Saudi billionaire Prince Alwaleed bin Talal unveiled plans on Tuesday to build the world’s tallest tower in the Red Sea port city of Jeddah, signing a 4.6 billion riyal ($1.23 billion) contract with Bin Laden Group.
The proposed tower, which will rise more than 1,000 meters and take just over five years to complete, is the centerpiece of the planned Kingdom City development being built outside Jeddah by Prince Alwaleed’s Kingdom Holding.
“Building this tower in Jeddah sends a financial and economic message that should not be ignored,” Prince Alwaleed told reporters. “It has a political depth to it to tell the world that we Saudis invest in our country despite what is happening around us from events, turmoil and revolutions even.”
When completed, the tower would replace Dubai’s 828-metre Burj Khalifa as the tallest tower in the world. The Burj Khalifa was built by Emaar Properties for a total cost of $1.5 billion.
The Jeddah tower, which is to include a hotel, serviced apartments, luxury condominiums and offices, will be designed by US architecture firm Adrian Smith + Gordon Gill.
Prince Alwaleed, a nephew of Saudi King Abdullah, said the Jeddah tower would eventually top 1,000 meters, but the final height is a closely guarded secret.
“It is not 1,000 meters. It is more, could be more by many meters... The figure is secret, only a small number of people know,” he said.
Kingdom Holding shares were up 2.55 percent on the Saudi bourse at 1255 GMT.
Kingdom said a 33.35-percent-owned associate firm, Jeddah Economic Co, had been set up to build the tower. Abrar International Holding Co. will also have a 33.35-percent stake, while Bin Laden Group will have 16.63 percent, and businessman Abdurrahman Sharbatly will own 16.67 percent.
Last month, Kingdom, which holds stakes in companies such as Citigroup, reported a 21-percent rise in second-quarter net profit helped by higher income from its investments.
Saudi Arabia is currently undergoing multi-billion dollar projects to improve its infrastructure, spending over $400 billion in the five years to 2013 and rolling out three consecutive record budgets along the way, in addition to over $130 million in social spending.
Jeddah, the country’s second largest city of around four million residents, has long complained of neglect.
Flash floods that swept through the city earlier this year are said to have damaged 90 percent of its roads and more than 27,000 buildings, which residents complain were poorly constructed.
“This will be a transformational project in Jeddah. It will be a source of pride for Saudi Arabia. Jeddah is in great need for it now,” Prince Alwaleed said.
The Kingdom Tower and Kingdom City, estimated to cost 75 billion riyals and to take around 10 years to complete, are among other projects to transform Jeddah into a city with high rise buildings to rival Dubai.
Saudi Arabia faces massive housing demand, due to a rapidly growing population. But its nationals have a preference for villas over apartments. Prices for villas have jumped by over 20 percent in the first half of the year, according to a report by Banque Saudi Fransi.
About 1.65 million new homes are needed by 2015 to meet growing demand in the world’s largest oil exporter, Saudi Fransi said in March.
Prince Alwaleed also said that within the next few weeks or months he plans to announce plans for another real estate project in Riyadh, spanning an area of 20 million square meters.