{"id":101443,"date":"2025-08-28T05:51:08","date_gmt":"2025-08-28T05:51:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/101443\/"},"modified":"2025-08-28T05:51:08","modified_gmt":"2025-08-28T05:51:08","slug":"saudi-arabias-financial-hub-finally-takes-shape","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/101443\/","title":{"rendered":"Saudi Arabia\u2019s financial hub finally takes shape"},"content":{"rendered":"

For almost a decade, the skyscrapers of King Abdullah Financial District defined Riyadh\u2019s skyline. But the gleaming towers housed an uncomfortable truth \u2014 they were empty.<\/p>\n

First announced in 2006, the $10bn project faced grinding delays. But the once-silent district is coming to life as Saudi Arabia pushes ahead with ambitious plans to become a regional financial hub.<\/p>\n

The kingdom\u2019s $940bn sovereign wealth fund, the Public Investment Fund, last year began moving its workforce to a 385-metre skyscraper \u2014 the tallest in Riyadh \u2014 in KAFD, while other buildings have also started to fill up as global groups such as HSBC and Accenture take up residence.<\/p>\n

\u201cA year ago, this felt like Canary Wharf in 1992,\u201d said a western expat who works in the district as he sipped a latte at one of the trendy caf\u00e9s lining the wadi, the pedestrian public space in the middle of KAFD. <\/p>\n

That was the year London\u2019s docklands financial centre officially opened, and went bust. <\/p>\n

\"WomenThe once-silent district is coming to life as Saudi Arabia races to become a regional financial hub \u00a9 Katarina Premfors\/FT<\/p>\n

\u201cNow it feels like Canary Wharf in 1998,\u201d they added \u2014 the start of an era of construction that would make it the European home of the world\u2019s biggest banks.<\/p>\n

One recent morning, a foreign woman dressed in a bright red outfit walked alongside Saudi office workers in their white thobes and women in niqabs. Nearby, construction crews toiled on a skywalk that would allow people to cross from one tower to another without stepping out in the summer heat as temperatures rise to 42C.<\/p>\n

The district is the main physical manifestation of a \u201cfinancial sector development programme\u201d. It has become part of a larger plan launched by Crown Prince Mohammed bin Salman to diversify the kingdom\u2019s economy away from dependence on oil revenues, and make Riyadh a rival to cities like Dubai and Abu Dhabi in the neighbouring United Arab Emirates.<\/p>\n

While many executives and bankers say Dubai is years ahead, Saudi officials are confident the kingdom can overtake the emirate thanks to the size of its economy \u2014 which is the region\u2019s largest and makes it a G20 country \u2014 and the ambitious economic and social reforms that the government implemented in recent years.<\/p>\n

\u201cWe want to be in both Riyadh and Dubai,\u201d said a portfolio manager with one of the major international investment banks. \u201cYou may not see Saudi Arabia competing with Dubai now, but we didn\u2019t see Abu Dhabi coming either.\u201d<\/p>\n

\"KingThe district is the main physical manifestation of a financial sector development programme \u00a9 Katarina Premfors\/FT<\/p>\n

Authorities have sought to push global firms to establish a strong presence in the kingdom by giving them an ultimatum, which came into force last year: establish their regional headquarters in Saudi Arabia or face the risk of losing out on lucrative government contracts. The rules require firms to have a regional base in the kingdom with at least 15 employees, including executives overseeing other countries. <\/p>\n

The investment ministry said more than 600 firms received licences to set up their regional headquarters in the kingdom since 2021. But experts said it would take more to dislodge Dubai as the Middle East\u2019s financial capital, with Saudi Arabia still lagging on the regulatory clarity needed by banks.<\/p>\n

\u201cThe Saudi government can\u2019t just rely on the country\u2019s economic heft and the global profile of its sovereign wealth fund to carve out a financial hub status,\u201d said Robert Mogielnicki, a senior resident scholar the Arab Gulf States Institute in Washington.<\/p>\n

\u201cCompetitive and consistent regulations are key. Other regional actors are playing the regulatory and incentive game effectively.\u201d<\/p>\n

The new capitals of capital<\/p>\n

Banks such as Goldman Sachs and Morgan Stanley opened regional headquarters in Riyadh last year. But concerns over the kingdom\u2019s regulatory environment mean that other banks and financial institutions are still reluctant to fully commit to move their regional headquarters to Riyadh.<\/p>\n

While Dubai\u2019s International Finance Centre acts an offshore banking hub with its custom-made regulatory framework based on English law, the financial sector in Saudi Arabia \u2014 including firms located at KAFD \u2014 is regulated by the kingdom\u2019s central bank Sama and the country\u2019s Capital Market Authority.<\/p>\n

\u201cThere\u2019s too much of a random walk in the kingdom. There are too many variables there: the politics, the personalities, sharia law,\u201d said a veteran American investor who has worked in the Middle East for 20 years. \u201cIt\u2019s just very difficult for people to feel comfortable with that kind of an environment.\u201d<\/p>\n

\"ArchitectureMore than 600 firms have received licences to set up their regional headquarters in the kingdom since 2021, according to the investment ministry \u00a9 Katarina Premfors\/FT<\/p>\n

While the idea of turning KAFD into a \u201cspecial zone\u201d with its own regulatory framework has been discussed in the past, Saudi officials argue that recent judicial and regulatory reforms as well as access to the kingdom\u2019s big-spending economic diversification projects should provide enough incentives and assurances for foreign firms to set up shop in Riyadh.<\/p>\n

Saudi Arabia introduced a commercial courts law in 2020 and a civil transactions law in 2023 as part of reforms meant enhance the business environment. A foreign lawyer based in Riyadh said these changes had helped make rulings \u201cmore predictable\u201d but added: \u201cI\u2019m not sure they will ever do offshore [regulation].\u201d<\/p>\n

Despite the vast sums Riyadh is spending on its development plans, it has struggled to attract its desired level of foreign direct investment, with a target of hitting $100bn annually by 2030. Inbound FDI was down 19 per cent year on year to $20.7bn last year, the lowest since 2020, according to the government\u2019s statistics authority.<\/p>\n

But the PIF\u2019s financial muscle continues to draw in money managers, as it seeks to leverage its relationships with the international financiers to develop Saudi Arabia\u2019s investment industry and get fund managers to invest in the kingdom. <\/p>\n

One day after Donald Trump spoke at a Saudi-US investment forum in Riyadh in May, the fund announced agreements with five international asset managers \u2014 BlackRock, Franklin Templeton, Northern Trust, Neuberger Berman and I Squared Capital \u2014 to attract new capital and bring investment expertise to the kingdom.<\/p>\n

The PIF and Neuberger Berman have agreed to work together to support up to $6bn in investments in Saudi Arabia, and to launch a Riyadh-based multi-asset investment management platform.<\/p>\n

\"MattMatt Malloy of Neuberger Berman: \u2018It is not just about exporting capital from the region but finding ways to invest in the region\u2019 \u00a9 Charlie Bibby\/FT<\/p>\n

\u201cThe name of the game \u2014 and what underpins the relationship with PIF \u2014 is that this is not just about exporting capital from the region but finding ways to invest in the region,\u201d said Matt Malloy, head of Europe, the Middle East and Africa at Neuberger Berman.<\/p>\n

Authorities are also optimistic that the social liberalisation reforms introduced in recent years, including lifting the ban on women driving and easing restrictions on entertainment, would help convince foreign executives and bankers to trade Dubai for Riyadh.<\/p>\n

But Riyadh, where the financial district boasts a futuristic new metro station designed by Zaha Hadid and high-end restaurants are opening to cater to the city\u2019s growing professional class, still lags behind the UAE in terms of infrastructure. <\/p>\n

Expats complain of a lack of schools in particular, and the challenge of finding suitable housing at affordable prices. Alcohol also remains banned, and many expats in the region prefer the lifestyle Dubai offers. <\/p>\n

The fact that it was the tiny island of Bahrain that historically served as the Gulf\u2019s financial hub before the emergence of Dubai has given Saudis confidence that they can play the long game and win.<\/p>\n

\u201cBahrain has stagnated and Dubai moved fast,\u201d the portfolio manger said. \u201cDubai might be 15-20 years ahead, but Saudi Arabia is catching up fast.\u201d<\/p>\n

Additional reporting by Harriet Agnew in London<\/p>\n","protected":false},"excerpt":{"rendered":"For almost a decade, the skyscrapers of King Abdullah Financial District defined Riyadh\u2019s skyline. But the gleaming towers…\n","protected":false},"author":2,"featured_media":101444,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-101443","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/101443","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=101443"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/101443\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/101444"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=101443"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=101443"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=101443"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}