Vision 2030 projects trigger a real estate boom in Saudi Arabia

Vision 2030 projects trigger a real estate boom in Saudi Arabia
According to the global commercial real estate leader Colliers, ‘a healthy residential real estate market is a critical enabler of a vibrant economy.’ (Shutterstock)
Short Url
Updated 25 February 2023

Vision 2030 projects trigger a real estate boom in Saudi Arabia

Vision 2030 projects trigger a real estate boom in Saudi Arabia
  • ‘A healthy residential real estate market is a critical enabler of a vibrant economy,’ says report

RIYADH: With multibillion-dollar projects related to the Vision 2030 strategy, Saudi Arabia’s real estate sector is expected to witness a record boom, real estate experts told Arab News.

The expected growth in the sector, they say, will be driven by foreign investors who are taking a keen interest in becoming part of the huge socioeconomic transformation currently underway in the Kingdom.

Since the launch of the Vision 2030 plan, Saudi Arabia has taken several measures to diversify its economy and reduce its reliance on oil and gas revenues. The Kingdom is propping up all sectors of the economy, particularly tourism, entertainment, art, and culture with an improved quality of life for residents and citizens as the central theme.

Government-funded projects like ROSHN, the leading real estate developer in the Kingdom, powered by the Public Investment Fund, are also contributing to meeting the demand for increased homeownership across the Kingdom.

In November 2022, the Saudi residential real estate market experienced a 6 percent rise in the total value of transactions, according to Knight Frank, a London-based property consultancy.

“Transaction volumes are still rising and are 6 percent up compared to last year, highlighting the pace of house price growth being experienced around the Kingdom,” said Faisal Durrani, partner – head of Middle East Research, Knight Frank, in a statement. 




There are currently around 15 giga-projects in various phases across the Kingdom, like the New Murabba district of Riyadh, which are standalone metropoles. (Supplied)

“Indeed, in Riyadh, average apartment values are up 30 percent in the last 12 months, and this is even higher at around 40 percent for some of the most desirable suburbs in north Riyadh. Villa prices in the capital have also risen by 20 percent,” he said.

According to Knight Frank, over 555,000 residential units, more than 275,000 hotel keys, over 4.3 million sq. m of retail space, and over 6.1 million sq. m of new office space are expected by 2030.

“The planned construction in the Kingdom will make Saudi Arabia the largest construction site the world has ever seen,” the agency said.

There are currently around 15 giga-projects in various phases across the Kingdom, many of which are standalone metropoles. These include NEOM, the largest giga-project announced to date, which publicized how it will house 9 million residents on completion across an estimated 300,000 new homes.

However, Knight Frank adds, just $ 7.5 billion of sub-projects have been commissioned thus far, with the construction progress of this tranche of projects standing at 29 percent. 

Transaction volumes are still rising and are 6 percent up compared to last year, highlighting the pace of house price growth being experienced around the Kingdom.

Faisal Durrani, Head of Middle East Research, Knight Frank

Other smaller cities or sub-cities like The Octagon, Trojena, and The Line are striving to set new benchmarks for luxury living, with close to 30 percent of homeowners in the Kingdom prepared to spend upward of $800,000 on a second home in the Kingdom. Developers now have their work cut out to satisfy this pent-up demand.

“There’s been a huge growth in the residential market,” Abdulaziz Binyousef, CEO and chairman of Fay, a private property management company based in Riyadh, told Arab News. “We have witnessed a huge demand for residential properties and the growth has been exponential over the past 10 years, especially with the introduction of mortgages and the growth of the Saudi population.”

In a 2021 paper titled “Residential Market Dynamics in Riyadh, Jeddah, Dammam, and Al Khobar,” Colliers predicted the number of households in these major Saudi cities to grow “from 2.31 million in 2020 to approximately 2.88 million by 2030, recording an average growth of 2.24 percent.”

According to the global commercial real estate leader, “a healthy residential real estate market is a critical enabler of a vibrant economy.”

With the increase in business activities in the Saudi capital and the establishment of regional headquarters of foreign companies, the population of Riyadh will swell naturally as people from across the Kingdom are migrating to the city in search of greener pastures. According to official estimates, the population will grow from 6.8 million to 15-20 million by 2030.

The increase in population means an increase in demand for workspaces and housing units.

“The demand for real estate will only get higher,” Binyousef said. “One of the major factors contributing to this rise is the population growth, the second is affordability and the third is that the market is lucrative for investors.”

Foreign investment is also a critical driver in the rise of the Saudi real estate market. As Bloomberg recently reported, Bahrain-based investor Investcorp Holdings, one of the largest asset managers in the Middle East, intends to invest nearly $1 billion in the Kingdom’s real estate market over the next five years to tap “an anticipated property boom in the Kingdom.”

Investcorp Holdings has already acquired a logistics warehouse in Dammam in Saudi Arabia’s Eastern Province, it said in a statement, according to Bloomberg.

Binyousef believes that government support is also crucial in the current upswing in the residential side of the real estate market. The government is taking measures to increase the homeownership ratio among Saudis through the Real Estate Development Fund by subsidizing mortgages.

In a recent survey of 1,000 households across Saudi Arabia conducted by Knight Frank, NEOM emerged as the most popular place where people wish to own a home followed by the Red Sea Project and Diriyah.

The $20 billion Diriyah Gate, which is located in the Riyadh region, will add 20,000 homes to Riyadh’s residential stock by the time it is completed in 2027.

According to Binyousef, Jazan is another Saudi city, which is experiencing rapid expansion, and its real estate sector is also growing fast. Situated on the Red Sea coast, the city serves as the Kingdom’s agricultural heartland and is home to leading coffee makers and other produce.

Known as the Kingdom’s “fruit basket,” it is also an area of diversified growth. A new Saudi Aramco oil refinery is also expected to spur the development of the city.

“Jazan City has many new projects underway, including the development of the port,” Binyousef told Arab News.

He said the government’s tourism push would catalyze the city’s development and ultimately help boost the real estate market. 


Oil Updates — Crude down; Venezuela president accepts resignation of oil minister  

Oil Updates — Crude down; Venezuela president accepts resignation of oil minister  
Updated 21 March 2023

Oil Updates — Crude down; Venezuela president accepts resignation of oil minister  

Oil Updates — Crude down; Venezuela president accepts resignation of oil minister  

RIYADH: Oil drifted lower on Tuesday as more than a week of banking turmoil kept weighing on market confidence. 

Brent crude futures for May settlement dropped 84 cents, or 1.14 percent, trading at $72.95 per barrel at 11.00 a.m. Saudi time.  

US West Texas Intermediate crude futures were down 56 cents, or 0.83 percent, to $67.08 a barrel. 

In the previous session, both Brent and WTI fell about $3 a barrel before settling higher. That followed Swiss bank UBS throwing a lifeline to Credit Suisse and major central banks saying they would enhance market liquidity and support the banking system. 

Venezuela’s Maduro accepts resignation of oil minister El Aissami 

Venezuela’s President Nicolas Maduro on Monday accepted the resignation of the country’s oil minister Tareck El Aissami, following the detention of at least six high-level officials amid a corruption probe focused on state-run company PDVSA and the judiciary. 

El Aissami had said earlier on Monday on Twitter he would resign to fully support the investigations. The probe especially touches PDVSA, which is supervised by the oil ministry. 

Maduro did not immediately name a replacement for El Aissami, who has served as vice president, and as a minister and mayor over the past two decades. 

Brazil environment agency asks for more info from Petrobras  

Brazil’s environmental regulator Ibama has asked Petrobras for additional information on its plan to drill at the mouth of the Amazon river before authorizing the company to test its emergency oil spill response, the agency’s president told Reuters. 

Ibama has not defined a test date because Petrobras did not deliver all of the documents required, but it will be scheduled as soon as the company provides the information, the agency’s president Rodrigo Agostinho said. 

Petrobas views the mouth of the Amazon as the newest and most important frontier for oil exploration in Brazil and the company planned the test to assess its response in the event of a major spill. 

The company has been working for years to open up a new exploration frontier in a region close to Guyana, where Exxon Mobil has made important discoveries and many wells were drilled. 

Later on Monday, Petrobras said it had just filed details and responses to Ibama’s demands. 

“After analysis and agreement by the environmental agency, the date for carrying out the pre-operational assessment may be defined together with Ibama,” the company said in a statement. 

The area was auctioned in 2013 and Petrobras has planned to explore there for years after BP and TotalEnergies gave up on their assets, even after investing in studies, because of difficulties in obtaining drilling licenses. 

Iran counts on ‘huge volumes’ of oil and gas swaps from Russia 

Iran counts on “huge volumes” of oil and gas swaps from Russia this year, Iranian Economy Minister Ehsan Khandouzi said in an interview with Russia’s RIA state news agency.  

“This year will witness huge volumes of swap supplies. We are very pleased that Tehran and Moscow have started cooperation on the issue of swap supplies of oil and gas,” Khandouzi was cited as saying. 

There were no details on what volumes of oil and gas Iran is expecting. 

(With input from Reuters)  

 
 

 


Saudi Arabia issues 46 mining licenses in January 

Saudi Arabia issues 46 mining licenses in January 
Updated 20 March 2023

Saudi Arabia issues 46 mining licenses in January 

Saudi Arabia issues 46 mining licenses in January 

RIYADH: Saudi Arabia’s Ministry of Industry and Mineral Resources issued 46 new mining licenses in January 2023 – a 33 percent drop compared to the previous month.

The ministry reported that the permits included 31 reconnaissance licenses, 14 building materials quarry licenses, and extra mineral ores license, according to the Saudi Press Agency. 

It also reported that there are 2,230 mining licenses valid in the sector until the end of January 2023, with building materials quarry licenses accounting for 1,331.

This was followed by 647 reconnaissance licenses, and then 178 for mining and minor mine exploitation.

Some 42 were issued for observation, and 32 extra mineral ores licenses were granted. 

Riyadh region gained the most mining licenses in the sector, with 507 permits, followed by the Makkah region with 418 permits. The Eastern Province had 369 licenses, Madinah had 242 and 191 licenses for Asir. 

Saudi Arabia's Tabuk region had 139 licenses, Al-Qassim had 102 licenses, followed by 68 licenses in Hail, Jazan had 65 licenses, Najran was issued with 45, Al-Baha had 37 and the Northern Province area had 25, along with Al-Jouf’s 22 licenses. 

In accordance with the goals of the Kingdom's Vision 2030 and the National Industry Development and Logistics Program, the Ministry of Industry and Mineral Resources seeks to protect and increase the mining sector’s value. 

To make mining the third pillar of the national economy and seek to harness the Kingdom's mineral resources, which are spread across more than 5,300 sites and are valued at approximately SR5 trillion ($1.33 trillion).


Saudi Arabia’s factory sector sees 50% growth since Vision 2030’s launch: Deputy minister

Saudi Arabia’s factory sector sees 50% growth since Vision 2030’s launch: Deputy minister
Updated 20 March 2023

Saudi Arabia’s factory sector sees 50% growth since Vision 2030’s launch: Deputy minister

Saudi Arabia’s factory sector sees 50% growth since Vision 2030’s launch: Deputy minister

RIYADH: The number of factories in Saudi Arabia has increased 50 percent since the launch of Vision 2030 in 2016, according to the Deputy Minister of Industry and Mineral resources Osama bin Abdulaziz Al-Zamil.

His comments come after figures released last year showed there are now more than 10,000 industrial facilities in the Kingdom, with 1,023 factories starting operations in 2022 alone.

Speaking during the first day of the annual Saudi Industrial Renaissance Forum that took place in the Kingdom’s Al-Yamamah University, Al-Zamil affirmed reliance on the industrial and mining sectors as economic tributaries.

The deputy minister also use his speech at the event to praise the growing Saudi workforce, saying: “The bet today on our young men and women is a big and winning bet as they are the largest percentage in this country, which makes them the basic base for our transformation and change in all fields and their exceptional capabilities and permanent ambition for positive change constitute a great force for the success of the Kingdom’s vision programs and contribute to the development of the homeland.”

The Saudi Industrial Renaissance Forum focused on the vital role that the industry plays in developing and diversifying the national economy which also contributes to achieving the economic and social goals of the Kingdom’s Vision 2030.

“The forum brings together a group of speakers, experts and interested persons with specialization in lectures, discussion sessions, working papers sessions and refereed research papers on many topics, and witnesses a number of important sessions,” said Hussam bin Muhammad Ramadan, Al-Yamamah University president and chairman of the organizing committee. 


Paddy Padmanathan steps down as ACWA Power CEO after 18 years

Paddy Padmanathan steps down as ACWA Power CEO after 18 years
Updated 20 March 2023

Paddy Padmanathan steps down as ACWA Power CEO after 18 years

Paddy Padmanathan steps down as ACWA Power CEO after 18 years

RIYADH: ACWA Power’s CEO Suntharesan 'Paddy' Padmanathan resigned on Monday, reported the Saudi Stock Exchange.

The board accepted Padmanathan’s resignation, and welcomed Marco Arcelli, an energy leader with over 30 years of experience, as the new CEO, revealed ACWA Power.    

Arcelli was previously chairman at Europe’s seventh largest electricity producer Ep New Energy, and had worked at Enel for 16 years where he was CEO of Enel North America and Slovenske Elektrarne.   

ACWA Power assured that Padmanathan will remain in the company serving as a member of the board of directors.   

In a statement, the company thanked the resigning CEO for his 18 years of service, and “his dedication during that period to elevate the company’s status as a leading global company in the field of renewable power generation, water desalination and green hydrogen production which culminated by its successful listing as a public company.”  

ACWA Power is Saudi Arabia’s leading utility service provider with a net profit of SR1.5 billion ($411 million) in 2022, according to a bourse filing. The company reported 103 percent increase in its profits from the previous year.   

In 2021, the Public Investment Fund-backed firm reported a net profit of SR758.8 million.   

The bourse filing further noted that the company’s fourth quarter net profit after zakat and tax surged 94 percent to SR656.6 million, compared to SR338.85 million in the previous year. 

According to the bourse statement, the firm’s financial results in 2022 were backed by higher operating income before impairment and other expenses.   

The profits were also driven by higher contributions from development and construction management services for the projects which achieved financial close last year, adequately supported by lower project development costs.   


Closing bell: TASI rises 60 points 

Closing bell: TASI rises 60 points 
Updated 20 March 2023

Closing bell: TASI rises 60 points 

Closing bell: TASI rises 60 points 

RIYADH: Saudi Arabia’s Tadawul All Share Index increased 60.39 points on Monday – or 0.59 percent – to close at 10,218.12.

MSCI Tadawul 30 Index inched up 0.69 percent to 1,386.65, and the parallel market, Nomu, slightly edged down by 0.05 percent closing at 18,968.30.   

TASI’s total trading turnover of the benchmark index was SR4.56 billion ($1.21 billion) as 111 stocks of the listed 224 advanced and 95 receded.    

Themar Development Holding Co. was the top gainer of the day, closing the trading session up 9.91 percent at SR44.35 

The second-best performer was Alima Tokio Marine Co., increasing 9.70 percent to SR14.48.   

Elm was the third-best performer, rising 7.67 percent - or 31 points – to SR435, compared to its opening at SR404. 

Other top performers of the day were Dar Alarkan Real Estate Development Co., and Makkah Construction and Development Co. 

The biggest faller of the day was BinDawood Holding Co., which slipped by 2.96 percent to SR52.5.  

Nahdi Medical Co. is the next worst performer of the day, decreasing by 2.48 percent to SR181. 

The other poor performers were Gulf Insurance Group, Alinma Hospitality REIT Fund, and Jabal Omar Development Co. 

Non-institutional foreign investors, excluding Saudi Aramco, reduced their stake in Tadawul-listed stocks to 10.45 percent, or SR281.79 billion, which is represented by swap holders, residents, and qualified foreign investors. 

On an announcement front, Saudi National Bank's share price increased by 3.86 percent, closing at SR44.4. The bank also said in a statement that the changes in the valuation of SNB’s investment in Credit Suisse have no impact on SNB’s growth plans. 

Rawasi Albina Investment Co. announced its annual financial results for 2022, reporting a 19.54 percent increase in its net profit to SR20.8 million. Moreover, Rawasi’s share price climbed 11.98 percent, closing at SR80. 

Perfect Presentation for Commercial Services Co. also announced a tremendous increase in net profit by 63.06 percent to SR131.4 million. The company’s shares closed 3.55 up at SR175. 

CHUBB Arabia Cooperative Insurance Co. reported a 12.54 percent decrease in net profit to almost SR13.4 million compared to SR15.3 million in 2021. CHUBB’s share price decreased 0.24 percent to close at SR16.48. 

The company correlated the decline to an increase in General and Administrative Expenses an increase in Policy Acquisition Costs in higher drilling utilization and an increase in daily rate, notably in the offshore segment   

Dallah Healthcare Co. reported a net profit of SR274 billion, up 6.13 percent compared to 2021. Dallah attributed the increase to a revenue increase of 18.18 percent in 2022 to SR2.4 billion. The healthcare company’s share price slightly decreased by 0.56 percent, closing at SR141.6. 

Saudi Reinsurance Co. also announced its financial results for 2022 and reported a net loss of SR1.6 million, down 58.1 percent compared to almost SR4 million in 2021. However, its share price increased by 1.66 percent to SR14.7 per share.