DUBAI: Investments in Saudi Arabia’s industrial sector grew 281 percent in the last 12 months, global property consultant Knight Frank showed, attributing it to strong regulatory support.
The consultancy firm said the “fast-paced growth” is due to initiatives by MODON, or the Saudi Authority for Industrial Cities and Technology Zones, which include offering new products and services such as warehouses, self-storage units, and financing solutions.
“The 281% jump in industrial sector investments in the last 12 months has delivered a staggering 30,000 new jobs across the Kingdom,” Faisal Durrani, head of Middle East research at Knight Frank, said.
The COVID-19 pandemic has also played a big role in the Kingdom’s industrial sector, as online shopping drove a surge in requirements for better logistics facilities, Durrani said.
“We do not expect a let-up in online shopping and indeed the government forecasts revenues for the sector to close in on SR30 billion ($8 billion) this year, up from SR24.7 billion in 2020,” he added.
This strong market performance has also led to rising lease rates and occupancy levels in industrial real estate in the Kingdom — 7 percent growth in Riyadh, and 4.5 percent increase in Jeddah.
“Riyadh in particular is expected to outperform Jeddah as stock levels have remained unchanged so far this year. Indeed, over the last six months, prime rents have increased by close to 8%, while grade B rents have retreated by 3.5,” Durrani explained.
The Knight Frank researcher said developers traditionally “developed warehouse and logistics facilities based on speculative demand, while built-to-suit stock has always been limited.”