring the value of their relations and mutual economic benefits. 

He also noted the success of the trade partnership, with over 1,000 British companies holding investment licenses in Saudi Arabia and 55 firms, including BAE Systems and Rolls-Royce, operating regional headquarters in the Kingdom. 

The Saudi delegation showcased the Kingdom’s aviation ecosystem, highlighting ongoing infrastructure projects, digital transformation efforts, and investment opportunities, including Riyadh Air’s launch and the King Salman International Airport master plan.  

The presentation also detailed investment prospects in Saudi airports, covering implementation strategies, funding volumes, business opportunities, and incentives for investors. 

Concluding his speech, Al-Khuraisi invited UK investors and aviation leaders to seize new opportunities for collaboration, further strengthening the global aviation sector.  

The Saudi delegation also participated in the Civil Aviation Supply Forum, engaging with representatives from the British Aviation Group, UK Air Navigation Services, the UK Civil Aviation Authority, and other global aviation companies. 

The meetings, attended by British government officials and Saudi embassy representatives, focused on investment opportunities in civil aviation and airport development.