Saudi Arabia’s Financial District Gaining Steam

One of Saudi Arabia’s signature financial hubs is humming back to life.

The King Abdullah Financial District, first announced in 2006, has been largely empty after years of delays and false starts on projects, but the project is finally starting to gain tenants as the kingdom’s plan to turn the city into a Dubai rival picks up steam, the Financial Times reported.

Last year, Saudi Arabia’s Public Investment Fund, the country’s $940 billion sovereign wealth fund, began moving forward with a nearly 1,300-foot-tall skyscraper in the King Abdullah Financial District that’s set to become the tallest building in Riyadh.

Other buildings in the area have been attracting new tenants like HSBC and Accenture. Goldman Sachs and Morgan Stanley opened regional headquarters in Riyadh in 2023, and according to officials, more than 600 companies have secured licenses since 2021. The licenses were obtained under new regulations linking government contracts to maintaining a Saudi base.

The transformation of the $10 billion King Abdullah Financial District is part of Crown Prince Mohammed bin Salman’s broader push to diversify the country’s oil-dependent economy and position Riyadh as a new Dubai, with the KAFD rivaling the Emirati city’s International Financial Centre.

Dubai’s International Finance Centre acts as an offshore banking hub with its custom-made regulatory framework based on English law. By contrast, the financial sector in Saudi Arabia — including firms located in the KAFD — is regulated by the central bank and Capital Market Authority. Investors might still hesitate, however, with one telling the Financial Times that regulatory opacity, politics and lifestyle constraints mean Dubai might still be the safer bet for now.

Though the Saudi government has been pouring money into Riyadh’s development plans, the city hasn’t yet reached its foreign direct investment goal of $100 billion annually by 2030. Last year, inbound foreign direct investment was down 19 percent year-over-year, raking in $20.7 billion, the lowest amount since 2020, per the Financial Times.

In May, one day after President Trump spoke at a Saudi–U.S. investment forum in Riyadh, the Public Investment Fund announced agreements with international asset managers BlackRock, Franklin Templeton, Northern Trust, Neuberger Berman and I Squared Capital. The PIF and Neuberger Berman have agreed to work together to support up to $6 billion in investments in the kingdom and to launch a Riyadh-based multi-asset investment management platform.

Last month, the Gulf kingdom announced that foreign buyers will be able to buy property in Riyadh and Jeddah starting next year. Depending on how much international interest there is, it could further accelerate the plan to turn Riyadh into a buzzing business hub in the region.

Riyadh is seemingly on its way to becoming a competitor to Dubai, though just how fast that metamorphosis will happen remains to be seen.

— Chris Malone Méndez