Saudi Arabia plans to raise up to 10 billion riyals ($2.67 billion) next year for Amaala, one of its tourism projects on its Red Sea coast, the CEO of The Red Sea Development Company (TRSDC) and Amaala said.
Amaala is a resort being built on Saudi Arabia’s northwest coast along with the Red Sea project, which are part of the country’s efforts to diversify its economy by boosting new sectors such as tourism. Both are green projects, using renewable energy.
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The planned “green” financing for the Amaala project would follow a larger loan raised earlier this year for the Red Sea Project.
“We will come to the market probably sometime next year with a financing for Amaala specifically related to the first phase of the project,” CEO John Pagano told Reuters on Tuesday.
He said the loan was likely to be between 5 and 10 billion riyals and follows the 14 billion riyals TRSDC raised earlier this year. “My sense is it’s likely going to be on the lower end of that scale”, he said.
The Red Sea project loan was provided by four Saudi banks to finance 16 new hotels. The Amaala financing will be for nine hotels in the first phase of the project, Pagano said, adding the plan is to open those facilities in 2024.
Amaala and the Red Sea project company, both 100 percent owned by the Public Investment Fund – Saudi Arabia’s main sovereign investor – will likely be consolidated under one “Red Sea Group” by the end of this year.
“The coming together of the two organizations is a natural evolution”, Pagano said.
He said once the projects are finalized their assets could be aggregated into a real estate investment trust backed by hotels, potentially listed on the Saudi exchange, as a way to attract a wide pool of investors.
“We could see it as early as 2024-2025. We need to open the hotels, we need to get up and running and reasonably stabilized so that proper cash will be generated,” he said.
The two projects are expected to create 120,000 jobs by 2030, 70,00 direct and 50,000 indirect, he said.