Saudi Arabia is preparing to shift its $925 billion sovereign wealth fund away from a focus on real estate gigaprojects, according to Reuters. Crown Prince Mohammed bin Salman, the de facto ruler of Saudi Arabia, has announced his “Vision 2030” plan in 2016, to transform the economy with a focus on large real estate projects.
Earlier this year, Bin Salman had also announced the launch of Humain, a company to develop and manage artificial technologies, as part of Vision 2030. The sovereign fund, Public Investment Fund (PIF), has been the driving force for financing the plan.
The original strategy for real estate included developments such as NEOM, a futuristic city in the desert by the Red Sea, and a plan to host international winter sports in the Kingdom’s northern mountains, with ski slopes largely using manmade snow.
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NEOM — which was set to have a population of nine million — and other projects faced several delays.
The new strategy aims to secure more sustainable near-term returns for PIF by narrowing the focus to other existing developments such as logistics, mineral exploitation and religious tourism, according to Reuters. The Kingdom is planning to invest in artificial intelligence, and data centers powered by its vast hydrocarbon and other energy resources,
PIF Governor Yasir Al-Rumayyan, speaking at the annual Future Investment Initiative (FII) summit in Riyadh said the next strategy would be announced “very soon.”
Analysts have said many of the gigaprojects have not yet yielded sufficient returns to justify their lofty price tags, as several remain far from completion, while other PIF investments have had a mixed track record.
PIF’s current five-year investment strategy ends this year and the fund is expected to announce an updated strategy soon that will detail its new priorities, according to Reuters. The fund’s board in recent days approved a new “core strategy.”
According to Reuters’ sources, the new plans bet on the kingdom becoming a major logistics hub, with recent disruptions in Red Sea shipping routes underscoring the importance of resilient supply chains. The Kingdom holds large, undisclosed sources of rare earth minerals, which will be a focus as part of its efforts to expand its mining sector.
The plan also involves the expansion of religious tourism to Mecca and Medina. Bin Salman recently announced a project at Mecca’s Grand Mosque which adds around 900,000 indoor and outdoor praying spaces.