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)
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Updated 25 February 2023
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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. 


Saudi Tadawul Group and Chinese Shenzhen Stock Exchange sign MoU to boost cooperation 

Saudi Tadawul Group and Chinese Shenzhen Stock Exchange sign MoU to boost cooperation 
Updated 48 sec ago
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Saudi Tadawul Group and Chinese Shenzhen Stock Exchange sign MoU to boost cooperation 

Saudi Tadawul Group and Chinese Shenzhen Stock Exchange sign MoU to boost cooperation 

RIYADH: Cooperation efforts between Saudi Arabia and China’s capital markets are on track to flourish thanks to an agreement signed by the Saudi Tadawul Group. 

Inked with the Chinese Shenzhen Stock Exchange, the memorandum of understanding aims to enhance collaboration and explore new opportunities in several areas, including joint listing and financial technology, by leveraging the advantages of both parties, according to a statement. 

This move aligns with the Shenzhen Stock Exchange’s plans to bolster partnerships with foreign exchanges to attract more long-term funds from outside China. 

It also poses a crucial step in promoting the development of the Saudi capital market.

Moreover, fostering the growth of capital markets emerges as a shared objective for both nations as it is believed that issuers and investors from the joint countries will benefit from the deep cooperation between the capital markets, according to officials from Saudi Tadawul Group. 

Under the terms of the agreement, both parties will work hand in hand to study the joint listing of exchange-traded funds and stocks. 

In addition, they will also exchange experiences and mutual learning in various fields, including environmental, social, and governance, financial technology, investor assistance, and corporate incubation services. This will help in supporting the high-quality development of both markets.

Moreover, both sides will jointly research and promote cooperation in products such as indices, funds, and real estate investment trusts. 

The two entities will also jointly build a cross-border capital service mechanism to promote the participation of market entities from both sides in cross-border investments and further advance the connectivity and integration of the capital markets between China and Saudi Arabia.

In September, the Saudi Tadawul Group and the Shanghai Stock Exchange signed an MoU to bolster cooperation and promote mutual development.

At the time, the agreement focused on dual listings of exchange-traded funds, initiatives related to investor relations and infrastructure development, as well as fintech, environmental and social practices. 

There was also support for family businesses and small-medium enterprises, corporate governance, and data exchange and research, according to a statement released at the time.


Closing Bell: TASI edges up 84 points, reaches $2bn trade volume  

Closing Bell: TASI edges up 84 points, reaches $2bn trade volume  
Updated 21 min 16 sec ago
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Closing Bell: TASI edges up 84 points, reaches $2bn trade volume  

Closing Bell: TASI edges up 84 points, reaches $2bn trade volume  

RIYADH: Saudi Arabia’s Tadawul All Share Index continued its upward trend on Monday, as it gained 84.23 points, or 0.75 percent, to close at 11,380.95.    

The total trading turnover of the benchmark index was SR7.52 billion ($2 billion) as 84 stocks advanced, while 133 retreated.    

Parallel market Nomu performed negatively as it dropped by 170.41 points, or 0.71 percent, to finish at 23,705.39. However, the MSCI Index edged up by 14.78 points to 1,463.16.    

The best-performing stock on the main index was Alkhorayef Water and Power Technologies Co., whose share price soared by 7.79 percent to SR168.80.    

Other top performers of the day included Naseej International Trading Co. and United Wire Factories Co., with their share prices surging by 6.34 percent and 4.23 percent, to reach SR57 and SR28.35, respectively.    

The worst performer of the day was Al-Baha Investment and Development Co. The share price of the company dipped by 7.14 percent to SR0.13.    

Saudi Enaya Cooperative Insurance Co. and Amana Cooperative Insurance Co. were also amongst the worst performers with their stocks dropping by 6.35 percent and 4.37 percent, to close at SR15.34 and SR12.70, respectively.  

In Monday’s trading session, ACWA Power, one of Saudi Arabia’s leading utility companies, saw its shares climb by 4 percent, reaching SR242.   

This marked the stock’s highest closing value since its initial listing, with approximately 500,000 shares traded. The company’s shares peaked at SR243.60 during the day.  

On the announcement front, Al Sagr Cooperative Insurance Co. disclosed today that it has received approval from the Insurance Authority to increase its capital from SR140 million to SR300 million through a rights issue, as per a statement on Tadawul.  

The approval also encompasses modifications to the company’s bylaws regarding the capital article, adapting them to reflect the new capital structure.   

This authorization from the IA holds validity for one year from the date of the letter, within which the capital increase must be completed.  

Al Sagr noted that it is facing difficulties determining the expected completion date for this event with the financial impact to be announced later.   

Additionally, Al Sagr emphasized its commitment to meeting the requirements of all other pertinent regulatory authorities in the course of this capital increase process. 


Saudi sovereign fund launches Dan Co. to promote ecotourism in Kingdom

Saudi sovereign fund launches Dan Co. to promote ecotourism in Kingdom
Updated 26 min 53 sec ago
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Saudi sovereign fund launches Dan Co. to promote ecotourism in Kingdom

Saudi sovereign fund launches Dan Co. to promote ecotourism in Kingdom

RIYADH: Saudi Arabia’s Public Investment Fund has launched a company dedicated to promoting ecotourism in the Kingdom.

In a press statement, the sovereign wealth fund said the newly launched firm Dan Co. plans to develop and operate high-end resorts and lodges in the Kingdom to partner with the local community and promote agritourism.

While agritourism refers to visitor experiences related to traditional farming, ecotourism focuses on experiencing nature and minimizing environmental impact. 

The fund revealed that the first project by Dan Co. would be located in the Al-Ahsa region, across 1.8 million sq. meters, featuring an eco-resort, an agritourism retreat and an adventure spot. 

The agritourism retreat will celebrate the unique produce of Al-Ahsa, which is especially famous for its rice and dates.

On the other hand, the eco-resort will utilize local materials with low carbon emissions, preserving the region’s flora and fauna.

The adventure resort will offer activities for travelers, including horse riding, star gazing and hill climbing. 

The press statement added that Dan Co. is expected to contribute SR6 billion ($1.6 billion) to Saudi Arabia’s non-oil gross domestic product by 2030. 

“The establishment of Dan Co. encapsulates one element of PIF’s strategy to further strengthen tourism,” said Khalid Johar, co-head of the fund’s local real estate portfolio department, in the statement.

He added: “It will boost economic development and contribute to national economic growth. The company will operate novel business models that integrate sustainability and embrace nature, involving the private sector and local farmers in agritourism and ecotourism.”

Johar further noted that establishing Dan Co. will also create new job opportunities in the local communities. 

Developing the tourism sector is crucial for Saudi Arabia, as the Kingdom is diversifying its economy away from oil, aligned with the goals outlined in Vision 2030. 

Saudi Arabia’s National Tourism Strategy aims to attract over 150 million visitors by the end of this decade, and the fund has been spearheading this journey after the launch of Vision 2030. 

The fund’s portfolio initiated several strategic investments to strengthen Saudi tourism and boost city economies nationwide.

These include the Soudah Development, which will create a year-round luxury mountain tourism resort in the Aseer region.

On the other hand, Boutique Group is developing historical palaces into luxury boutique hotels.

The fund’s Saudi Downtown Co. also aims to establish and develop urban centers across the Kingdom. 


UAE’s green bonds and sukuk value surges over $4bn in 11 months

UAE’s green bonds and sukuk value surges over $4bn in 11 months
Updated 11 December 2023
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UAE’s green bonds and sukuk value surges over $4bn in 11 months

UAE’s green bonds and sukuk value surges over $4bn in 11 months

RIYADH: The total value of sukuks, green and sustainability-linked bonds registered with the UAE’s Securities and Commodities Authority reached about 15.45 billion dirhams ($4.2 billion) between January and November, according to a top official.

SCA Chairman Mohamed Al-Shorafa disclosed the figures in an interview with the Emirates News Agency, or WAM, on the sidelines of the UN climate change conference in Dubai.

He appreciated the UAE’s commitment to sustainable development, aligning with the vision of the late founding father, Sheikh Zayed bin Sultan Al-Nahyan, and actively pursued under current leadership guidance.

The UAE’s ambitious target is to achieve net-zero emissions by 2050, with Dubai planning a 50 percent reduction in carbon emissions by 2030. 

Al-Shorafa emphasized the SCA’s pivotal role in regulating the issuance of green and sustainability-linked bonds and sukuk. 

Al-Shorafa said: “Issuing green bonds and sukuk is one of the transformational projects in supporting the efforts to make the UAE the new global economic hub for the next ten years.” 

In a significant move, the SCA exempted companies listing sustainability-linked bonds from registration fees for 2023, reflecting a positive response to the growing demand for these instruments.

Additionally, SCA CEO Maryam Al-Suwaidi highlighted the importance of green bonds in the country’s transformative journey.

“These performance agreements represent forward-looking quality projects that will enhance the country’s competitiveness, and the transformational projects will greatly impact all sectors over short periods and ensure the implementation of the new government action model of the UAE government,” Al-Suwaidi told WAM. 

The UAE has facilitated its green transition by encouraging local companies to raise capital through green sukuk. 

This move included DP World’s successful $1.5 billion green sukuk offering in October, listed on Nasdaq Dubai and the London Stock Exchange, oversubscribed by 2.3 times.


Saudi Arabia’s initiatives help boost industrial licenses by 84%

Saudi Arabia’s initiatives help boost industrial licenses by 84%
Updated 22 min 33 sec ago
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Saudi Arabia’s initiatives help boost industrial licenses by 84%

Saudi Arabia’s initiatives help boost industrial licenses by 84%

RIYADH: Saudi Arabia granted 412 new industrial licenses in the third quarter, marking an 83.9 percent surge compared to the corresponding period in the previous year, according to the latest Investment Ministry data.

The ministry attributed this increase, along with a 1.5 percent rise in capital for newly licensed factories, to the Kingdom’s efforts to enhance the competitiveness of the industrial environment, elevate the value of local content and support domestically manufactured products.

These initiatives fall under the National Industrial Development and Logistics Program and the Saudi Export Development Authority, which introduced the “Made in Saudi” program in 2021 to promote local talent and innovation.

The program seeks to boost the economy, position Saudi products internationally, and attract investments by supporting businesses locally and globally.

Businesses collaborating in this initiative can use the “Saudi Made” logo to enhance the country’s global image.

In alignment with Vision 2030, the initiative strives to build a diversified and sustainable Saudi economy, targeting an increase in non-oil exports to 50 percent of non-oil gross domestic product by 2030.

The ministry issued 2,202 licenses in the third quarter, including those granted as part of anti-concealment law enforcement, representing an 89 percent increase over the same period last year. 

The construction sector led in investment licenses with 654 licenses, a 170 percent increase, over the third quarter of last year.

On the other hand, the manufacturing sector bagged 360 licenses, reflecting a 94 percent increase. 

Professional, scientific, and technical activities saw a boost with 216 new licenses, a 93 percent increase, while the information and communication sector obtained 204 licenses, indicating a 115 percent increase.

Notably, public administration and support services witnessed the most substantial growth in investment licenses, with an increase of 294.3 percent.

Following closely, the electricity, gas, steam, and air conditioning sector saw a rise of 175 percent in granted licenses.

The construction sector also experienced a notable increase of 170 percent during this period.

According to MISA investment data, the third quarter closed 19 deals, with the education & training and culture sectors attracting the highest investor interest, each securing four agreements. 

China led in the origin of investments with five deals in the third quarter, followed by Japan with three in Saudi Arabia. The remaining deals were distributed among 12 other countries.