Saudi Arabia’s NEOM gets $5.6bn to build workforce housing

The scope of the agreement will cover elements of design, finance, build, operations and maintenance of the housing communities

by Kudakwashe Muzoriwa

June 7, 2023

Image credit: NEOM

Saudi Arabia’s NEOM has finalised a deal worth more than $5.6bn (SAR21bn) with a consortium of local investors for the first phase of the futuristic mega-city’s residential communities for its growing workforce.

The four Saudi companies that will construct the first phase of the residential communities are Alfanar Global Development, Almutlaq Real Estate Investment Company, Nesma Holding Company and Tamasuk.

The scope of the agreement will cover elements of design, finance, build, operations and maintenance of the housing communities. It will see an additional 10 communities established across NEOM adding capacity for 95,000 more occupants once the first phase of the project is completed.

“NEOM has selected some of the leading companies in Saudi Arabia as partners in delivering and operating temporary communities with world-leading services and infrastructure,” said Nadhmi Al-Nasr, CEO of NEOM. “The newly formed partnerships mark an important milestone for the region and is a testament to the capabilities of our team and partners who rapidly achieved financial close on a record amount.”

NEOM has finalized contracts with investors for the first phase of its residential communities’ expansion. Worth over SAR 21 billion, the agreement represents the largest international public-private partnership for accommodation ?

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— NEOM (@NEOM) June 6, 2023

The deal paves the way for more private sector participation in the development of the giga-project’s infrastructure. The second phase of the temporary residential project is expected to be issued to the market in the coming months.

The city is reviewing interest from investors with plans to shortlist pre-qualified participants in addition to awarding contracts. The multi-billion-riyal investment is further proof of the scale of the project for Saudi Arabia.

The mega-project will have a direct economic impact on the region, helping to develop local competency, advance the use of sustainable solutions in construction and allow for local job creation. NEOM is expected to have capacity for 450,000 people by 2026 and 1.5-2 million people by 2030 and eventually house nine million by 2045.

NEOM takes shape

Meanwhile, several of NEOM’s core developments including THE LINE, Trojena, Oxagon, and Sindalah are ramping up as infrastructure unfolds across the region. The latest public-private partnership is a vital step in bringing larger plans online to their agreed timescales.

Last month, NEOM Green Hydrogen Company (NGHC) signed financial documents with a group of local, regional and international banks and investment firms for a green hydrogen production facility at a total investment value of $8.4bn.

NGHC, which is equally owned by Air Products, ACWA Power and NEOM, is building a green hydrogen plant to produce green ammonia for export to global markets, with the first shipment expected from NEOM’s port in the first quarter of 2026. The green hydrogen production plant is currently being built at Oxagon.

Saudi Arabia also awarded a multi-year contract to a US-based infrastructure consulting firm AECOM in March to provide project management consultancy services for NEOM International Airport, in the country’s northwestern region.

The $500bn futuristic city will have its own dedicated airline, NEOM Airlines, and the carrier is set to take to the skies at the end of the fourth quarter of 2024.