Saudi investors keen on real estate and looking abroad

Dubai Marina by night: The UAE is the preferred market for 28 percent of GCC investors. (AFP)
Updated 20 June 2018
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Saudi investors keen on real estate and looking abroad

  • Many Saudis are looking outside the Kingdom for opportunities in the property market, according to a new survey of investment patterns among residents.
  • Some 85 percent of Saudi residents have invested in property at some stage, but over half of respondents are considering putting their cash into international real estate.

DUBAI: Most investors in Saudi Arabia are committed to real estate as their main investment vehicle, but many are looking outside the Kingdom for opportunities in the property market, according to a new survey of investment patterns among residents.

Some 85 percent of Saudi residents have invested in property at some stage, but over half of respondents are considering putting their cash into international real estate, the survey, by market research firm YouGov on behalf of British property developer Select Property Group, reveals.

“Investor confidence is only further evidenced by the frequency in which investments are being made. The results found that almost a quarter (23 percent) of investors based in Saudi Arabia look to make a new investment at least every three months.

“Respondents were asked to consider their previous and potential future investments in bonds, stocks and real estate – both domestically and internationally – as well as mutual funds, bank products, gold and precious metals, cryptocurrency and fine art. Across every category, respondents demonstrated a desire to increase their level of investment in the coming years,” the report said.

 

Despite cryptocurrency being in its relative infancy as an asset, 5 percent of respondents based in Saudi Arabia declared they have already spent over $500,000 in the digital currency, though investment levels collectively still trail far behind more traditional asset classes, such as real estate.

The Saudi Arabian Monetary Authority has warned of the “risky and speculative” nature of crypto-currencies like Bitcoin, while welcoming blockchain as an innovative financial technology.

“The results show that investors in this region are highly motivated and it’s interesting to see the mix of key investment choices among the varying demographics. It’s promising to see that Saudi Arabia residents are also inclined to make regular investments, constantly keeping an eye on the market and looking to capitalize on the latest opportunities,” said Adam Price, managing director at Select Property Group.

Investors in Saudi Arabia and the UAE accounted for the highest proportion of the “very knowledgeable” category in the survey.

In the wider Gulf, most investors looking at overseas property were interested in residential real estate (44 percent) with 27 percent eyeing commercial property.

The UAE is the preferred market for 28 percent of GCC investors, with 16 percent interested in the US and 8 percent naming the UK as their preferred destination. Some 11 percent looked favorably on Turkish real estate.

An earlier version of this story incorrectly stated that the Select Property Group survey found that 1 percent of GCC property investors said the UK was their preferred market. The correct figure is 8 percent. This has been amended in the above text.

FASTFACTS

The Saudi Arabian Monetary Authority has warned investors of the “risky and speculative” nature of crypto-currencies such as Bitcoin.


Saudi crown prince’s India visit to boost bilateral investment

Saudi Aramco CEO Amin Nasser leaves after attending the Saudi-India Forum in New Delhi on Wednesday. (Reuters)
Updated 12 min 53 sec ago
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Saudi crown prince’s India visit to boost bilateral investment

  • Vision 2030 offers huge opportunities to Indian businessmen in non-oil sector

Many Indian businesses that already operate in the Kingdom are interested in expanding as part of Vision 2030. Retail company Lulu Group International, for example, plans to open 12 new hypermarkets and five malls in Saudi Arabia by next year. 

It already employs more than 2,700 Saudi nationals and plans to increase this number to about 5,000 by 2020.

“Saudi Arabia is a very important market and we will invest in the booming retail sector as we are upbeat about the vast opportunities in the Kingdom through its Vision 2030 initiative,” said Yusuff Ali M. A., the chairman of Lulu Group.

Saudi Crown Prince Mohammed bin Salman’s first visit to India will propel trade and bilateral business relations between the two countries to new heights, experts predict.

Saudi Arabia has long been an important trade partner for India, said Mir Gazanfar Ali Zaki, the general secretary of the Saudi Indian Business Network, and the crown prince’s trip could expand and enhance ties in diverse fields.

According to Saudi Arabia’s General Investment Authority, more than 420 Indian companies operate in the Kingdom through joint ventures or with 100 percent ownership. They have capital of more than $1.5 billion and cover sectors including management and consultancy services, construction projects, telecommunications, information technology and pharmaceuticals.

Saudi Vision 2030, the crown prince’s brainchild, aims to transform the country by diversifying its economy through a series of reforms in non-oil sectors. India hopes to play a significant role in this expansion. The key sectors that India can target to expand and boost trade ties with the Kingdom include software development, solar energy, jewelry, fashion, tourism, education and food, said Zaki.

The cultural reforms initiated recently by the crown prince also clear the way for a wide range of business opportunities in the entertainment sector that India is well placed to cash in on. Bollywood films and music rank high on the list of popular entertainment among many Saudis, and with the recent reopening of cinemas in the Kingdom, and ambitious plans to build hundreds of theaters across the country, there is a huge opportunity for an Indian film to grab a large share of the market.

India’s bilateral trade with Saudi Arabia was worth $27.48 billion in the financial year 2017-18, according to the Indian Ministry of Foreign Affairs, making the Kingdom the country’s fourth-largest trading partner. It is the main supplier of energy, providing more than 18 percent of India’s oil. However, bilateral trade has dropped by almost a half from a high of about $48 billion five years ago because of the fall in global demand for oil. This might soon change, analysts say, as more investors from India are tempted by the Vision 2030 opportunities.

This view is shared by a Middle East Institute analysis that said: “As reforms related to Saudi Arabia’s Vision 2030 are implemented, Indian investors are likely to be attracted to several sectors, including infrastructure, hydrocarbons, desalination, renewable energy, education, research and development, health and pharmaceuticals.”

“We have trained about 200 Saudi nationals to take our business forward,” P. A. Ibrahim, the chairman of Indian company Malabar Gold and Diamonds said. “It is really a huge success that gives us the confidence to open more branches in the Kingdom. Vision 2030 and the Neom project have opened up good opportunities for us to invest more. We are planning four more jewelry outlets in the Kingdom soon,” he said.

A growing area of trade cooperation between the two countries is the field of petrochemical projects. Saudi oil company Aramco, in partnership with the UAE’s Adnoc, recently announced a joint venture for a stake in the $44 billion Ratnagiri Refinery and Petrochemicals project. Cooperation in the sector is expected to grow and it is thought new agreements might be signed during the crown prince’s visit.

An enduring and tangible aspect of the bilateral relations is the presence of a strong, vibrant community of 2.7 million Indians in Saudi Arabia, the largest single group of expatriates in the country. In addition, the Kingdom welcomes more than 175,000 Indian Hajj pilgrims every year.

“We can transform the trade links and cooperation to people-to-people coexistence because of this,” said Zaki. “By promoting foreign direct investment at Saudi trade shows and Indian trade shows, businesses from both countries can benefit. India and Saudi Arabia can organize Indo-Saudi trade exhibitions in both countries so that it can be a common platform for bilateral trade. Both countries should organize as many business-to-business meetings as possible.”

He highlighted the recent efforts by the Saudi Indian Business Network to achieve this through exhibitions such as the Kerala Gems and Jewelry show, the Kolkata Gems and Jewelry Show, Indus Food 2019 in Greater Noida, the International Indian Jewelry Show Signature in Mumbai, the Food Festival of India in Jeddah, the Film Festival of India in Jeddah, Global Exhibition on Services in Mumbai, Business Opportunities in India in Jeddah, and Tea Around the World in Jeddah.

The crown prince’s visit has great political significance, too. While energy and economic cooperation will remain the mainstay of bilateral ties, the two nations are trying to strengthen their cooperation in defense and security. The Ministry of External Affairs has talked of a growing desire in Riyadh for stronger strategic relations and improved intelligence sharing.