Super Cities Rise from the Sand

A little more than thirty years ago, Riyadh was a small city mostly of mud bricks, whereas Jeddah, on the Red Sea, relied instead on its dried-up coral reef as a construction material. Today, thanks to decades of continuous economic growth alongside a booming construction industry, they are both sprawling cities with multi-billion dollar projects on the way.

When the Yamama cement company started its operation back in the early 1960s, its production was 300 tons a day, covering most of the kingdom's demand from Riyadh to Ha'il. “And we even had some left over,” says Saud M. Al Dablan, the company's general manager.

By 2007, Yamama's increased production will reach 20,000 tons a day, but that output will not even cover the demand in Riyadh. “This should tell you how far this country has come along,” adds Al Dablan. Other companies such as Ittefaq Steel Products, part of the Al Tuwairqi Group, went from producing 1,000 tons a month of hot rolled steel sections to 1,250 million tons in less than 15 years, a world record according to the company's management.

Driven by surging oil revenues and population growth, which is expected to double in the next 20 years, the construction industry is attracting massive investment.

In the past, the state took the lion's share of responsibility for housing projects, schools and utilities, but the private sector is increasingly involved in these segments of the industry.

The kingdom's infrastructure has not seen such intensive construction since the 1980s, when companies such as Saudi Oger and the Saudi Binladen Group literally built the country up from the sand, by interweaving thousands of miles of roads and connecting Saudi Arabia to the rest of the Gulf.

The Saudi Oger Group was founded in 1978 by the late Rafik Hariri, former Prime Minister of Lebanon. Right from the start, the company became renowned for its professionalism and swiftness in carrying out massive projects such as the King Abdul Aziz International Conference Center, the operation and maintenance of the King Khaled International Airport and the high-profile National Museum.

During 30 years of activity, Saudi Oger carried out an impressive list of projects, such as the construction of hospitals, conference centers, office complexes, government buildings and military facilities. And recently Oger Dubai, a subsidiary of Saudi Oger Limited, won a $186.4 million contract to buid the Churchill towers in Dubai City. The project will be built on 58 acres and consist of two towers, comprising of 56 floors of residential apartments and 42 floors of commercial and office space.

Over the years, Saudi Oger has grown into a multi-divisional organization with interests throughout the Middle East, Africa and Europe. The World Trade Organization accession has also created new opportunities for a company that does not fear foreign competition and welcomes strategic alliances.

In 2004, the telecommunications arm of the group, Oger Telecom, led a consortium that included Telecom Italia SpA, to take a 55 percent stake in the formerly state-owned Turk Telekom. The Oger bid was more than $6 billion and the largest privatization in Turkish history.

In tune with the mood of the time, Oger Telecom spokesman Mohammed Hariri said that he regarded the Turk Telekom deal as a partnership, rather than just a financial investment.

Operation and maintenance of both private and public utilities have also taken the company outside the national borders. Independent power and water project opportunities are currently being pursued by Saudi Oger in Jordan, the UAE and other Middle Eastern countries, especially concerning water-treatment plants, and seawater cooling systems.

The Saudi Binladen Group, which was founded in 1931, has also left indelible marks on the kingdom. The group has made major contributions to all aspects of the infrastructure, from desalination plants to thousands of miles of roads.

Considering the geographical characteristics of Saudi Arabia, a huge country mostly dominated by desert and a punishing heat throughout the year, the significant distances covered by the company's builders will remain an accomplishment for the next generation to admire.

The two holy cities of Mecca and Medina have also seen some astonishing construction sites from the Binladen Group, such as the colossal complex of skyscrapers it is building in front of the gate of the Great Mosque for the Al Saud family.

The Binladen Group is also taking advantage of international cooperation as the construction industry moves into giant developments. The King Abdullah Economic City (KAEC), launched in December 2005, is considered the single largest private sector investment in the kingdom. To be built on the Red Sea, north of Jeddah and easily reachable from the Holy cities of Mecca and Medina, the project is part of Saudi efforts to take advantage of the new oil boom, to diversify the economy and create jobs for the new generations.

The Binladen Group is part of a consortium created to facilitate investment for the project and is headed by Emaar Properties, the company that has played a leading role in developing Dubai.

The KAEC is expected to cost $26.7 billion and include a seaport, industrial district, education and healthcare zone, financial island, resorts and a residential area. Once completed, the complex hopes to attract foreign investments and global trade on a scale unseen in Saudi Arabia.

By Marco Venditti