The King Abdullah Economic City is tipped to transform Saudi Arabia’s coastline. (Image: Getty)
King Abdullah Economic City (KAEC), situated along Red Sea coast, stands as a testament to the nation’s ambitious vision for economic diversification and sustainable development.
Spanning approximately 180 square kilometres (69 square miles), KAEC is poised to become a pivotal , commerce, and tourism, and came with an original price tag of a staggering $100billion (£80billion).
KAEC has attracted significant investments in recent years to bolster its infrastructure and industrial capabilities. Notably, late last year, 2024, Emaar The Economic City, the master developer of KAEC, unveiled a further $2.32 billion (£1.8 billion) capital optimisation plan to bring the metropolis up to date.
The initiative focuses on restructuring financial frameworks, including the conversion of $1.6 billion (£1.3 billion) in debt owed to the Public Investment Fund into equity, and introducing a $266 million (£214 million) convertible shareholder facility from PIF.
In January 2024, KAEC further solidified its commitment to sustainable development by signing agreements with the Saudi Electricity Company (SEC) to upgrade electrical facilities. These enhancements support the growing demand from manufacturing sectors, particularly the burgeoning .
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A view from the administrative building at the King Abdullah Economic City. (Image: Getty)
KAEC’s Industrial Valley has emerged as a focal point for manufacturing and logistics, and the city has so far attracted major players in the EV sector, including Lucid Motors, which began constructing its first Saudi manufacturing facility in 2023.
This facility is expected to produce up to 155,000 electric vehicles annually, initially catering to the Saudi market. Regional deliveries are anticipated to begin later this year.
KAEC’s partnership with and Altaaqa Alternative Solutions to develop a 12.5-MWp solar plant, which aims to power the city sustainably, reduce its carbon footprint, and align with Saudi Arabia’s broader environmental goals, is also added to this.
Beyond industrial advancements, KAEC is enhancing its appeal as a lifestyle destination. In 2023, Emaar, The Economic City, announced plans to develop a waterfront mixed-use destination to attract tourists and residents alike.
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Workers finishing the building of an industrial air conditioner manufacturer within the city. (Image: Getty)
This development is expected to offer a blend of retail, dining, and recreational facilities, further diversifying the city’s offerings and opening up a social and residential element to the project.
Though the city has welcomed all of this positivity, it hasn’t been with its challenges. Similar projects like , both in Saudi Arabia, appear to have raced ahead.
Some analysts suggest that KAEC’s development has not yet matched the scale and innovation of these projects, and the Financial Times previously reported that by 2018, the city had not become a hub for logistics and manufacturing – a key tenet of its original vision – and that it had failed to attract enough external investment.
However, money is continuing to be pumped into the project from within Saudi Arabia, and the city’s goals of world-beating infrastructure, industry, and sustainable practices remain a central component of Saudi Arabia’s economic diversification strategy. As the city evolves, it is poised to play a significant role in the nation’s economic future, contributing to the fulfilment of Saudi Vision 2030.