OPEC sticks to forecast on demand growth citing economic stability

Echoing the expected positive demand for oil and partially boosted by tighter supply from OPEC producers, crude prices rose on Tuesday. File
Echoing the expected positive demand for oil and partially boosted by tighter supply from OPEC producers, crude prices rose on Tuesday. File
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Updated 12 September 2023

OPEC sticks to forecast on demand growth citing economic stability

OPEC sticks to forecast on demand growth citing economic stability

RIYADH: The Organization of the Petroleum Exporting Countries, in its latest report, sticks to expectations on oil demand growth for 2023 and 2024 on expectations that major world economies will fare better despite existing global headwinds.

According to the report, OPEC expects that global oil demand will rise by 2.25 million barrels per day in 2024, compared to the growth of 2.44 million bpd in 2023.

“The ongoing global economic growth is forecast to drive oil demand, especially given the recovery in tourism, air travel, and steady driving mobility,” said OPEC in the report.

In its report, OPEC further pointed out that the global economic growth dynamics in the first half of 2023 have been resilient despite the numerous challenges, including high inflation, elevated interest rates, and geopolitical tensions.

“This steady global economic growth trend continued into the third quarter of 2023, supported by buoyant consumer spending, especially in the services sector. With this, the global growth is expected at 2.7 percent for 2023 and 2.6 percent for 2024,” added OPEC in the report.

The report added that Saudi Arabia is expected to witness robust growth in the near term driven by various reform initiatives by the government.

“In the near term, a sustained period of robust growth is anticipated, with support from both the oil and non-oil sectors, all driven by a strong commitment to government reform initiatives,” said OPEC about Saudi Arabia’s growth prospects.

Echoing the expected positive demand for oil and partially boosted by tighter supply from OPEC producers, crude prices rose on Tuesday.

November Brent crude futures rose 85 cents, or 0.9 percent, to $91.49 a barrel at 03:19 p.m. Saudi time, while US West Texas Intermediate crude futures for October firmed by $1.02, or 1.2 percent, to $88.31.

“Pre-COVID-19 levels of total global oil demand will be surpassed in 2023,” OPEC added in the report.

In a bid to stabilize the oil market, OPEC and its allies, known as OPEC+ began limiting supplies in late 2022, and as a result, Brent crude breached $90 a barrel last week for the first time in 2023.

In April 2022, OPEC+ decided to reduce global oil production, with Saudi Arabia voluntarily trimming output by 500,000 barrels per day.

Building on this commitment, Saudi Arabia implemented an additional 1 million bpd cut in June, a decision which was later extended until December 2023.

Closing Bell: Saudi Tadawul closes in the red across all indexes 

Closing Bell: Saudi Tadawul closes in the red across all indexes 
Updated 6 sec ago

Closing Bell: Saudi Tadawul closes in the red across all indexes 

Closing Bell: Saudi Tadawul closes in the red across all indexes 

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Monday, losing 32.93 points, or 0.28 percent, to close at 11,697.04.       

The total trading turnover of the benchmark index was SR8.6 billion ($2.3 billion), as 115 of the listed stocks advanced while 109 retreated.  

The Kingdom’s parallel market Nomu dropped 47.75 points, or 0.18 percent, to close at 26,777.87. This comes as 21 of the listed stocks advanced while as many as 33 retreated. 

Similarly, the MSCI Tadawul Index also dropped 5.07 points, or 0.34 percent, to close at 1,470.61.  

TASI’s best-performing stock of the day was Miahona Co. The company’s share price surged 9.93 percent to SR23.46.     

Other top performers include Etihad Atheeb Telecommunication Co. as well as Jazan Development and Investment Co., whose share prices soared by 7.88 percent and 6.92 percent to stand at SR91.70 and SR15.46, respectively.   

Additional top performers include Salama Cooperative Insurance Co. and Electrical Industries Co. 

The worst performer was Fawaz Abdulaziz Alhokair Co., whose share price dropped by 5.99 percent to SR8.32.    

Other firms to see a drop were Mouwasat Medical Services Co. as well as ACWA Power Co., whose share prices dropped by 3.69 percent and 3.56 percent to stand at SR120.20 and SR351.80, respectively.   

Additional falling performers include Theeb Rent a Car Co. and Dr. Sulaiman Al Habib Medical Services Group.     

In Nomu, Osool and Bakheet Investment Co. was the top gainer, with its share price rising by 16.80 percent to SR60.50.    

Other strong performers in Nomu were Mohammed Hadi Al Rasheed and Partners Co. as well as Al Mohafaza Co. for Education, whose share prices soared by 7.58 percent and 6.50 percent to stand at SR35.50 and SR20, respectively.   

Other top gainers include Future Care Trading Co. and Saudi Lime Industries Co.  

Mulkia Investment Co. was the major faller on Nomu, as its share price dropped 9.80 percent to SR31.30.    

The share prices of Alwasail Industrial Co. as well as Lana Medical Co. also fell by 4.68 percent and 4.47 percent to stand at SR2.65 and SR33.10, respectively.   

Other major losers include Saudi Top for Trading Co. and Jahez International Co. for Information System Technology. 

Spinneys CEO sets out Saudi retail growth plans after flagship store launch in Riyadh

Spinneys CEO sets out Saudi retail growth plans after flagship store launch in Riyadh
Updated 11 min 41 sec ago

Spinneys CEO sets out Saudi retail growth plans after flagship store launch in Riyadh

Spinneys CEO sets out Saudi retail growth plans after flagship store launch in Riyadh

RIYADH: Dubai-based supermarket chain Spinneys has made its debut in Saudi Arabia by launching its first store in Riyadh’s La Strada Yard. 

The 43,520 sq. ft. flagship outlet in Riyadh’s emerging mixed-use development marks the beginning of Spinneys’ expansion strategy in the capital city and Jeddah, aiming to cater to the increasing preference for high-quality grocery choices across the Kingdom.

The company said its first store aims to deliver a “premium shopping experience” with a wide range of imported goods, locally sourced products, international brands, and an exclusive private label selection.

This comes as Spinneys’ initial public offering on the Dubai Financial Market, initially priced at $375 million, was oversubscribed 64 times, reaching $19.33 billion last month.

“At the time of our IPO, we were explicit about our ambitions in the Kingdom, and these are now coming to fruition. We see a massive whitespace opportunity in Saudi Arabia, with sectoral growth supported by favorable macroeconomic and consumer trends,” Sunil Kumar, CEO of Spinneys, told Arab News.

He emphasized that the local grocery market is experiencing rapidly increasing demand for a fresh, high-quality offering that squarely fits their expertise. 

“By entering Saudi Arabia now, we believe that we are gaining an early mover advantage in establishing Spinneys as the pre-eminent premium grocer,” he said. 

Kumar revealed that the company has ambitious targets for its inaugural store, aiming to achieve performance levels similar to those of one of its key community stores in the UAE.

“As our first store, we expect Spinneys La Strada to benefit from drawing customers from a broader geographic base than it would in a city where we have an existing footprint,” the CEO said.  

He added: “Our immediate goals are to offer customers in these areas a truly differentiated shopping experience, with a focus on premium fresh food, convenience and outstanding service.” 

He highlighted the company’s on-site production capabilities at La Strada, which are set to enhance economies of scale and are crucial for its fresh food offerings and profitability. 

“These facilities will have an important role in supplying fresh food to other Riyadh locations as we expand across the city,” Kumar added. 

Sunil Kumar, CEO of Spinneys. Supplied.

Spinneys operates a total of 79 stores across Saudi Arabia, the UAE, and Oman, with a combined sales area of 880,000 sq. ft. across all markets.

The company aims to open three additional locations in Riyadh and Jeddah by year-end, positioning itself to operate up to 12 stores in Saudi Arabia by 2028.

Following the flagship La Strada Riyadh location, Spinneys’ next project will be an 11,636 sq. ft. store in the King Abdullah Financial District in Riyadh.

The company is also targeting opening 25 new stores in the UAE between 2024 and 2028, with recent launches and expansions underway. 

Kumar explained that their strategy includes like-for-like store growth, exploiting white space opportunities, and introducing the Kitchen by Spinneys concept, as well as expanding their hyperlocal e-commerce channel, Spinneys Swift, and optimizing operational efficiencies.

Saudi market

In terms of locations, Spinneys wants to concentrate on establishing a robust presence in Saudi Arabia’s most affluent and populous cities, namely Riyadh and Jeddah.

“There are a few reasons for this. First off, these are economic powerhouses and population hubs, with Riyadh comprising 27 percent of the national population and Jeddah 25 percent,” Kumar said. 

He further highlighted the significant expatriate population in the Kingdom, currently at 42 percent and projected to reach 50 percent by 2040, which he sees as an “important factor” for Spinneys’ market proposition. 

“Secondly,” he continued, “the disposable income levels in Riyadh and Jeddah are compelling, around $13,300 and $12,250 per capita respectively as of 2022.”

He added: “With a projected 6.4 percent CAGR for the Kingdom’s affluent population between 2022 and 2028, and particularly in view of our premium positioning, the purchasing power of families and individuals is important.” 

Looking at the Saudi market more broadly, Kumar noted that disposable incomes are rising, inflation is relatively low, and transformative initiatives like Saudi Vision 2030 are driving long-term diversification. 

“All of this creates a very attractive environment for business growth,” said the CEO.

With its leadership in the UAE, Spinneys plans to replicate and adapt its offerings in the Kingdom’s burgeoning premium grocery segment. “Our core store concepts won’t deviate radically from other GCC (Gulf Cooperation Council) markets, but we have carefully tailored the in-store experience and product assortment to align with distinct Saudi preferences,” explained Kumar.  

The company asserts that it has done in-depth market research to understand unique Saudi tastes, consumer behaviors, and cultural traditions, which will be reflected in its stores. Kumar stated that the goal is to offer “a truly localized shopping experience” that combines global sourcing with authentic local flair.

Entrance of Spinneys at The Villa Community in Dubai. Shutterstock

Supply chain

The UAE-based firm recognizes the importance of establishing a robust supply chain infrastructure and local production capability. It aims to leverage its “vertically integrated” sourcing model, which Kumar notes has been a key competitive advantage in other GCC markets.

“We are already ensuring it plays the same role for our Saudi business,” Kumar said. 

The facilities at La Strada will supply other stores in Riyadh as they open, and Spinneys plans to establish in-house production facilities in Jeddah as well. “Our local production model enables us to optimize our supply chain, reduce food miles, and maintain the exceptional freshness and quality standards our brand is known for,” said the CEO. 

The company has “well-established” relationships with over 870 suppliers in 44 countries, facilitated through its own subsidiaries in major sourcing hubs such as the US, the UK and Australia. “Our Saudi customers will benefit from this supply chain in the same way that our customers in the UAE and Oman have done,” Kumar explained.  

Spinneys insists that its diverse global network, along with its proximity to producers, enables significant cost efficiencies. “It’s also a key driver of our sustainability commitment, minimizing food waste while adhering to the highest environmental and social standards. Replicating the Spinneys supply chain model in Saudi Arabia is essential to maintaining our competitive edge,” he emphasized. 

White space opportunity

Spinneys sees a significant white space opportunity in the Saudi grocery market, which Kumar describes as “too compelling to ignore.”

Citing third-party research, Kumar highlighted that the Kingdom’s overall grocery retail white space is set to reach 86 million sq. ft. by 2033, adding: “To put that into perspective, this is equivalent space for almost 1,200 Spinneys stores. As of today, we’re opening a much smaller number of stores than that, but we have a good deal of headroom in what we see as a vast, underpenetrated market that is ripe for a genuinely premium offering.”

Kumar emphasizes that it’s not just about white space; he points to a powerful confluence of structural tailwinds driving growth in the Saudi retail landscape. “The affluent population that belongs to our “target market” is forecast to expand at a 6.4 percent CAGR through 2028. This means that Spinneys’ target market is growing at a rate that outpaces the wider grocery market,” he said.

In Riyadh and Jeddah, Spinneys anticipates its target market will grow at a CAGR of 6.7 percent from 2022 to 2028, outpacing the broader Saudi grocery market, which is expected to grow at a CAGR of 4.8 percent over the same period.

Spinneys outlets in Saudi Arabia are operated through a joint venture formed in 2022 with Abdul Mohsen Al Hokair Holding Group. 

Kumar emphasized: “Our respective interests are closely aligned, and we share the same ambition to make the Spinneys brand a champion in Saudi Arabia’s premium grocery segment.” 

He added that their partner plays a crucial role in navigating the local business and regulatory landscape, as well as in identifying and securing the most attractive locations to open stores. 

“This is a partnership we are very excited about, and we have every expectation that it will continue to flourish in the years to come,” Kumar concluded.   

Australia, Saudi Arabia trade expo to be held in Riyadh in October

Australia, Saudi Arabia trade expo to be held in Riyadh in October
Updated 24 June 2024

Australia, Saudi Arabia trade expo to be held in Riyadh in October

Australia, Saudi Arabia trade expo to be held in Riyadh in October

RIYADH: Agriculture, healthcare, and education are among the sectors that will benefit from a new conference aiming to boost partnership deals between Saudi Arabia and Australia. 

Set to be held from Oct. 21 to 22 at the KAFD Conference Centre in Riyadh, the inaugural Aussie Expo will also see a focus on technology, infrastructure, and mining.

The event is being organised by the Trademark Group of Companies – a conglomerate dedicated to facilitating the expansion of Australian businesses into the Kingdom and the broader Gulf Cooperation Council region, as well as supporting businesses from these areas in entering the domestic market.

According to the UN Comtrade database, Australia’s exports to Saudi Arabia stood at $789.65 million in 2023. On the other hand, the Kingdom’s exports to Australia amounted to $702.75 million over the same 12-month period

“For the past two and a half years, Trademark Group of Companies has been committed to creating a bridge between Australian and Saudi Arabia businesses. For the first time ever, an Australian exhibition that showcases Australian talents, products, and services to the region will be proudly held in Riyadh, Saudi Arabia. I would like to thank all stakeholders involved in ensuring the success of this event,” Sam Jamsheedi, chairman and founder of Trademark Group of Companies, said. 

On June 1, Trademark Group of Companies opened its office in Riyadh, eyeing economic opportunities in Saudi Arabia and providing a platform for Australian companies to explore and deepen trade ties with the Kingdom.

Guided by the theme “Accelerating Partnerships, Unlocking New Opportunities,” Aussie Expo Riyadh 2024 will showcase excellence across various industries, according to its website. 

This will be achieved through a series of conference sessions and workshops during which key government officials, industry leaders, decision-makers, and entrepreneurs from both countries will converge. 

These networking opportunities are expected to be a major draw for attendees, providing a platform to explore potential partnerships that drive mutual success.

Renewable energy and sustainability as well as tourism and hospitality, retail and consumer goods, and transport and logistics will be discussed at the evemt

Talking to Arab News on the sidelines of the Australian Saudi Business Networking Event in Riyadh earlier in June, Australian Ambassador Mark Donovan said the opening of the Trademark Group of Companies’ office in the Kingdom  would help both countries explore investment opportunities in various sectors.

Earlier in May, Saudi Arabia and Australia signed an agreement to improve cooperation across multiple sectors and strengthen bilateral trade ties.

The Australia Saudi Business Council and Forum and the Export Council of Australia signed an agreement to boost collaboration in industry, mining, food, technology, and artificial intelligence, with an aim to enhance opportunities for Australian exporters to work with Saudi entities, strengthening bilateral cooperation.

Saudi Arabia expands access for Chinese tourists with new agreement

Saudi Arabia expands access for Chinese tourists with new agreement
Updated 24 June 2024

Saudi Arabia expands access for Chinese tourists with new agreement

Saudi Arabia expands access for Chinese tourists with new agreement

RIYADH: Chinese tourist groups will now find it easier to visit Saudi Arabia following the implementation of the Approved Destination Status arrangement, effective July 1.      

This initiative marks a key step toward the Kingdom’s goal of positioning China as its third-largest source market for international arrivals by 2030, according to a statement.     

The agreement aligns with Saudi Arabia’s goal of attracting 5 million Chinese tourists by 2030, facilitated by new direct flights from Air China, China Eastern, and China Southern, alongside existing Saudia flights.   

Moreover, it highlights the Kingdom’s commitment to strengthening its economic ties with China, leveraging opportunities in the tourism sector, and promoting mutual understanding, cooperation, and economic growth between the two nations.   

The Kingdom’s Tourism Minister Ahmed Al-Khateeb said the agreement “demonstrates Saudi Arabia’s readiness for Chinese visitors.”  

He added: “The Saudi Tourism Authority has played a crucial role in visa facilitation, reduced fees, improving air connectivity, and ensuring destination readiness with Mandarin-language information available on www.visitsaudi.cn, Mandarin signage at airports, and Mandarin-speaking tour guides and hotel staff.”   

China’s ADS policy is a bilateral agreement between countries that allows its citizens to travel to specific overseas destinations for tourism purposes in organized groups.  

It was first introduced in the early 1990s to accommodate the growing interest of Chinese citizens in international travel and the increase in disposable income among the population.    

“By strengthening bilateral ties with China, the ADS agreement opens doors for economic development across sectors, benefiting both nations,” added Saudi Arabia’s Ambassador to China Abdulrahman bin Ahmed Al-Harbi. 

CEO of Saudi Tourism Authority Fahd Hamidaddin said that the Kingdom’s approval as a tourist destination for Chinese visitors reflects Saudi Arabia’s continuous efforts and participation in trade shows and conferences, leading to agreements with Chinese organizations. 

He added: “We strive to provide a seamless, enjoyable, and safe experience for Chinese tourists, including streamlined visa procedures, increased flight capacity, and Mandarin integration across airports, destinations, tourist sites, and digital platforms like the ‘Visit Saudi’ website.”

The CEO highlighted that partnerships with trusted Chinese brands such as UnionPay, Trip.com, Huawei, and Tencent further enhance the authority’s offerings. 

In February, top officials from both countries convened for a high-level meeting in Beijing, focusing on investment opportunities, technology transfer, and enhancing economic cooperation. 

The Saudi delegation, led by Abdulaziz Al-Duailej, president of GACA, visited the Asian country to hold a joint roundtable meeting, exploring cooperation in connectivity and discussing partnership aspects across various areas. 

During the visit, the Kingdom’s representatives emphasized the substantial investments in the sector and reiterated Saudi Arabia’s openness to further opportunities. 

‘Historical transformation’ in Saudi Arabia to drive construction output to $181.5bn: Knight Frank

‘Historical transformation’ in Saudi Arabia to drive construction output to $181.5bn: Knight Frank
Updated 24 June 2024

‘Historical transformation’ in Saudi Arabia to drive construction output to $181.5bn: Knight Frank

‘Historical transformation’ in Saudi Arabia to drive construction output to $181.5bn: Knight Frank

RIYADH: Saudi Arabia’s construction output value is projected to hit $181.5 billion by the end of 2028 — a 28 percent rise over five years, according to global property consultancy Knight Frank,

An analysis by the firm found that output value for the sector reached $141.5 billion in 2023 thanks to the Kingdom’s activities in the residential, institutional, and infrastructure sectors as well as industrial, energy, utilities, and commercial divisions.

This substantial investment in construction also serves to strengthen the Kingdom’s position as a global hub for tourism, commerce and trade.

This is further propelled by Saudi Arabia’s giga-projects – including the $500-billion-megacity NEOM – and goals to deliver over 660,000 residential units, more than 320,000 hotel keys, over 5.3 million sq. m. of retail space, and more than 6.1 million sq. m. of new office space by the end of the decade.

Mohamed Nabil, head of Project and Development Services for the Middle East and North Africa at Knight Frank, said: “We are currently witnessing a historical transformation unfolding in Saudi Arabia with construction projects standing out in their design scale and value.”

He added: “Given the scale of the development pipeline, the government is hoping to attract over $3 trillion in investments by 2030, a figure recently confirmed by the Minister of Investment during the inaugural Sino-Gulf Cooperation for Industries and Investments Forum in China last month.”

Since the launch of Saudi Arabia’s National Transformation Plan in 2016, deemed an integral part of Vision 2030,  the total budgeted value of real estate and infrastructure projects has surpassed $1.25 trillion. 

While this transformation is evident across the entire urban landscape, the residential division primarily dominates the sector’s output value, accounting for 31 percent, or $43.5 billion, of the total in 2023. 

This is projected to reach $56.9 billion by the end of 2028, according to Knight Frank’s analysis.

This continued growth is largely driven by the nation’s flagship real estate developer, ROSHN, which aims to produce over 400,000 homes, 1,000 kindergartens and schools, and over 700 mosques by 2030. 

The company has made strides to fulfill this goal, most recently in April, when it signed an SR215 million ($57.3 million) sale and purchase agreement with partner developer Dar Al Arkan.

Under the deal, Dar Al Arkan will acquire and develop residential villas in SEDRA 1A, which is in northern Riyadh.

Riyadh currently accounts for 38 percent of the existing contract award value, equating to $54 billion, followed by Makkah at $28.7 billion and Tabuk province at $28.5 billion.

While construction sector contract awards account for 61 percent of the total value, the transportation sphere follows in second place at 33 percent, highlighting the significant investment being made in bolstering the capital’s  infrastructure as the population swells to a projected 10 million by 2030.

The under-construction Riyadh-based King Salman International Airport is a testament to this fact. According to the Public Investment Fund, the project, announced by Crown Prince Mohammed bin Salman in November 2022, is expected to cover an area of approximately 57 sq. km, allowing six parallel runways as well as the existing terminals.

The Knight Frank analysis comes as Saudi Arabia emerged as the leader in global construction activity for the first quarter of this year,  according to a report released in May by real estate services firm JLL, which calculated the Kingdom having $1.5 trillion of projects in the pipeline,

The JLL analysis further highlighted that Saudi Arabia accounted for a 39 percent share of the total construction projects in the Middle East and North Africa region, valued at $3.9 trillion. 

The economic diversification strategy Vision 2030 has been the driving force for much of this growth, especially through giga-projects across the Kingdom, particularly in the Western region.

Initiatives like NEOM, The Line, Diriyah Gate, and the newly announced Qiddiyah project are at the forefront of this boom.

Amar Hussain, associate partner for research at Knight Frank, said: “With a value of over SR1.25 trillion launched but not yet delivered, giga-projects are undoubtedly transforming the Kingdom’s urban landscape. Arguably, one of, if not the most expansive, real estate development programs ever seen in the world is gathering pace in Saudi Arabia as the 2030 deadline nears to realize Vision 2030.” 

He added that across the Kingdom the planned volume of residential units has risen to 660,000, an increase of 30 percent in the last 12 months, while the office pipeline is steady at 6 million sq. m.

In the commercial market, according to the report, plans are currently underway for 5.3 million sq. m. of retail space and an additional 320,000 hotel rooms, which will contribute to Saudi Arabia’s objective of growing the population to 40 million and accommodating 150 million visitors by 2030. 

“This figure has increased from approximately 106 million visitors last year, including 27 million international visitors, a 62 percent increase from the previous year,” said Hussain.

According to Knight Frank’s analysis, 25 giga-project-related developments are currently in various construction phases around the Kingdom. 

Western Saudi Arabia remains a focus of development, with plans valued at $692 billion, accounting for 55 percent of the total $1.25 trillion expansion plan. 

The region is expected to see extensive growth in luxury residential supply, hotel accommodation, retail, and office space.

This past year alone, under the umbrella of NEOM, a multitude of new assets were announced in the Western region, including luxury lifestyle destination Magna, situated on the Aqaba coastline, ultra-modern active lifestyle community Norlana, and eco-luxury sanctuary resort Zardun.