3 aug 11 | The Wall Street Journal
Saudis Plan World's Tallest Tower
by Summer Said with Peter Grant
Saudi Arabia's Prince Alwaleed bin Talal announced plans to build the world's tallest building in Jeddah less than two years after the Burj Khalifa opened in Dubai at a height that many thought wouldn't be surpassed for years.
The planned tower will soar to 3,281 feet (1,000 meters) and will include a hotel, luxury condominiums and offices. It would dwarf the Burj Khalifa, which is 2,717 feet (828 meters), and would also be the world's tallest man-made structure.
Prince Alwaleed at a news conference Tuesday said his company, Kingdom Holding Co., had signed a 4.6 billion Saudi riyal ($1.23 billion) deal with Bin Laden Group to build the tower, which is expected to take more than five years to complete. Bin Laden Group is the largest construction firm in Saudi Arabia and is owned by the bin Laden family, which in the 1990s distanced itself from Osama bin Laden.
"Building this tower in Jeddah sends a financial and economic message that should not be ignored," Prince Alwaleed said. "It has a political depth to it to tell the world that we Saudis invest in our country."
Prince Alwaleed, one of the Middle East's wealthiest businessmen, said finances for the tower are in place and construction is expected to start soon, without giving further details. Its designer was a team led by Chicago-based Adrian Smith + Gordon Gill Architecture.
Countries for years have vied for bragging rights to the world's tallest building. The U.S. held the title for decades with different buildings in New York and Chicago until 1998, when it shifted to Asia with the opening of the Petronas Towers in Kuala Lumpur.
But the world's tallest buildings also have had reputations for poor financial performance. For years, the Empire State Building in New York was known as the "Empty State Building" because of its slow leasing progress. The Burj Khalifa, a mixed-use property, also opened during a global economic downturn. As the supply of office space has swelled, Dubai's vacancy rate has risen to 44%, according to Jones Lang LaSalle.
"The world's tallest building has never been about making the maximum financial return," says Antony Wood, executive director of the Council on Tall Buildings and Urban Habitat. "It's about ego. It's about attention. It's about making a statement."
The Saudi project is designed to be the showpiece of Kingdom City, a 57-million-square-foot megadevelopment north of Jeddah. Overlooking the Red Sea, it is slated to cost $20 billion.
"This project will provide sustainable profits to Kingdom Holding shareholders," Prince Alwaleed said. It "has been in discussion since four years because of our emphasis to have it very economically viable."
Prince Alwaleed, who owns 95% of Kingdom Holding, has focused his investments on banks, hotels and media companies, building sizable stakes in firms such as Citigroup Inc., News Corp., Apple Inc. and Time Warner Inc. News Corp. owns Dow Jones & Co., publisher of The Wall Street Journal.
The prince kept a low profile in the aftermath of the global financial crisis. But more recently, he started seeking investors and acquisitions around the world.
Kingdom Holding said it had signed a shareholder agreement under which Bin Laden Group would take a 16.63% stake in Kingdom's Jeddah Economic Co. unit, which will build the tower. Kingdom will own 33.35% in Jeddah Economic, while 33.35% will be held by Abrar International Holding Co. and 16.67% by investor Abdurrahman Sharbatly.
Construction costs are a lot lower in the Mideast than in the U.S. For example, the tallest building being developed in the U.S., One World Trade Center in New York, is slated to cost $3.1 billion. It will be 1,776 feet tall.