TOURISM

RED SEA PROJECT TAKES THE GREEN FINANCE ROUTE

The kingdom’s retail and tourism sector is expected to get a big boost with the development of the multi-faceted Red Sea Project.

In April, The Red Sea Development Company (TRSDC), which is tasked with developing the sustainable project, closed a SAR 14.12 billion term loan facility with four Saudi banks.

The Saudi British Bank (SABB) acted as one of the mandated lead arrangers, while its affiliate HSBC served as a green loan co-ordinator on the transaction. 

The landmark deal marks the first ever riyal-denominated green finance credit facility in the kingdom, and underscores SABB’s commitment to environmental, social and governance (ESG) issues in the country.

“We’re delighted to help TRSDC set such an important example for placing environmental considerations at the heart of a major development,” said Ms Lubna Olayan, chair, SABB. “As the kingdom’s most international bank, we have a unique opportunity to bring new banking capabilities such as green loans to Saudi Arabia. Finding new ways to help environmentally friendly, sustainable projects is an important part of how our newly combined bank can play a bigger role in the kingdom’s sustainable development.”

The Red Sea Project is being rapidly developed on the kingdom’s west coast and is on track to welcome its first guests by the end of 2022, when the international airport and the first hotels open. TRSDC said the first phase of the project will comprise 16 hotels by 2023.

Once fully built by 2030, The Red Sea Project will feature 50 resorts, offering up to 8,000 hotel rooms and more than 1,000 residential properties across 22 islands and six inland sites. The destination will also include marinas, retail facilities, golf courses, entertainment and leisure facilities.

GREEN FRAMEWORK

The Red Sea project secured its green financing accreditation thanks to TRSDC’s approach to social and environmental sustainability.

“The framework enables TRSDC to issue green loans and other green financial instruments and allows TRSDC to identify, select, manage and report on eligible projects and assets in line with principles,” the developer said.

The accreditation is governed by a Green Financing Framework aligned with the Green Bond Principles and Green Loan Principles, established by the International Capital Markets Association and the Loan Market Association’s (LMA), respectively. 

“This first-ever SAR-denominated LMA Green Loan Principles compliant green loan in Saudi Arabia will pave the way for other borrowers to raise financing in a ‘green’ format, and help develop the local sustainable lending practices,” said Rajiv Shukla, CEO of HSBC Saudi Arabia, noting that the project dovetails with the Saudi Vision 2030, and HSBC’s commitment to supporting clients transition to a low-carbon, sustainable economy.

SUSTAINABLE DEVELOPMENT

The Red Sea project, which is aiming to be a “regenerative tourism project,” has already awarded Saudi company Al Bawani and Swiss firm Blumer Lehmann contracts for structural work at its luxury hotels and resorts.

The two companies will play pivotal roles in the construction of hotels across the project, with Al Bawani responsible for civil and structural works across 40 hotel villas on the Southern Dunes site, and Blumer Lehmann responsible for timber construction planning and fabrication as well as supply works for a hotel situated on Ummahat Al Shaykh Island.

Both companies have pledged to minimise wastage, and preserve the natural environment as they work on the projects.

In April, TRSDC also awarded the contract to design and build infrastructure at its Coastal Village to Saudi firm Contracting & Construction Enterprises Ltd., which would adhere to sustainable principles, and a fleet of electric buggies and service vehicles.

The Coastal Village will not be accessible by regular vehicles and instead rely on a network of roads and paths builtfor sustainable travel. To conserve energy, energy-efficient LED street lighting and illuminated signages will comply with the Red Sea Dark Sky guidelines.

To further enhance its ESG credential, TRSDC also awarded a contract to MachinesTalks, a national Internet of Things (IoT) service provider, for the provision of smart, wearable technology and wireless tagging solutions for its construction workforce and fleet of vehicles at its site.

“Our partnership with MachinesTalk will play an important role in ensuring the welfare of our workers, given their proven track record providing smart construction technology and alignment with our business goals,” said John Pagano, CEO of TRSDC.