The past year has been transformative for the real estate industry in the GCC, marked by positive changes to the market as it begins to recover post-pandemic. With high vaccination rates and rapidly easing restrictions to freedoms and travel, we are witnessing a gradual return to normality across the GCC.
In the real estate space, several giga-projects which are set to revive the market have recently been launched. In Saudi Arabia, developments such as Neom and Qiddiya have received extensive funding and represent an active collaboration between the private and government sectors.
“In KSA, the Ministry of Municipal & Rural Affairs & Housing has done an excellent job of building a trillion-dollar real estate market, working to meet the Vision 2030,” Yousef Betraoui, Executive Partner at Land Sterling said in a discussion as part of the Cityscape GCC Summit.
The residential sector remains one of the largest across the region, with developers struggling to meet current demand.
INVESTING IN CHANGE
“Saudi has changed dramatically in the past 10 years and has opened up to the rest of the world in line with Vision 2030,” Betraoui noted.
Various sectors are working collectively to address reforms and revive the economy, looking to incite economic, social, and cultural changes in the country. As KSA strives to fulfil the requirements of a modern country, it has introduced initiatives such as Invest Saudi in attempt to attract high levels of foreign investment and international business.
The Ministry of Investment is guiding the country’s foreign investment initiatives, working in alignment with various other ministries to assess the requirements for each real estate sector, including healthcare, logistics, residential and education.
Digitisation and technology are also easing processes for foreign investors in terms of licensing, for example.
BUILDING ONE OF THE WORLD'S LARGEST ECONOMIES
Seeking to end the KSA’s dependence on oil and diversify the economy, Saudi Crown Prince Mohammed bin Salman wants Riyadh to become one of the world’s top ten largest economies by 2030.
To achieve this, the existence of free zones and financing for giga-projects such as The Red Sea Development Company and NEOM, is increasing across the kingdom.
“These kinds of projects will create new tourist destinations and many jobs in Saudi Arabia,” Betraoui said.
An ongoing relaxation of cultural and social rules, particularly concerning women’s rights, is also contributing to improving residents’ quality of life and to achieving the objectives of Vision 2030.
A FOCUS ON LOGISTICS
The logistics sector is a key focus for development, with investment into many industrial zones increasing across the Kingdom. The Saudi freight and logistics market is currently valued at around $23 billion and is experiencing annual growth of 5-6% annually, expected to reach $35 billion by 2026, Betraoui said.
“Saudi wants to become one of the world’s largest logistics markets … all of the private sector developers are gearing themselves towards addressing this gap in the market,” Betraoui noted.
DEVELOPMENTS IN THE TOURISM SECTOR
Saudi’s tourism sector is currently undergoing a vast transformation as developers shift from producing hotels to full-fledged resorts and cities, many in the southern mountainous regions.
By 2030, the Kingdom is aiming for 10% of the GDP to be from the tourism sector and the government has set-up a tourism development fund to support this. Saudi expects to welcome 22 million international arrivals by 2025 and is continually investing in infrastructure to accommodate this, such as the creation of new airports and a metro system.
Investment in the tourism sector is also having a positive effect on developing roles for women in a range of sectors. Increasingly, we are seeing women take-up roles in hotels, tourist centres, restaurants, and beyond.
“This is a very powerful workforce that’s been dormant for a long time … it’s really amazing to see women involved in tourism and reflecting the heritage of their country,” Betraoui commented.
With coastal, mountainous, green, and urban areas all under development, the KSA offers tourists a range of experiences and heritages.
“Saudi has positioned itself very well regionally to address tourism. Every region has its own style of tourism, so different regions are complementing and not competing with each other,” added Betraoui.
For more insights and discussion around the MENA real estate market and to catch-up on Yousef Betraoui’s session, attend the Cityscape GCC Summit from 5-6th October 2021. Sign up for free here.
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