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[DUBAI] Saudi Arabia's sovereign wealth fund finalized a deal to take over the management of Riyadh's US$10 billion unfinished financial hub as the government attempts to revive the project, according to people familiar with the matter.
The Public Investment Fund is taking control of the King Abdullah Financial District from the Public Pension Agency, the people said, asking not to be identified because the information is private. Details of the deal aren't clear, they said.
Hilmi Ghosheh will become project manager of the hub to oversee completion of the project that has been plagued by delays and cost overruns, the people said. Mr Ghosheh will continue in his current role as an adviser the PIF's real estate projects, one of the people said.
Crown Prince Mohammed Bin Salman lists the rehabilitation of the financial district as one of his objectives in the kingdom's Vision 2030 economic reform plan. The government plans to make the area an economic freezone with visa exemptions and a direct connection to the airport. Construction of the hub with 73 buildings in the north of Riyadh started in 2006.
The government restructured the financial district and reduced the number of offices and increased the number of residential units so the project "didn't fail," Prince Mohammed told Bloomberg in an interview last month. The first phase will open next year and Saudi Arabia plans to host the G-20 meeting at the hub in 2020, he said.
A spokesman for the PIF declined to comment.
HSBC Holdings Plc's local unit was advising the pension agency on the sale of the district, while JPMorgan Chase & Co was working with the PIF, people familiar with the matter said in November 2016.
As of April 2016, not a single financial institution had agreed to take space in any of the 73 buildings in the district, Waleed Aleisa, chief executive officer and project manager of the district at developer Al Ra'idah, said at the time. Local lender Samba Financial Group is building its own tower in the district. PricewaterhouseCoopers and local regulator Capital Market Authority have also agreed to take space in the area.
The government is also looking at ways to lure banks with incentives that could include tax breaks lasting a decade or more, as well as separate regulation that makes it easier to hire and issue work visas, Mr Aleisa said.
The PIF is behind several large real estate developments in Saudi Arabia, including a new city called Neom that will be built on the Red Sea Coast, an entertainment city on the edge of Riyadh and another tourism project on the Red Sea.