Alwaleed hires Saudi Binladin to build world's tallest tower

 
Bloomberg News
Posted8/7/2011 6:07 AM
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  • Kingdom Tower will be the centerpiece of a $26.7 billion development in Jeddah, Saudi Arabia, known as Kingdom City

    Kingdom Tower will be the centerpiece of a $26.7 billion development in Jeddah, Saudi Arabia, known as Kingdom City Artist's rendering

Saudi billionaire Prince Alwaleed bin Talal has chosen Saudi Binladin Group to construct the world's tallest building in Jeddah, Alaweed's investing company said Tuesday.

Kingdom Tower will be more than 3,281 feet high and cost $1.2 billion to build, Alwaleed's Kingdom Holding Co. said in a statement. Alwaleed told reporters in Riyadh that construction of the tower, which will include homes, offices, and a hotel, will be finished in about five years.

The tower will be the centerpiece of a $26.7 billion development in Jeddah known as Kingdom City that was announced in 2008, soon after the onset of the global credit crisis that roiled real-estate markets. Emaar Properties, the United Arab Emirates' biggest real-estate developer, is managing the development. Emaar built Burj Khalifa, the Dubai property that's currently the world's tallest at 2,716 feet.

The tower's construction isn't likely to help alleviate Saudi Arabia's growing housing shortage. The Arab world's largest economy needs to build 900 homes a day over the next five years to meet the demands of a population that has quadrupled over the last 40 years to 28.7 million, according to global real estate services firm Jones Lang LaSalle.

"Saudis, like a lot of Gulf residents, like to live in villas and individual homes; they don't like to live in flats or big towers," said Loic Pelichet, assistant vice president of research at National Bank of Kuwait's NBK Capital unit. The tower's construction "changes nothing on the housing demand front."

Kingdom Tower will be built in the first phase of a development that overlooks the Red Sea and Obhur Creek, the company said.

It's a "prestige project" that Kingdom Holding has committed itself to building after presumably gaining investor interest, NBK's Pelichet said. "Is there demand anywhere in the world for a 1,000 meter-high tower? I'm not sure."

In October, Adrian Smith & Gordon Gill Architecture was selected to design the tower in Jeddah. Adrian Smith designed Burj Khalifa when he was working for Skidmore Owings & Merrill, Gulf News reported in October.

Jeddah-based Saudi Binladin Group, Saudi Arabia's largest construction firm, agreed to become a shareholder in Jeddah Economic Co., the project's owner, with a stake of about 17 percent, according to today's statement. Kingdom Holding and Abrar International Holding Co. each own a third of the stock, and Abdurrahman Sharbatly owns the remaining 17 percent.

Saudi Binladin Group, which expanded the holy mosque in Mecca and built large projects across the Middle East, is owned by the family of deceased al-Qaida leader Osama bin Laden.