Madina Knowledge Economic City (KEC) will sign major contracts early next year for the vertical development of the first phase of the KEC smart city project, the chief executive officer of KEC said on Sunday. In an interview with the Saudi Gazette, Tahir Bawazir, CEO of KEC, said the contract agreements worth SR1.5 billion would cover the construction of the infrastructure and related facilities in hospitality industry, commercial/retail malls, business parks and educational facilities that would offer courses in information technology, health education and management tourism, among others. On the sidelines of the “Business Opportunity Forum” hosted by KEC and supported by the Saudi Arabian Investment Authority (Sagia) held at the Jeddah Hilton, Bawazir said the first phase of the KEC project which is the northern part covering an area of 2.3 square miles, will involve initially the construction of 200 villas, 300 apartments/villas and smart school. As planned, completion of Phase I would take 30 months, he further said, adding that more multimillion contracts would be awarded by mid-2012 for the horizontal developments of the area. Moreover, Bawazir said the huge number of investors who participated in the forum, roughly around 400, highlighted the growing interest in the KEC project. The forum was dominated by local and Gulf investors and with participation of representatives from multinational companies. KEC continuously receives a lot of pre-qualification bidders for a host of projects at stake, he added. Commenting on the likely impact of the global economic downturn on the local economy as compounded by the recent Dubai debt crisis, Bawazir said the Saudi economy as a whole remains strong, noting that the country's real estate sector is least affected as indicated by the ongoing vertical development projects which remained uninterrupted. However, as a result of the recent predicament, Bawazir said the banks became more cautious toward lending. The National Commercial Bank (NCB) said in its recent study that the Kingdom's banks are adopting a balanced credit policy to avert risks and remain competitive. NCB study forecast a tough business environment banks in the Kingdom, saying that restructuring revenues and cost bases would buttress their position. “Domestic banks will have to strike a balance so as to avoid overexpansion on the upside or overcontraction on the downside, the premises behind taking uncalculated risk or losing market share,” NCB said in a study. Bawazir further said that despite some lending constraints as banks become more concerned, the Kingdom still maintains a sustainable economic growth. In the construction industry, Bawazir said recent data showed that the “cost of development is lower … as raw materials become cheaper.” He added that KEC plans to raise over SR1 billion ($267 million) in a public offering early next year, which represents thirty percent of the company's shares. KEC has a combined investment of over SR30 billion. __
