Real estate developers need to be ready for competition
The real estate market in Saudi Arabia has seen many positive developments following the announcement of the Kingdom’s Vision 2030 and the changing business landscape that Crown Prince Mohammed bin Salman laid out in recent years.
The vision brought many opportunities to local developers. However, it also presented a challenge for them as they now have to keep pace with competitive regulations as a more globalized Saudi market will be open and attractive to international developers and investors.
The top obstacle for local developers, in my opinion, is how they can remain in the market and enlarge their market shares to meet the huge expected demand for real estate projects that would result from the Saudi Vision.
More than 95 percent of the local real estate developers are primitive in their work, Prince Mohammed said in a televised interview in April. The old ways of doing business for them would impose a huge challenge to supply the market with high-quality office buildings as the Kingdom dictated that all foreign companies, which have contracts with the government, have to move their head offices to Saudi Arabia. This means the country needs more office buildings to meet international standards in order to cover the huge demand for foreign companies and investors.
I highly recommend that international real estate companies enter the Saudi market as soon as they can to secure their place and obtain a market share.
The market will witness aggressive competition between local and international developers. I think that the former must change their strategies in order to survive and they can only do this by adopting international standards and practices.
As a result, we will see an uptick in real estate projects in Riyadh and newly developed giga-projects, such as Qiddya, Amaala, and NEOM. These areas will only be home to high-quality projects and this means those in Riyadh and elsewhere need to keep established customers happy or they will move on to the new giga projects.
Faced with these assumptions, I believe we need a market maker that leads the local real estate market and becomes a champion in the sector. It needs to apply higher standards, capabilities, and lead others to follow the course.
I highly recommend that international real estate companies enter the Saudi market as soon as they can to secure their place and obtain a market share. For this is a growing and promising market that is in its early stage of booming.
• Khaled Almobid is the CEO of Menassat Reality Co., a Riyadh-based real estate developer. Twitter: @khaledalmobid