Arab Spring spurs more smart thinking

New smart real estate projects gain investment momentum as region looks to develop local economic opportunities

Tags: Orange Business ServicesSaudi ArabiaSmart cities
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By  Hicham Barakat Published  September 5, 2011

As global oil prices rise and revenues grow to fill GCC government reserves, increasingly sovereign wealth funds are looking inwards and focusing on accelerating local infrastructure development, rather than chasing international investment opportunities. This is proving to be something of a catalyst for smart real estate development projects across the region, and especially in the Kingdom of Saudi Arabia, where plans have just been announced to build the world's tallest building.

The whole Arab world, from the Middle East to North Africa, has been affected by the Arab Spring and even countries in the GCC have been caught up in these regional events and have had to re-adjust and accelerate their strategic priorities, focusing on rapid social and economic reforms.

GCC governments are now adopting a fast-track approach to developing major public infrastructure, energy investments and real-estate projects. GCC countries are using the crisis as a catalyst too for their efforts to implement smart infrastructure developments and to unlock more investment and funding for these projects. It is clear that GCC governments continue to believe that smart real estate infrastructure projects - those education, finance and technology campuses that generate economic value and create employment - can contribute to widespread economic and cultural development to support the achievement of long term economic visions and meet shorter term social needs.

It's an area that is developing quickly and especially in Saudi Arabia, where Orange Business Services has been actively implementing its concept of smart cities. From our global perspective and experience, KSA is clearly in the vanguard of smart city developments and the result will be cities and campuses that are more intelligent, greener, and more sustainable, because they are built on a NextGen IP network supporting cutting edge technologies and infrastructure that puts the ‘smart' into the modern city - where ICT becomes the fourth utility.

The business opportunity has been recognized by new, local telco operators and real estate developers, and partnerships have been created to develop new business models so that a local telecom operator can build a real estate division to develop a significant real estate projects, and a major real estate developer can embark on a smart cities journey from concept into operations, as they move into the campus operator space. Telco and developer roles are converging on these smart campuses.

Major projects on the move

A brief look at two of the more high profile projects in the Kingdom shows the extent of the commitment to these major smart developments.

Information Technology and Communication Complex (ITCC) in Riyadh is set to become the home of advanced industrial knowledge and communication in the Arab world and the Middle East region, through investments worth SR6.2 billion ($1.65bn). On completion, it will support technology transfer and encourage scientific research, create investment opportunities and activate cooperation and integration methods between the institutions of information and communication technology.

ITCC consists of administrative buildings for IT and communication companies, as well as manufacturing and prototyping facilities for software production companies, campuses for research, training, and development, in addition to technical business centers and research laboratories.

King Abdullah Financial District (KAFD) in Riyadh is the Middle East's largest financial district, at a cost of SR28 billion ($7.46bn), and will support efforts to diversify the country's economy, attract investment and create employment opportunities for Saudi nationals. KAFD will be the headquarters for the Capital Market Authority (CMA) and the Stock Exchange (Tadawul), and for financial institutions and other service providers such as accountants, auditors, lawyers, analysts, rating agencies, consultants, and IT providers.

In short, Orange Business Services sees continued momentum across all its engagements in these various smart real-estate projects, especially in Saudi Arabia, and customers in the region are more than ever focused on deploying these developments as quickly as possible, to start to harvest the economic and social benefits.

Hicham Barakat is senior consultant, Orange Business Services.

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