Saudi Arabia’s industrial sector sees $10bn investment in early 2024: Knight Frank

This funding milestone was achieved two months earlier than the previous year, according to Knight Frank’s annual report. File
This funding milestone was achieved two months earlier than the previous year, according to Knight Frank’s annual report. File
Short Url
Updated 02 September 2024
Follow

Saudi Arabia’s industrial sector sees $10bn investment in early 2024: Knight Frank

Saudi Arabia’s industrial sector sees $10bn investment in early 2024: Knight Frank

RIYADH: Factories in Saudi Arabia attracted a total capital of SR38.6 billion ($10.2 billion) in the initial months of this year, reflecting a notable increase in investment compared to 2023.

This funding milestone was achieved two months earlier than the previous year, according to Knight Frank’s annual report.

The report highlights that 410 new industrial licenses were issued and 505 factories commenced production during this period. This growth is also evident in the workforce, with 11,434 new jobs created at these facilities. Of the total investment, 83.7 percent originated from local sources, 8.3 percent from international sources, and 8 percent from joint ventures.

The non-oil sector grew by 3.8 percent in 2023, contributing SR2.5 trillion to the national GDP and now accounting for 63 percent of the country’s economic output. Investment in the industrial sector surged by 63 percent last year, reaching SR15 billion. This trend has continued into 2024, with private sector investment more than doubling in the first quarter to exceed SR7 billion.

By the end of 2023, cumulative investment in the industrial sector had reached SR415 billion, supporting 891 projects across the country and demonstrating strong local and international interest. Global investments in the sector saw an 85 percent increase, according to the report.

The Saudi Authority for Industrial Cities and Technology Zones has played a crucial role in this growth. The developed industrial land now spans over 209 million sq. meters, housing 6,443 factories and 7,946 industrial, logistical, and investment establishments.

Government initiatives

The Saudi Industrial Development Fund has been instrumental in advancing the industrial sector. Over the past 50 years, SIDF has provided loans exceeding SR180 billion to more than 4,000 projects, facilitating total investments of around SR700 billion.

SIDF's National Industrial Strategy aims to elevate export values to SR557 billion by 2030, positioning Saudi Arabia as a prominent global player in the sector. The strategy also targets the creation of 2.1 million new jobs by 2030, with annual growth in the logistics sector expected to reach SR97.5 billion.

The manufacturing sector's annual contribution to GDP is projected to be SR895 billion by 2030, with exports anticipated to hit SR892 billion by 2035. To support these goals, SIDF has introduced several key initiatives. The Tanafus program offers financial support and incentives to local manufacturers, while the Sanea initiative focuses on developing small and medium-sized enterprises within the industrial sector.

Additionally, the Green Finance initiative encourages sustainable industrial practices, and the digital transformation support program helps industries adopt advanced technologies and digital solutions.

Demand for warehouse solutions soars

The COVID-19 pandemic has significantly accelerated the growth of e-commerce, driving a substantial increase in the demand for modern warehousing and logistics solutions. This surge has spurred the development of technologically advanced warehouse facilities across Saudi Arabia.

A prime example of this trend is the joint venture between Saudi Aramco and DHL Supply Chain, known as ASMO, which was established to address the rising need for sustainable and efficient supply chain services.

There has also been a notable rise in demand for storage facilities, last-mile logistics centers, and cloud kitchens, especially for smaller, centrally located warehouses.

The food delivery market in Saudi Arabia is booming, valued at $10 billion in 2023 and expected to reach $14.9 billion by 2028, outpacing competitors in the region.

Supply expansion

Over the past 12 months, several key developments have occurred in the supply of warehousing and logistics facilities. In Riyadh, the total stock of warehouse and logistics space has expanded to 28 million sq. meters, with the majority of new facilities located in the Industrial Gate City.

Jeddah has also experienced significant growth, increasing its total warehouse and logistics stock to 19.6 million square meters. Noteworthy projects in Jeddah include Maersk’s logistics park and Aramex’s facility at Jeddah Islamic Port, along with several plants developed by Logi Point in Zahid Business Park.

In contrast, the industrial stock in the Eastern Province has remained relatively static over the past year, with no major completions, resulting in a total stock of 7.96 million square meters. This stable supply has contributed to high occupancy rates, particularly in strategically located areas near key transport links and industrial zones.

Rising rents reflect growing demand

The increasing demand for warehouse and industrial facilities has led to a rapid rise in rental prices. In Riyadh, warehouse rents have surged by 10.5 percent to SR210 per sq. meter, while in Jeddah, rents have risen by 1.5 percent to SR208 per sq. meter.

These rental rates reflect the market average for light industrial units and Grade B warehouse and logistics facilities, with supply constraints for primary and Grade A spaces across Saudi Arabia. National occupancy levels have reached a record high of around 97 percent, highlighting the strong demand in the market.

In Riyadh, the demand for logistics and warehouse facilities is particularly intense, driven by ongoing transportation and infrastructure projects as well as landmark giga-projects such as Diriyah Gate, King Salman Park, New Murabba, and Qiddiya. These initiatives boost the need for construction and building materials and spur the development of new industrial and logistics hubs.

Challenges

Despite significant growth, Saudi Arabia is grappling with a shortage of high-quality warehouse spaces. This issue is exacerbated by the cautious investment behavior of local landowners, who are hesitant to undertake speculative development projects. This reluctance, largely due to a lack of experience in developing real estate that meets international standards, has resulted in a critical supply gap, particularly in Riyadh.

However, there is increasing interest from international developers eager to enter the Saudi market. These developers bring extensive expertise in constructing top-tier industrial and logistics infrastructure. Potential partnerships between international and local developers could help alleviate the supply shortage over time. Nevertheless, the construction and availability of new warehouse spaces are expected to take about two years, suggesting that the shortage will persist in the near term.

Outlook

Saudi Arabia’s strategic location at the crossroads of Asia, Africa, and Europe, coupled with its status as the largest market in the GCC and a key consumption center in the MENA region, makes it a vital commercial hub. Its position along the Arabian Gulf and the Red Sea, through which 13 percent of global trade flows, provides significant advantages, establishing the Kingdom as a natural gateway to international markets comprising over 6 billion people.


Bailout: Pakistan thanks Saudi Arabia, UAE, China for support ahead of IMF meeting

Bailout: Pakistan thanks Saudi Arabia, UAE, China for support ahead of IMF meeting
Updated 25 September 2024
Follow

Bailout: Pakistan thanks Saudi Arabia, UAE, China for support ahead of IMF meeting

Bailout: Pakistan thanks Saudi Arabia, UAE, China for support ahead of IMF meeting
  • IMF executive board scheduled to meet today to discuss approval of $7 billion loan for Pakistan

ISLAMABAD: Prime Minister Shehbaz Sharif said on Wednesday Pakistan had met the “tough conditions” set by the International Monetary Fund with the help of Saudi Arabia, the UAE and China, as the global lending agency’s board meets today to discuss the $7 billion loan program for the country.

Pakistan reached a staff-level agreement with the IMF in July for a fresh loan to keep its fragile economy afloat. Finance Minister Muhammad Aurangzeb had earlier expressed hope of sealing the deal by the end of August. However, delays were caused by an external financing gap, which prompted Pakistan to seek commitments from key allies and request debt reprofiling.

Just a day earlier, the finance minister again expressed optimism about securing the loan program after the IMF board meeting, while emphasizing the government’s commitment to structural reforms.

“[Today] is the IMF board meeting, and we have fulfilled all of their conditions, very tough conditions, but praise be to God, we have completed them,” he told the media in New York on the sidelines of the 79th United Nations General Assembly Session. “I want to express my heartfelt gratitude once again, to our trusted brother nations, Saudi Arabia, China and the UAE. Without their immense support, this would not have been possible.”

“At the final stage, the conditions were related to China, and just like in the past, the Chinese government once again held Pakistan’s hand and offered immense support,” he added. “I am deeply grateful to the Chinese leadership.”

Pakistan’s last $3 billion IMF program helped avert a sovereign default in 2023 amid a sharp decline in foreign exchange reserves, currency depreciation and record inflation.

The government has already maintained that the country’s macroeconomic indicators have improved, though it needs the 37-month-long IMF program to solidify those gains.

“You have to grow and build from a stable base,” Pakistan’s finance minister said on Tuesday while addressing a high-level private sector dialogue, ‘CPEC-II and the Region.’ “We have reached that level now. Now, we can say that we have a good foundation on which we can build from here.”

“Now we need to move forward and stay with the reform agenda whether it’s on the taxation or energy side [or] on the state-owned enterprises or privatization side,” he added.


Closing Bell: Saudi main index gains 75 points to end at 12,343

Closing Bell: Saudi main index gains 75 points to end at 12,343
Updated 25 September 2024
Follow

Closing Bell: Saudi main index gains 75 points to end at 12,343

Closing Bell: Saudi main index gains 75 points to end at 12,343

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Wednesday, gaining 75.3 points, or 0.61 percent, to close at 12,343.72. 

The total trading turnover of the benchmark index stood at SR7.09 billion ($1.89 billion), with 136 stocks advancing and 83 declining. 

The Kingdom’s parallel market, Nomu, dropped 30.99 points, or 0.12 percent, to close at 25,653.38, as 26 stocks advanced and 33 retreated. 

The MSCI Tadawul Index added 9.85 points, or 0.64 percent, to close at 1,545.63. 

The best-performing stock of the day was Saudi Printing and Packaging Co., which surged 10 percent to close at SR14.52.  

Other top performers included Saudi Industrial Development Co. and Saudi Fisheries Co., whose share prices rose 9.93 percent and 9.9 percent, respectively. 

National Medical Care Co. was the worst performer, with its share price falling 2.47 percent to SR213.60.  

Other underperformers were Gulf Union Alahlia Cooperative Insurance Co. and Saudi Reinsurance Co., which saw their share prices decline by 2.28 percent and 2.17 percent to SR16.26 and SR36, respectively. 

On the parallel market, Al Mohafaza Co. for Education was the top performer, with its share price rising 9.21 percent to SR23. 

Other top performers on Nomu were Armah Sports Co. and Balady Poultry Co., with their share prices increasing 5.33 percent and 4.49 percent, respectively. 

Banan Real Estate Co. was the worst performer on Nomu, dropping 7.8 percent to SR5.44. 

Other notable decliners included Academy of Learning Co. and Leen Alkhair Trading Co., with their shares down 6.73 percent and 4.55 percent, respectively.  

On the announcements front, Saudi AZM for Communication and Information Technology Co. confirmed the award of a new project from the General Entertainment Authority.  

The project aims to provide guidance and support to entrepreneurs and businesses in the entertainment sector, reflecting a strategic push to foster industry growth aligned with Saudi Arabia’s Vision 2030. 

The project’s value exceeds 5 percent of AZM’s total revenues for the 2024 financial year. Its scope includes advisory services to strengthen the capabilities of entertainment sector stakeholders. 

This initiative builds on the existing partnership between AZM and GEA. Previously, AZM collaborated with GEA on a major digital transformation project that modernized the authority’s operational framework. 

Through that collaboration, AZM implemented IT solutions that enhanced GEA’s digital infrastructure, improving efficiency and service delivery. The project involved upgrading critical systems, automating processes, and integrating advanced technologies.


Saudi Arabia to host Global Logistics Forum in October 

Saudi Arabia to host Global Logistics Forum in October 
Updated 25 September 2024
Follow

Saudi Arabia to host Global Logistics Forum in October 

Saudi Arabia to host Global Logistics Forum in October 

RIYADH: Saudi Arabia's transportation and supply chain sector evolution will be a central topic as top leaders discuss innovative strategies and advancements at the Global Logistics Forum in Riyadh. 

The event, set to take place from Oct. 12-14, comes as investment in the sector is surging, with a 76 percent increase in new businesses registered in the second quarter of 2024, making logistics the fastest-growing sphere in the Kingdom. 

Spearheaded by the Ministry of Transport and Logistic Services, the sector is undergoing significant changes to solidify the Kingdom's pivotal role in global trade. This transformation focuses on using advanced technologies to promote sustainability and improve infrastructure and transportation solutions, the Saudi Press Agency reported. 

The forum highlights the Kingdom's initiatives to develop and strengthen logistics centers, improving domestic and international connectivity. 

The three-day event is expected to gather over 100 speakers and participants, including industry leaders and government representatives.

This year's forum will also attract over 10,000 participants from leading global organizations who will address pressing logistics challenges with discussions on sustainability, supply chain resilience, workforce advancement, and technology adoption. 

The agenda includes keynote speeches, dialogue sessions, and bilateral meetings, fostering innovative, sustainable visions for the industry's future.

The event falls in line with Saudi Arabia's strategic location as a trade corridor between Asia, Africa, and Europe and aligns well with the nation's goal to consolidate its position as a global logistics hub under Vision 2030 and the National Transport and Logistics Strategy. 

These initiatives and efforts have propelled Saudi Arabia up 17 positions in the World Bank's Logistics Performance Index.

The Kingdom's port standings have also advanced, with the country climbing to 15th place globally in annual container handling. 

Three Saudi hubs were mentioned in Lloyd's List One Hundred Ports 2024, a testament to the country's growing influence in logistics and support for economic growth.  

The civil aviation sector is equally dynamic, highlighted by the Saudia Group's record-setting purchase of 105 Airbus planes and growing investment opportunities at airports. 

These developments are establishing new standards for global connectivity and infrastructure.  

This momentum marks a new era of leadership and innovation, aligned with national ambitions to redefine global trade and logistics under the ministry's sustainable and technologically progressive leadership.

The Kingdom presents substantial opportunities for global logistics players. With a population of approximately 36 million and a gross domestic product of $1.81 trillion in purchasing power parity as of the end of 2023, Saudi Arabia is a central hub for expansive trade routes supported by world-class infrastructure.  

Another major catalyst for growth is the Kingdom securing the bids for Expo 2030 and the 2034 FIFA World Cup — both of which will attract substantial global business opportunities, opening new channels for trade and commerce.


New customs agreement to boost UAE, US economic ties

New customs agreement to boost UAE, US economic ties
Updated 25 September 2024
Follow

New customs agreement to boost UAE, US economic ties

New customs agreement to boost UAE, US economic ties

RIYADH: The economic partnership between the UAE and the US is poised for significant expansion with the introduction of a new customs cooperation agreement. This initiative aims to reduce customs violations, combat illicit trade, and enhance technical collaboration between the two nations.

The agreement was formalized during UAE President Sheikh Mohamed bin Zayed’s visit to the US, marking a crucial step in streamlining customs operations and strengthening trade relations. Ali Al-Shamsi, chairman of the UAE Federal Authority for Identity, Citizenship, Customs, and Port Security, and Troy Miller, acting commissioner of US Customs and Border Protection, signed the accord.

Al-Shamsi underscored the agreement’s importance, stating it would broaden trade opportunities and facilitate the exchange of customs expertise, alongside enhancing national capabilities through targeted training programs.

He told the Emirates News Agency, WAM: “Bilateral trade between the two nations continues to grow steadily, driven by our deep political and economic ties. This growth brings numerous advantages, particularly in fortifying customs relations and expanding trade scope to navigate challenges that may impede the seamless flow of goods.”

The UAE and the US enjoy a robust economic relationship, with bilateral non-oil trade skyrocketing to $31.4 billion in 2023, up from $23.8 billion the previous year. Notably, US exports to the UAE surged by 19 percent, totaling $24.8 billion. The UAE remains the largest market for US goods in the Middle East, highlighting its vital role as a trade hub.

This burgeoning trade dynamic yields substantial benefits for both economies. US exports to the UAE supported approximately 125,000 jobs across the US in 2023. Meanwhile, the UAE’s exports to the US reached around $6.6 billion, featuring a diverse array of products including aluminum and precious metals, reflecting the complementary nature of their trade.

Al-Shamsi further emphasized that the customs cooperation and mutual assistance agreement underscores the UAE’s pivotal role as a regional gateway for global trade. Its strategic location connects Asia, Europe, and Africa, making it an essential transit hub.

With the US, the world’s largest economy, as a historical partner, the UAE's non-oil trade strategy and investments in sectors like real estate, technology, and manufacturing highlight the mutual interest in nurturing a vibrant trade and investment relationship.


KAUST, Abdul Latif Jameel Motors strike deal with Toyota to advance hydrogen fuel research  

KAUST, Abdul Latif Jameel Motors strike deal with Toyota to advance hydrogen fuel research  
Updated 25 September 2024
Follow

KAUST, Abdul Latif Jameel Motors strike deal with Toyota to advance hydrogen fuel research  

KAUST, Abdul Latif Jameel Motors strike deal with Toyota to advance hydrogen fuel research  

JEDDAH: Saudi Arabia will accelerate hydrogen fuel cell research after two local entities joined with Toyota Motor Corp. to increase decarbonization efforts in the transportation sector and beyond.

King Abdullah University of Science and Technology and Abdul Latif Jameel Motors have embarked on a strategic partnership with the Japanese firm to implement cleaner energy solutions.

At the heart of this initiative, KAUST has acquired proton electrolyte membrane fuel cell modules from Toyota, establishing a cutting-edge laboratory within its Clean Energy and Research Platform.

This facility is poised to play a crucial role in the Kingdom’s hydrogen innovation efforts, particularly in adapting fuel cells to the region’s specific environmental conditions, KAUST said in a statement.

Saudi Arabia aims to deliver around 2.9 million tons of hydrogen by 2030, offering competitive domestic and export costs, and this collaboration aligns with the Kingdom’s commitment to reducing greenhouse gasses and achieving net zero emissions by 2060.  

Mani Sarathy, professor of chemical engineering at KAUST, said they are excited to collaborate with TMC and Abdul Latif Jameel Motors to drive the adoption of hydrogen fuel cell technology in Saudi Arabia.

“Through our Clean Energy Research Platform, we are focused on advancing research that will optimize hydrogen fuel cells for the region’s specific conditions, ensuring their efficiency and reliability,” Sarathy said.

He emphasized that this partnership demonstrates their commitment to pioneering innovations that support sustainable solutions and contribute to a greener future for the Kingdom and beyond.

Sarathy and his CERP team are currently leading research efforts to explore the performance, durability, and environmental integration of PEM fuel cells, supported technically and financially by TMC and Abdul Latif Jameel Motors, the authorized distributor of Toyota vehicles in Saudi Arabia since 1955.

The team is undertaking a series of modeling and experimental studies to evaluate factors such as temperature sensitivity, humidity effects, and overall efficiency, aiming to optimize the environmental advantages of these fuel cells within the Kingdom’s infrastructure, KAUST said in its release.

Mazin Ghazi Jameel, managing director of Toyota marketing operations at ALJ Motors, commented that his company is dedicated to facilitating the development and adoption of solutions that benefit both local and global communities.

“A key focus is promoting fuel cell technology to establish Saudi Arabia as a key contributor to sustainable mobility. This strategic partnership reaffirms our commitment to enabling a future of cleaner, efficient and smarter mobility accessible to all, supporting the transformational needs of businesses and individuals in the Kingdom of Saudi Arabia,” Ghazi said.

Nobuyuki Takemura, chief representative of the Toyota liaison office for mobility and energy in the Kingdom, remarked that for more than two decades, TMC has been a leader in environmentally friendly mobility solutions, showcasing a steadfast commitment to a zero-carbon future through ongoing innovation and significant global investment.

“In partnership with the KAUST research team within CERP and Abdul Latif Jameel Motors, we are bringing this technology to Saudi Arabia, supporting its decarbonization goals. Toyota is dedicated to contributing to the research at KAUST and to advancing the Kingdom’s economic diversification and circular carbon economy, in alignment with Vision 2030,” he said.