The Line, Mukaab & Maraya – 3 examples

3 examples I have brought with me. “The Line“, a 170 kilometer long, 500 meter high, mirrored line will soon cross the Saudi Arabian desert. In Riyadh, the “Mukaab” is being built. Simply put, the most expensive surprise egg in the world! Costing 800 billion, the construction will provide space for 20 Empire State Buildings. A 400 meter high, wide and long indoor super city in the center of Riyadh. Example 3 is the “Maraya”, the largest mirrored concert hall in the world.

The Line: 170 kilometers long – The desert city

A 170-kilometer-long, 500-meter-high mirrored line will soon cross the Saudi Arabian Desert. People will live and work in it. Another superlative project, following the recent inauguration of the mirrored concert hall. The Line will be the name of the city, with over 9 million inhabitants. Under the title “What if we could start again” only the ideas are presented. The Saudi Arabian government has unveiled the first images of the 500-meter-tall rectilinear city called The Line, which will be built as part of Neom, near the Red Sea.

The Line will be a car-free and equally carbon-free (CO²) city the size of the country of Belgium.

• The Line: The Desert City

Location of “The Line”: Satellite view

“The Line” from the view from space.

Mukaab: 400 meters high – The indoor super city

“The Mukaab” has just been presented by the Crown Prince of Saudi Arabia. What is planned? An impossibly large, 400-meter high, wide and long indoor super city, right in the center of Riyadh. With space for a full 20 Empire State Buildings, the project is to be financed by the PIF and become a new global symbol for technology, sustainability, mobility and Saudi innovation.

“The Mukaab” is at the center of the broader New Murabba development project launched by Crown Prince Mohammad bin Salman bin Abdulaziz, the prime minister and chairman of the New Murabba Development Company (NMDC). The Riyadh Giga project is scheduled to open in 2030.

• Mukaab: Indoor Super City

Maraya: The largest mirrored concert hall

I must show you the Maraya Concert Hall in Saudi Arabia! A real architectural highlight and certainly a hotspot of this world in the future. Al-Ula is a unique region in Saudi Arabia that was hidden from tourists until September 2019. Now the whole world has the opportunity to discover ancient places that are more than 6,000 years old.

• Maraya: Mirrored concert hall

House market Saudi Arabia: Development until 2030 (PwC)

Away from the prestige projects, how is the country developing? This report from PwC provides an insight.

Own surplus ratio to increase by +8% to 70%.

In 2020, an ownership rate of 62% was achieved, and the goal is to reach an ownership rate of 70% by 2030. The real estate sector already contributes about 7% to Saudi GDP and creates many jobs. In 2021, 40,000 job opportunities were created in the real estate sector alone.

To address housing challenges, Saudi Arabia has undertaken a number of initiatives since 2017. The Ministry of Municipal and Rural Affairs and Housing (MoMRA) has launched the Housing Program, which aims to improve Saudi families’ access to affordable, quality, safe, and well-located housing for first-time buyers.

Funding initiative: What is planned?

The initiative also aims to increase private sector involvement and improve financing options for Saudi families. Various measures have been taken to this end, including injecting liquidity into the market, tax reform, reducing capital requirements, developing new mortgage products and strengthening the rental market.

The Saudi Real Estate Refinance Company (SRC) was established in 2017 to inject liquidity into the real estate market and improve homebuyers’ access to sustainable financing solutions. By the end of 2020, SRC’s loan portfolio reached SAR 6.5 billion, and the goal is to have refinanced 20% of the total residential mortgage loan market in Saudi Arabia by 2025.

Sakani program has assisted 210,000 Saudi families (2021).

The successes of the housing program are already clearly visible. The supply of housing in Saudi Arabia has improved significantly, and many Saudi families have realized their dream of home ownership. In 2020, the homeownership rate in Saudi Arabia reached 62% and will reach the target of 70% by 2030. The Sakani program has assisted more than 210,000 Saudi families in 2021 alone, and a total of 1.2 million families have already benefited from the program. The mortgage market in Saudi Arabia has also grown significantly, with 295,590 contracts in 2020 worth a total of SAR 140.7 billion for Saudi families.

1.2 million new homes needed

For the future, the focus of the housing program is on the most disadvantaged population groups and increased private sector participation. Around 1.2 million new homes will be needed in the coming years to reach a housing stock of 4.96 million homes by 2030.

The transformation of the housing market in Saudi Arabia is a success story and will have far-reaching implications for the Kingdom. The government has taken robust measures to address the challenges of the housing market and make the dream of home ownership possible for new generations of Saudis.

Source: PwC.

Conclusion: Saudi Arabia

Saudi Arabia is not only investing in spectacular construction projects such as “The Line”, the “Mukaab” and the “Maraya”, but has also launched a major initiative to promote the housing market. Measures such as the Sakani program and the establishment of the Saudi Real Estate Refinance Company have increased the ownership rate and improved access to affordable housing. The housing market has already developed significantly, and the government has ambitious plans to further meet housing needs. The transformation of the housing market is a success story for Saudi Arabia and will have a far-reaching impact on the country by realizing the dream of home ownership for many Saudi families.

Why set up a family foundation?

When a foundation is established, the founder transfers assets to the foundation. The assets can be invested in the form of cash, real estate, businesses, stocks, and time deposits to meet the foundation’s long-term funding needs. In the case of a family foundation, the purpose is to transfer the assets to future generations, to protect assets from being accessed and to save taxes.

3 good reasons for establishing a family foundation.

1. Transfer assets to the next generation
2. Protect assets from access (prenuptial agreement, children, company insolvency, etc.)
3. Save tax, pay only 15% tax

The costs of establishing a foundation consist largely of the invested assets. These costs also cover the administration costs. To ensure that the amount available for the foundation’s purpose remains as high as possible, it is advisable to keep administrative costs as low as possible. Additional costs arise from consulting services, for example from lawyers.

The most important facts about the foundation: Overview

Here’s what we discuss in this guide.

Consultant yes or no?

Expert advice is important in this context, especially on tax aspects and transfers, as the establishment of a foundation is a complex and unique process that involves planning asset succession, optimizing tax implications and considering legal aspects in order to achieve long-term financial benefits and minimize potential risks.

More about that in a moment.

First of all, let’s talk about the minimum capital.

Minimum capital of a family foundation

The German Civil Code (BGB) does not specify a specific minimum capital requirement for the establishment of a foundation. However, the capital must be sufficient to ensure “the permanent and sustainable fulfillment of the foundation’s purpose” (§80 BGB).

The competent authorities that check the recognition of the foundation’s formation usually set their own minimum amounts. These are usually at least 25,000 euros. However, many authorities only recognize foundations with assets of at least 50,000 euros. It is assumed that long-term fulfillment of the foundation’s purpose is not possible with an amount less than 50,000 euros less administrative costs.

Some authorities even require minimum assets of 100,000 euros. This often depends on the purpose that the foundation is to pursue.

The assets invested in the foundation may not be reduced in order to ensure that the foundation’s work is continuously financed and that the income can be used to fulfill the foundation’s purpose. Another advantage of foundations when we talk about annual allowances to beneficiaries.

Important: These regulations do not apply to the special form of dependent family foundations. These so-called trust foundations are not legally independent foundations, but rather a contract between a founder and a trustee. The assets are transferred as special assets to the trustee, who has the task of realizing the foundation’s purpose with the income.

In summary:

• BGB: No minimum capital requirement, but sufficient capital needed for long-term foundation purpose
• Authorities: At least 25,000-50,000 euros required for foundation recognition, sometimes 100,000 euros.
• Assets: May not be reduced to ensure continued funding and fulfillment of purpose

Tax disadvantages as a cost factor

The same applies to the founder of a family foundation. In most cases, the founder’s priority will be to optimize the tax implications of the foundation. In other words, for the founder it is much more important to transfer his assets worth millions to the foundation as tax-efficiently as possible or even tax-free than to worry about the formation costs of around 20,000 euros for consulting services.

Establishing family foundations with strategy

My experts can help you set up a family foundation:

• Contact

Consulting costs

If someone is unsure about setting up a foundation, they can seek advice from an expert, for example. Foundation law is not uniformly regulated throughout Germany, so the help of a specialist can be useful.

Depending on the foundation’s assets, tax advice may also be beneficial. Although this initially incurs costs, good tax advantages may ultimately result.

The minimum amount of assets required, administrative costs, tax consultancy fees and legal fees vary depending on the individual case. Charitable foundations that are endowed with a sum of money are generally “less expensive.” Foundations that own real estate assets, on the other hand, are more expensive. This is due, among other things, to the fact that dealing with authorities is easier in the case of monetary assets.

In some cases, a simple start-up can be covered with as little as 15,000 euros. For more complicated situations, such as the transfer of a company, there is no upper cost limit.

Not all consultants are the same

Last but not least, not every consultant is the same. Establishing a foundation is usually a one-time and non-reversible process. For example, if you want to sell your car to a private buyer, you can certainly use a template for the contract – the risk is limited. However, if a founder’s succession planning concerns providing for his three children and spouse, ensuring that his 300-employee business can continue, avoiding inheritance disputes over compulsory share rights within the family, and saving a seven-figure amount in taxes, this is not something that can be done with the click of a mouse.

No consultant with only theoretical knowledge of foundations is suitable for such a project. A reputable consultant without the relevant experience would never accept such a mandate for liability reasons. In such cases, advice from genuine experts with many years of experience in theory and practice is required. As a rule, a founder is also well advised to call on the expertise of a team of specialists (foundation law, tax law, corporate law, inheritance law, etc.).

• Foundation formation requires sound and experienced consulting experts.
• Experience in foundation law, tax law, corporate law, inheritance law is important.
• Serious consultant with practical knowledge and many years of experience required.

Establish a family foundation in Germany

A family foundation offers an excellent opportunity to secure assets for future generations, optimize taxes and make orderly succession arrangements. However, establishing a foundation requires comprehensive planning and strategic decisions. Cost factors such as the invested assets and administrative costs play a role.

In case of doubt, professional advice from experts with experience in the areas of foundation law, tax law and asset planning is of great importance. By setting up a family foundation, it is not only possible to take advantage of tax benefits, but also to create clear structures for succession planning. This makes it possible to protect and preserve family assets in the long term.

Foundation questions

My experts can help you set up a family foundation:

• Contact