As reported in the Financial Times and a WSJ discussion, Prince Waleed is building the world’s tallest building in Saudi Arabia. As he was my boss for quite a long time, and I was pretty involved in this project, I thought I would highlight some of its really cool aspects.
And make no mistake. Waleed’s “super awesome mega tower” is the greatest real estate project ever attempted.
Cool Factoid #1: The tower could reach one mile.
That would be 1,600 meters, almost double the height of Dubai’s 828m Burj Khalifa. The exact height for Waleed’s tower has been analysed internally for years. It was recently reported as above 1,000m but the discussions have also included the one mile scenario. This would be an interesting move as the natural next step for an ultra-tall skyscraper would something at around 1,000 meters. But with a mile tower, Waleed could effectively jump a generation (and create a truly one-of-a-kind structure).
A quick note: Everything that is written here (or anywhere else by me) about Waleed / KHC is strictly limited to information that is already widely known. I am a loyal guy. There are no personal or inside stories here.
Cool Factoid #2: It’s not a tower. It’s a city in the sky.
Everyone knows what a building is. You come in, go up the elevators and then leave. And a skyscraper is just a really tall version of this. Offices. Retail in the podium. A hotel. Maybe some apartments.
But when you start building to 1,000 meters and above, it becomes something different. Vertical transportation is a big factor. You can’t just go down and leave for lunch. A mega tower is not just two (or three) 500 meter towers stuck together. It is something new.
A structure of this height most resembles a city in the sky. You live and work in it. And it’s so big you can put city-like things in it – such as museums and shopping centres. You can create parks up in the clouds. Very cool.
Cool Factoid #3: The tower is just one part of an entire city Waleed is building.
The development covers an entire peninsula and creates an entire new city on the north side of Jeddah. Early models have shown Park Avenue-like thoroughfares, waterfront apartment high-rises, harbors, intersecting waterways, and maybe even a university. It is effectively a new city with the mega tower as its symbol.
Cool Factoid #4: The tower sits at the front of a new Sydney-like harbor.
Iconic structures always look better on the water. But the tower is in the centre of the new city and there aren’t a lot of lakes in Saudi Arabia. So Waleed is building a new harbor into the centre of the development and connecting it by waterways to the Red Sea. This will allow the tower to sit at the front of a Sydney-like harbor. It is really spectacular and you can find published pictures of it online.
Cool Factoid #5: The fire escape plan may require parachutes
Building such a tall structure creates lots of interesting questions. What do you do about the swaying? (It moves a lot) Does it poke into the nearby airspace? (Yes) And what do you do for a fire escape given the vertical transportation problems? Parachutes? It’s a fascinating project.
The Middle East has gotten a lot of flak about some of its mega-real estate projects. Many were petrodollar fuelled extravaganzas. Many were short-term speculation. And true, Dubai got way out of control for a while.
But Waleed, like Buffett, is a value investor (mostly). If he’s moving forward with a project of this scale, he is not speculating. It’s not government money doing something stupid. He’s operating as a businessman in the private markets – and he’s making his returns by creating (and capturing) real economic value. It’s the real thing.
To do a project like this is pretty great. But to do it based on solid economics (and a healthy ROI) is particularly impressive.
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