The Massive Master Plan

Amr al-Dabbagh has no doubt that if he builds it, they will come. The governor of the Saudi Arabian General Investment Authority (SAGIA) is one of the forces behind King Abdullah Economic City (KAEC), a $27 billion development rising out of the desert 62 miles (100 km) north of Jeddah, and he can already envision the arrival of its first residents. "It won't be long before it starts taking shape," he says.

There's a palpable sense of urgency at the construction site, where a line of high-rises--the first batch of offices and residences--is taking form along the aquamarine waters of the Red Sea. Dozens of businesses have signed on to set up shop in KAEC (pronounced cake), and the first 1,500 housing units sold out in days. In early 2009, the first business tenants will move in; the first residents, soon thereafter. The first school is planned to open by the end of next year, which will allow families to move in.

If all goes to plan, in a couple of years the trickle will turn into a flood. When it's completed 20 years from now, KAEC will be roughly the size of Washington, D.C., with a population exceeding 1.5 million. It will have a seaport, an industrial district, a financial center, a health-care zone, a full-fledged university and a beach resort. Not since Brasília and Chandigarh in the 1950s and '60s has any country set out to build an entirely new city on such a scale.

Saudi Arabia is planning to build five of them. Simultaneously. KAEC serves as the flagship project. The Saudis plan for nothing less than to make the country more competitive globally, and they are willing to spend what it takes to do it.

To its critics, the plan smacks of oil-fueled excess, an attempt to one-up rivals on the mad dash across the Arabian Peninsula to build the tallest, biggest, glitziest structures. Their coffers bulging with surpluses, many Persian Gulf states are turning their desert into one giant construction site. There's the City of Silk project in Kuwait, Dubailand in Dubai and any number of ports, airports, universities and giant residential and industrial complexes abuilding in Qatar, Abu Dhabi, Bahrain and elsewhere. KAEC "is not a vanity project, but there is definitely a statement being made," says a Riyadh businessman who asked not to be identified for fear of offending King Abdullah, who is personally keen on the new city that bears his name. "It is the Saudis saying to the rest of the Arabs, 'We can build bigger than the rest of you.'"

Al-Dabbagh and his backers insist they're not trying to out-Dubai Dubai--or anybody else--and that the new cities are meant to solve pressing economic and demographic problems: with 60% of its population under the age of 25, Saudi Arabia needs to create millions of jobs and homes for young people who will come of age in the next five years. This "youth bulge" will create a demand for 6 million residential units in the next 12 years; that's a million more units than were built in the past 60 years. "When you have demand on that scale, you can't think small," says Fawaz al-Alamy, who advises King Abdullah on economic issues. "Big problems need big solutions."