The Empty Towers of KAFD

The Economist reports on the skepticism around the new King Abdullah Financial District (KAFD) in the Saudi capital Riyadh:

It is unclear how Riyadh’s new district will develop into what it is meant to be: a sober Saudi alternative to Dubai’s exuberant International Financial Centre.

To date just 10% of the district’s office space has been leased; tenants will include the country’s stockmarket regulator, the Capital Markets Authority, and one large local bank, Samba. A further 10% is under negotiation, according to sources close to the developers of the project.

Because Saudis like to do things on a large scale, KAFD will offer three times as much high-end office space as the rest of Riyadh. So “even if every company in the city’s plusher offices moved to the new district it would still be two-thirds empty.” Unlike Dubai, the oil-dependent Saudi economy does not have enough businesses to use all the new extra space. The magazine concludes that the KAFD project will make sense eventually, but it will take time. Due to its vast wealth, the government can afford to take such a long bet.