Contracts for palaces to be built as part of the massive $500bn Neom development in Saudi Arabia have been awarded, sources confirmed. 

The palaces for the king, crown prince, and other senior royals will be located on the Red Sea coast about 150 kilometres (95 miles) west of the city of Tabuk in the northwest of the country, according to Reuters.

The Saudi government has started awarding contracts for the business zone, with Saudi Binladin Group, the country's biggest construction firm, reportedly commissioned to build one of the palaces, sources said.

READ: Saudi Arabia to build new $500bn megacity on Red Sea coast


Banks have started offering financing facilities to builders of the palaces, but an official cost has yet to be revealed, the report stated.

The palaces will feature modern and traditional Moroccan-style architecture with Islamic designs and colourful ceramic tiles. The complex of palaces will include helipads, a marina and a golf course.

Some companies, including Japan's Softbank, have said they are prepared to invest in NEOM, but major, concrete business investments have not yet been announced.

The government's Center for International Communications and Neom’s management team has not yet officially revealed any further details about the contract awards. 

Development of Neom, which was unveiled last year during a global business conference in Riyadh, will be backed by more than $500bn from the Saudi government, the country’s sovereign wealth fund, and local and international investors, Saudi Crown Prince Mohammed bin Salman said in a statement.

The scope of the project will include a bridge spanning the Red Sea, connecting the proposed city to Egypt and the rest of Africa. About 10,000 square miles have also been allocated for the development of the area that will stretch into Jordan and Egypt.