Saudi Arabian newspaper Al Sharq published an interview with Prince Al-Waleed bin Talal about the Kingdom Tower project.
Below is the English version of the interview, translated by us.
Why is the tower being built now? And why is it built in Jeddah?
The time is appropriate to build the Kingdom Tower now because the prices for construction materials are low. From cement to iron, everything is low.
Secondly, it is being built in Jeddah, because this city is in need for a project of this kind, as it would attract more business here. Nothing of this size happened in Jeddah for over two decades.
Currently, there are a few facilities near Jeddah like the «King Abdullah Economic City» (KAEC) in Rabigh, and «King Abdullah University of Science and Technology» (KAUST) in Thuwal, but these projects are not located in the same city, while the Kingdom Tower will be the commercial center of the new north of Jeddah.
Is the tower part of a larger project?
Yes, the tower will be built as part of a larger real estate of 3,500,000 square meters. The Kingdom Tower will be a milestone in this project, because it will boost the value of the rest of the property.
Why is it important to be the tallest in the world?
It is not important to be the tallest in the world. But reaching the height of 1,000 meters for a tower is not a small achievement. The current tallest building in the world is the Burj Khalifa in Dubai with a height of 823 meters, and we want to be higher than that by 200 meters, but we won’t announce the final height before the last year of construction.
Wasn’t the building supposed to be a Mile-High Tower, meaning 1,600 meters?
No, we never had that idea in our mind. We always said we want to build a tower over 1,000 meters tall, but some of the media misinterpreted that number and labeled the project as a mile-high tower.
But we did not think about a 1,600 m tower for any moment.
Saudi Arabia is a big country which allows building horizontally. Why did you choose to adopt building vertically?
It is true that Saudi Arabia is a big country, but there are only a few major cities: Riyadh, Jeddah, Dammam and Khobar. It is possible to build horizontally, but high-rise buildings are landmarks and attractions for people, companies and institutions.
You’ve signed a contract with a contractor recently, right?
Yes, at the start we had offers from 10 companies, and in the second phase, we reduced the number of companies to one – the Bin Ladin Group – which began work on the 1st of January 2012. It is also important to notice that the contractor has become our partner in the project.
Have you signed a contract and what is the total amount of it?
Yes, we agreed on a lump sum of 4,6 billion SAR.
But to allow the contractor to be a partner means that you can’t contract penalty clauses related to the delay.
Actually, we have two different relationships with two different units of the Bin Ladin Group. The contractor is the «Bin Ladin Group for Contracting», while the other investor is the «Bin Ladin Group».
While we do not expect any delay in the project, if it happens we will implement penalties stipulated in the contract, and I am ready to do so, even if my son is a member of the building project.
Besides the Binladin Group, you have two other partners in the project: Abrar International Holding Co. and Mr. Abdulrahman Hassan Sharbatly. How were they chosen?
Above all, the land belongs to them for decades. We decided to build our project there for two reasons; first, because the place is close to the heart of the city and secondly because the price of the land is relatively good there, as for us, it is important that the ROI is high.
Our project and feasibility study led them to enter into partnership with us.
When do you expect you to start harvesting the proceeds of your investment?
We expect a return of our investment over a period of 10 years. But that period will be longer for the entire project.
Is it true that the cost of the Kingdom Tower will be $ 270,000,000 less than the cost of building the «Burj Khalifa», although it will be taller by about 200 meters?
Yes, the average cost per square meter is cheaper than in the «Burj Khalifa».
WHY? Because the learning curve to build such a tall tower was done in the neighboring emirate of Dubai. This is important because it is not possible to apply the rules of towers built in Asia, here for instance.
We hired the same designers that designed the Burj Khalifa. We will benefit from their experience in Dubai, as we will adopt all the positives that they have and will rethink of the negative aspects of their first project.
Speaking of architects, Adrian Smith and Gordon Gill from Chicago, did you choose them because they designed «Burj Khalifa»?
This played a role, but the main reason for selecting them is that they have designed a high viability of a project at this scale. This means that the implementation of the new project will be less expensive. There was also another gorgeous designs but the higher cost of construction by about 50%, meant that the internal rate of ROI would be less.
It must be pointed out that the Burj Khalifa is still facing difficulty in finding tenants. How will you address the issue of occupancy with the «Kingdom Tower»?
First, let’s make it clear, from the perspective of an investment «Burj Khalifa» sold out, and the developers got their money. It is the new owners who are not able to find tenants. The hotel there does very wel.
The problem is that Dubai faced a crisis of its own excess, add to that the crisis that hit the global banking sector in 2008, and add a new economic crisis faced by many countries around the world such as Greece, Italy and others. All these factors weighed heavily on the shoulders of the real estate market in Dubai.
Yes, we are aware of their problems, but we have different view. We have no danger of a surplus. What we expect is to deliver a project of great demand in Saudi Arabia, and on the international level. In the end, with due respect for Dubai and Abu Dhabi, Qatar, Bahrain and Kuwait, but they are all city-states, their population ranged between one and three million people.
Saudi Arabia is like a huge sea compared to them that has twenty million people, in addition to seven million expats, that is more than the rest of the population of the Gulf region. Saudi Arabia is the center of power, economy and knowledge in the region, so it does not even compare to Dubai.
What is the political dimension of building such a tower in Saudi Arabia?
First of all, we carry out this project because the return of investment is excellent; we are businessmen in the end. But such a project in Saudi Arabia, in the commercial center of the second-largest city in the country, is certainly a national project. At the global level, we believe it will foster Saudi Arabia’s major presence in the international arena.