Soaring oil prices are tempting Gulf countries to launch mega projects, which are helping them to get international attention, according to an analyst.
"Every country wants to build a landmark and, as oil prices climb, it is certainly a tempting proposition for oil rich nations to launch mega real estate projects," Stefan Schurmann, Director of Research, EFG-Hermes, told Emirates Business.
Kuwait on Tuesday announced an ambitious plan to invest $132 billion (Dh484bn) to build a model city in its northern desert, complete with rail links to the rest of the Middle East, central Asia and China.
"We are not dreamers at all when we talk about investing $132bn," Sami Alfaraj, president of the Kuwait Center for Strategic Studies and an adviser to the Gulf Co-operation Council, told Reuters.
London-based architects Eric R Kuhne & Associates have drawn up designs for the project, to be called Madinat Al Hareer or Silk City, which would include a 1,000-metre high skyscraper. The city, set for completion in 2023, would be home to around 700,000 people and linked to the capital, Kuwait City, by a dedicated mega-causeway.
Although Schurmann believes that Silk City will certainly bring returns for Kuwait in the long term, it would be interesting to see how they make it economically viable in the mid term.
According to a recent Moody's report, the total value of real estate projects in the GCC is estimated at $1 trillion of which 40 per cent is concentrated in Dubai and Abu Dhabi.
Among the major projects in the region is King Abdullah Economic City. Emaar is developing the project, which has a development value of more than $26.6bn and development area of 168 million square metres. Another mega development is the $64bn Dubailand, which is scheduled to open in 2020. It will host more than 45 entertainment projects, ranging from a space exploration exhibition to a full-size dinosaur enclosure.