‘Private-public partnerships driving investment in Saudi Arabia’s booming real estate market’

Special ‘Private-public partnerships driving investment in Saudi Arabia’s booming real estate market’
Elias Abou Samra, CEO of Rafal Real Estate in discussion with Arab News’s Reina Takla. Supplied
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Updated 10 July 2024

‘Private-public partnerships driving investment in Saudi Arabia’s booming real estate market’

‘Private-public partnerships driving investment in Saudi Arabia’s booming real estate market’

RIYADH: Private-public partnerships have become a cornerstone for attracting substantial investment to Saudi Arabia’s real estate market over the past five years, an expert has told an industry forum.

Amid Saudi Arabia’s drive to bolster the private sector and foster sustainable partnerships for development, the role of PPPs in spurring economic growth and innovation is now more critical than ever, delegates at the 15th Real Estate Development Summit Saudi Arabia - Europe edition were told.

Saudi real estate projects headlined the event held in Palma de Mallorca, Spain and hosted by GBB Venture. This gathering featured over 100 companies and connected decision-makers from major Saudi projects with global suppliers. 

It also showcased the Kingdom’s rapid real estate advancements, driven by ambitious urban developments and substantial infrastructure investments, emphasizing sustainability and innovation.

Speaking at the event, Elias Abou Samra, CEO of Rafal Real Estate, said: “We’ve seen good traction on PPPs. With private-public partnerships, you have guaranteed offtake. So most of the investments that came into the country were based on this.” 

In a panel discussion titled “In Conversation with a Chief Challenger,” Abou Samra introduced a classification system for PPPs in Saudi Arabia – structured and unstructured. 

“It’s a definition that I came up with, but it helps me understand the landscape of opportunities,” he said.

Structured PPPs encompass projects under the National Center for Privatization, which are highly organized and regulated. In contrast, unstructured PPPs involve mega projects like NEOM and Red Sea, characterized by joint ventures between public entities and private investors.

The NCP, is one of the executive programs launched by the Council of Economic and Development Affairs to achieve the objectives of Vision 2030. 

The program seeks to support the development of the national economy, and enhance the role of the private sector as well as strengthen the government’s focus on its legislative and regulatory role and seek to attract local and foreign direct investments.

During the discussion, Abou Samra unveiled a wealth of opportunities awaiting investors in the Saudi real estate market, highlighting the $1.5 trillion figure mentioned in a recent report by the US-based global real estate services company JLL, which details the pipeline for onward projects in the Kingdom.

“It will be good to segment this $1.5 trillion to understand the landscape of opportunities in the market out of the $1.5 trillion,” said Abou Samra. 

“I believe $80 to $90 billion have already been awarded. So that means there’s 15 times growth in terms of projects to be done over the next seven, eight, maybe 10 years,” he added.

The CEO was candid about the challenges faced by mega projects, acknowledging that they require time and often encounter issues. “It’s no secret that these projects can be stretched, but the relevance of these figures is to highlight the scale of opportunities. While the Saudi government may not invest the remaining balance of $1.5 trillion in the near term, there is notable traction from foreign direct investments.”

Regional investors have already shown significant interest, a development Abou Samra viewed as a healthy sign that will drive further foreign direct investment from both Western and Eastern markets.

“(They) understand the intricacies of investing in Saudi Arabia, creating a ripple effect that fosters more substantial international investment,” he explained.

The real estate market in Saudi Arabia is transitioning from traditional infrastructure projects to more sophisticated superstructures and operational activities. This transformation is poised to accelerate, particularly as most infrastructure works are already well underway. Abou Samra emphasized that this progress is promising for industries such as construction, lifestyle, tourism, and interior design.

Several initiatives are currently underway, including the headquarters group, which has seen a growing number of regional HQs moving to Riyadh. 

“As of my last check, 225 companies have relocated their regional headquarters to Riyadh. This demonstrates the leadership’s commitment to interdisciplinary development and value creation,” Abou Samra remarked.

More than 120 international firms received licenses to relocate their regional headquarters to Saudi Arabia during the first quarter of 2024, representing a 477 percent year-on-year increase. 

In its quarterly report, the Kingdom’s Ministry of Investment revealed 127 permits issued in the first three months of the year, underscoring the nation’s attractive and favorable business environment.

Speaking on the demand for residency in Saudi Arabia, the CEO emphasized that it remains robust, driven primarily by local residents and increasingly by expatriates who have made the Kingdom their home.

“I’ve launched the project since the beginning of this year, and almost 15 percent of the buyers are expats that are residents. Some of them have been residing in Saudi for 10 or more years, so they call it home. But until very recently, they were not actually buying a house,” said Rafal’s head.

This demand is primarily from Arabs and Southeast Asians, with potential growth in Western expatriates as community-driven projects like Dirriyah take shape, he explained.

Saudi Arabia launched the premium visa residency option in 2019, aimed to allow eligible foreigners to live in the Kingdom and receive benefits such as exemption from paying expat and dependents fees, visa-free international travel, and the right to own real estate and run a business without requiring a sponsor.

Abou Samra also discussed the burgeoning mortgage industry in Saudi Arabia, which is catching up on lost years of low uptake. The Saudi Real Estate Refinance Co., established by the Minister of Housing, aims to securitize and syndicate mortgage portfolios, creating liquidity in the market.

This initiative is likened to the establishment of Freddie Mac and Fannie Mae in the US, according to the CEO.

Alternative strategies, such as land deals with extended payment terms, are being employed to decouple from debt markets amid anticipated turbulence. “We just won a project that’s a couple billion riyals in value, but we could start with 150 million riyals of equity, and this is without debt,” Abou Samra shared.

He concluded with a call to action for vendors and suppliers, emphasizing the importance of localization in the supply chain. “Localization is key. I know we’re speaking to a crowd that’s mostly vendors and suppliers from all over the world, but my advice would be, find ways to localize your products,” he urged.

The insights provided by Abou Samra underscored the dynamic and evolving nature of the Saudi real estate market, presenting a wealth of opportunities for investors and stakeholders.

Saudi Arabia’s real estate sector is poised for substantial growth, with projections reaching $69.51 billion in 2024 and anticipated to surge to $101.62 billion by 2029. This expansion aligns closely with the Kingdom’s Vision 2030, focusing prominently on housing, tourism, and commercial development.

Chief Operating Officer of Armada Casa, Wassim Hamdanieh. Supplied

Speaking to Arab News on the sidelines of the event Wassim Hamdanieh, chief operating officer of high-end construction material supplier Armada Casa, said his firm plans to establish key partnerships to expand its premium construction materials portfolio.

“With Vision 2030 driving rapid growth, our focus is on meticulous, detail-oriented developments that align with the country’s urban and sustainability goals, positioning us to shape the future of Saudi Arabia’s property landscape with unparalleled quality and innovation,” he said.

In another panel discussion, titled “Setting Saudi Above the Competing Boundaries,” Navdeep Hanjra, vice president of planning and development at the Royal Commission for AlUla, highlighted the vast potential of the region. 

“AlUla spans 22,000 sq. km., nearly the size of Belgium, and boasts stunning landscapes and significant nature reserves. Its master plans showcase its uniqueness and diversity,” she said.

Hanjra elaborated on the five master plans, emphasizing the “Journey Through Time,” which guides visitors from the ancient Nabataean era to Hegra, Saudi Arabia’s first UNESCO World Heritage site. 

The “Path to Prosperity” master plan aims to grow the current population from 44,000 to 122,000, transforming AlUla into a sustainable city that balances tourism and community development. 

Navdeep Hanjra, vice president of planning and development at the Royal Commission for AlUla. Screenshot

The vice president emphasized that 70 percent of AlUla’s land is dedicated to nature reserves, ensuring the preservation and regeneration of its historic landscapes.

In response to whether AlUla would remain a limited tourist destination or open up further, Hanjra explained that a structured framework plan, developed five years ago, guides the region’s development. 

This plan includes clear urban development boundaries, visitor targets, and 12 guiding principles focused on cultural and natural heritage, sustainability, and socio-economic factors. 

These principles aim to support and retain the existing community while promoting sustainable development and re-naturalizing the landscape for future generations.


Saudi Arabia’s tourist expenditure hits $40bn in H1 2024, says minister

Saudi Arabia’s tourist expenditure hits $40bn in H1 2024, says minister
Updated 17 July 2024

Saudi Arabia’s tourist expenditure hits $40bn in H1 2024, says minister

Saudi Arabia’s tourist expenditure hits $40bn in H1 2024, says minister

RIYADH: Tourist spending in Saudi Arabia reached approximately SR150 billion ($40 billion) in the first half of 2024, reflecting a 10 percent increase in both traveler numbers and expenditure compared to the same period the previous year, as revealed by a top minister. 

At a conference convened to review the 2024 summer tourism program, the Kingdom’s Minister of Tourism Ahmed Al-Khateeb reiterated that his country will launch a tourist visa next month to attract more international visitors and bolster the sector’s growth.

This comes as Saudi Arabia has set an ambitious target to host 150 million tourists annually by 2030, underscoring its commitment to transforming the Kingdom into a premier global tourism destination. 

The country’s passenger air traffic surged by 17 percent in the first half of 2024, reaching 62 million compared to 53 million in the same period last year, according to statistics released by the General Authority of Civil Aviation.  

This growth was supported by a 12 percent increase in flights, with 446,000 recorded compared to 399,000 in the first half of 2023. 

Al-Khateeb shared statistics from the first half of the year, stating: “We achieved 60 million visits and approximately SR150 billion in tourist spending.” 

The minister added that this reflects a 10 percent rise in both visitor numbers and expenditure compared to the same period last year.

He described the country as a “continent,” highlighting its vast natural beauty and varied landscapes, including mountains, resorts, Red Sea beaches, and vibrant cities.  

This diversity, he noted, positions Saudi Arabia uniquely to offer a wide array of tourism products to global travelers. 

Outlining initiatives aimed at enhancing opportunities and training for Saudis, he said: “We’ve raised salaries and conducted over 100,000 training courses annually.” 

This underscores the ministry’s proactive stance in encouraging private-sector investment in Saudi human capital.

Al-Khateeb noted the crucial role of the private sector in shaping the tourism landscape. “The tourism and travel sector worldwide is primarily managed by the private sector, and we recognize its pivotal role in our sector’s development,” he affirmed. 

Al-Khateeb also pointed out the substantial impact of the Tourism Development Fund on building the country’s infrastructure.

Launched in June 2020, the fund has already financed over 100 projects totaling SR35 billion, encompassing a mix of small to medium-sized ventures and larger-scale initiatives. 

“In Asir (region) alone, the Tourism Development Fund has allocated SR1 billion to 10 projects, reflecting a significant focus on enhancing hospitality offerings in the region,” stated Al-Khateeb, showcasing the Kingdom’s commitment to regional development through strategic investment. 

To enhance transparency and support stakeholders, the minister announced the launch of comprehensive tourism statistics on the ministry’s website. “An annual report will provide valuable insights for the media and investors, detailing every statistic and figure relevant to Saudi Arabia’s tourism sector,” he added.

According to the latest data released by the ministry, the total number of tourists reached 109.3 million in 2023, with 81.9 million being local tourists and 27.4 million international visitors. 

In terms of economic impact, expenditure by international tourists totaled SR141.2 billion last year, while local tourists spent SR114.4 billion, bringing the total tourism expenditure to SR255.6 billion in 2023.

“We achieved 153 percent growth in tourism compared to 2019. Asir received 8 million tourists last year, who spent around $3 billion,” the minister said.

Egypt achieves record primary surplus of $18.14bn in fiscal year 2023/24

Egypt achieves record primary surplus of $18.14bn in fiscal year 2023/24
Updated 17 July 2024

Egypt achieves record primary surplus of $18.14bn in fiscal year 2023/24

Egypt achieves record primary surplus of $18.14bn in fiscal year 2023/24

RIYADH: Egypt’s budget recorded a preliminary surplus of 875 billion Egyptian pounds ($18.14 billion) for the fiscal year 2023/2024, compared to 164 billion during the previous period, a top official revealed.

During a Cabinet meeting chaired by Egypt’s Prime Minister Mostafa Madbouly, Minister of Finance Ahmed Kouchouk highlighted that this improvement came despite economic activity shocks.

The North African country’s economy has witnessed blows over the last year due to the ongoing crisis in Gaza, which has slowed tourism growth and cut into Suez Canal revenue, two of Egypt’s biggest sources of foreign currency.

To help alleviate the inflationary effects that have been burdening the Egyptian public, the government in April increased the amount of funding required in its 2024/2025 budget by over 2.8 trillion pounds ($59 billion).

Kouchouk stated that revenues represented an annual growth of about 59.3 percent during the fiscal year 2023/2024.

The budget also achieved a total deficit that was about 706 billion pounds lower than what was listed in the revised budget.

Kouchouk noted the reduction in the overall deficit in the general budget during 2023/2024, which amounted to about 505 billion Egyptian pounds, compared to a deficit of about 610 billion pounds in the previous fiscal year – a decrease of 17 percent.

Despite the deficit shrinking, there were sectors that exceeded their allocated budgets. 

Education required around 256 billion pounds in funding, compared to around 230 billion pounds in the original budget.

Health sector needs totaled about 180 billion pounds, against an initial allocation of about 148 billion pounds.

The public treasury paid the Insurance and Pensions Fund’s dues, which amounted to 185 billion pounds, and settled all fees related to food subsidy support, amounting to 133 billion pounds, compared to about 128 billion pounds in the original budget.

He noted that this, alongside increasing wages and salaries of government employees and providing adequate allocations for various support items and social protection programs, contributed to an annual expenditure growth rate of 37.4 percent.

Kouchouk emphasized the continued efforts to improve the expenditure structure, which was generally achieved for all budget chapters, pointing out that the debt service bill remains high, and efforts are underway to reduce it.

The Minister of Finance reviewed the rates and developments regarding allocations for subsidies, grants, and social benefits, especially those related to supporting industrial production, export incentives, as well as social protection programs, and the health and education sectors.

Kouchouk also discussed the future budget estimates for the fiscal year 2024/2025, explaining that the Ministry of Finance aims to reduce the budget’s debt and place it on a downward trajectory.

Despite the difficulties the public treasury faced in the fiscal year 2023/2024 as a result of regional geopolitical unrest, high rates of inflation, and social programs put in place to protect citizens and pensioners, Kouchouk reiterated that the ministry was able to achieve strong financial performance by taking the required steps to mobilize revenues and control public finances.

Closing Bell: Saudi main index closes in green at 12,157

Closing Bell: Saudi main index closes in green at 12,157
Updated 17 July 2024

Closing Bell: Saudi main index closes in green at 12,157

Closing Bell: Saudi main index closes in green at 12,157

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Wednesday, gaining 77.24 points, or 0.64 percent, to close at 12,157.61. 

The total trading turnover of the benchmark index was SR7.37 billion ($1.96 billion) as 157 of the listed stocks advanced, while 64 retreated.    

The MSCI Tadawul Index increased by 6.82 points, or 0.45 percent, to close at 1,520.39. 

The Kingdom’s parallel market Nomu decreased by 31.22 points, or 0.12 percent, to close at 25,887.91. This comes as 36 of the listed stocks advanced, while as many as 32 retreated. 

The best-performing stock of the day was AYYAN Investment Co., with its share price surging by 9.97 percent to SR19.42. 

Other top performers include the Miahona Co. and Al Sagr Cooperative Insurance Co., whose share prices soared by 9.88 percent and 9.41 percent, to stand at SR42.25 and SR24.88, respectively. 

National Gas and Industrialization Co. and Al-Baha Investment and Development Co. were also amongst the top gainers.  

The worst performer was the Mediterranean and Gulf Insurance and Reinsurance Co. whose share price dropped by 2.46 percent to SR31.70. 

Other underperformers included Baazeem Trading Co. and Arabian Pipes Co., with their share prices declining by 1.53 percent to SR64.30 and 1.20 percent to SR131.40, respectively.

Saudi Public Transport Co. and Red Sea International Co. also experienced declines in their stock prices.

Value Capital Co., serving as the financial advisor and lead manager, announced that Tharwah Co. intends to offer 705,735 ordinary shares, representing 15 percent of its total shares post-offering. The company’s shares will be listed on Nomu. 

Tharwah Co.’s application for listing on the parallel market. was approved by the Saudi Exchange on May 19, and the Capital Market Authority approved the offering on June 3. The price per share for subscribers will be determined after the book-building period. The one-week offering period is scheduled to commence on Aug. 4. 

Alkhabeer Capital, a Shariah-compliant investment and financial services firm, has announced the listing and commencement of trading for the Alkhabeer Diversified Income Fund 2030 on the Saudi Exchange. 

In an official statement, the fund reported successful participation from a diverse group of investors, including individuals and institutions, during its initial public offering.  

The IPO concluded on June 13, attracting 144,132 subscribers and raising a total of SR305.4 million. 

Saudi Cabinet approves establishment of national minerals program

Saudi Cabinet approves establishment of national minerals program
Updated 17 July 2024

Saudi Cabinet approves establishment of national minerals program

Saudi Cabinet approves establishment of national minerals program
  • Program aims to develop Kingdom’s infrastructure and support local supply chains
  • Saudi Arabia’s mineral wealth is valued at an estimated $2.5 trillion

RIYADH: Saudi Arabia is set to launch a new national minerals program, further strengthening its position as a regional and global center for the mining and metals sector. 
The Saudi Cabinet has approved the establishment of the initiative, which is set to be linked to the Kingdom’s Ministry of Industry and Mineral Resources, according to a statement. 
The newly announced program is expected to meet the growing local, regional, and global needs for minerals, build local capabilities, and contribute to exploration operations. 
This is in line with Saudi Arabia’s ambition to transform mining into a foundational industrial pillar of the country’s economy. It also aligns with the ministry’s goal to further bolster the sector and contribute to ongoing developments under Saudi Vision 2030. 
According to a ministry statement released earlier this year, the Kingdom’s mineral wealth is valued at an estimated SR9.4 trillion ($2.5 trillion). 
The Minister of Industry and Mineral Resources Bandar Alkhorayef thanked King Salman and Crown Prince Mohammed bin Salman for the cabinet’s approval and said the program will effectively drive growth in the minerals sector and exploit the country’s mineral wealth. 
“The Council of Ministers’ decision to establish the National Minerals Program will constitute a qualitative shift in supporting supply chains in the industrial and mining sectors and strengthen the Kingdom’s position as a regional and global center for the mining and minerals sector,” Alkhorayef said in a statement. 
“The Kingdom’s directions aim to develop mineral value chains so that the mining sector becomes the third pillar of the national industry and to benefit from the Kingdom’s geographical location, which represents one of the most important major trade intersections,” he added.
The statement further revealed that the initiative will entail important functions, including ensuring the quality and adequacy of supply chains for current and future minerals and developing and managing their strategic storage.
It will also work on quantifying and following up on securing Saudi Arabia’s mineral needs, developing plans and strategies, and providing industrial supplies of mining raw materials.
The nation’s mining sector has been expanding locally and internationally, with significant strides being made.
In March, the Kingdom’s mining sector recorded a 138 percent increase in the issuance of exploitation licenses since the new Mining Investment Law was implemented in 2021. 
The number of permits recorded rose from eight in 2021 to 19 last year as the Ministry of Industry and Mineral Resources actively works to boost mineral production and investment. 

Saudi weekly POS spending hits $3bn, driven by hotel sector surge

Saudi weekly POS spending hits $3bn, driven by hotel sector surge
Updated 17 July 2024

Saudi weekly POS spending hits $3bn, driven by hotel sector surge

Saudi weekly POS spending hits $3bn, driven by hotel sector surge
  • Payments in restaurants and cafe held the largest share of POS transactions

RIYADH: Saudi Arabia’s point-of-sale spending totaled SR11.9 billion ($3.19 billion) from July 7 to 13, driven by a 3.8 percent weekly surge in hotel sector transactions, official data showed.

The latest data from the Saudi Central Bank, also known as SAMA, revealed that the hospitality industry showed the only increase during the week, with total transaction values reaching SR269.6 million. 

Point-of-sale is where transactions between merchants and customers take place, using systems like cash registers or digital terminals to manage sales and payments. 

Saudi Arabia’s apex bank releases weekly POS data to provide insights into consumer spending patterns, economic activity, and trends in various sectors such as retail, hospitality, and services. 

During the seven-day period starting July 7, POS transactions in the Kingdom declined by 9.8 percent, reversing from an increase in the previous week, to reach SR13.2 billion.  

Data from SAMA indicated that payments in restaurants and cafes decreased by 6.4 percent compared to the previous week, totaling SR1.84 billion, while still holding the largest share of POS transactions. 

Expenses on food and beverages dipped by 12.5 percent to reach SR1.79 billion, the third-largest fall compared to the previous week.  

Miscellaneous goods and services came in third place in spending size, recording an 11.2 percent dip, reaching SR1.57 billion. 

Gas stations witnessed the smallest dip this week, recording a 3.2 percent decrease, reaching SR841.4 million.  

Construction and building materials experienced the second-smallest drop in POS transaction value, diminished by 4.7 percent to SR329.7 million. Furthermore, expenses on transportation witnessed the third-smallest surge, with a 5.6 percent decrease, reaching SR733.1 million. 

According to data from SAMA, 33.37 percent of POS deals occurred in Riyadh, with the total transaction value reaching SR3.91 billion, representing an 8.3 percent decline from the previous week when it was SR4.26 billion. 

Riyadh has expanded into a major growth hub, with Spinneys recently debuting its flagship 43,520 sq. ft. outlet at La Strada Yard, marking the start of its expansion in the capital and Jeddah to meet the increasing demand for high-quality groceries in Saudi Arabia.  

In Jeddah, purchases accounted for 14.6 percent of the total, amounting to SR1.71 billion, reflecting an 8 percent weekly decrease, the third-largest decline compared to the previous week.  

Expenditures in Abha and Makkah declined by 4.8 percent and 4.2 percent, reaching SR224.2 million and SR459.5 million, respectively. 

The highest fall was spotted in Tabouk with a 12.8 percent weekly change, reaching SR216.2 million.