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What lies ahead for Saudi Arabia’s burgeoning real estate market?

Amira Sajwani’s hot take on Saudi Arabia’s newfound goal to establish itself as an international real estate hub

What lies ahead for Saudi Arabia’s burgeoning real estate market?

Over the past decade, the world has seen Saudi Arabia undergo an immense transformation. Thanks to its leaders’ commitment to modernisation and reform, the kingdom has successfully attracted investors and buyers from across the globe, expanding its property market significantly.

This metamorphosis has been driven in no small part by a slew of government-backed economic initiatives and gigaprojects. Consequently, Saudi Arabia is now set to establish itself as an international real estate hub in a shift reminiscent of the meteoric rise of the UAE’s property market.

So, with immensely promising levels of growth, what lies ahead for Saudi Arabia’s burgeoning real estate sector?

Amira Sajwani, Managing Director at DAMAC Properties and Founder of PRYPCO and Amali Properties

Positive projections

Last year, the kingdom amended its investment and real estate laws to boost foreign investment, and those opportunities are not going unnoticed. In fact, KSA’s real estate market appears to be on the brink of an impressive surge. According to an analysis from RedSeer Strategy, the sector is on course to witness 62% growth over the next four years, reaching approximately $100 billion by 2027.

Its capital, Riyadh, will be the main focal point of this growth, set to account for nearly half of the market by the end of this period. Other major cities such as Jeddah and Dammam are also projected to experience significant activity, with commercial property making up a significant portion of KSA’s overall real estate market.

With all of these impressive projections in place and seemingly on track, the total value of Saudi Arabia’s property sector looks to pass $2 trillion this year, with residential real estate accounting for $1.39 trillion of this figure.

Widespread appeal

The forecast for the kingdom’s real estate sector is undeniably bright, but how likely is it that these predictions will come to fruition? Well, to answer that question, we need to look at the bigger picture. Specifically, we need to ask whether Saudi Arabia is doing enough to entice international buyers and investors.

In my opinion, the short answer to this question is ‘yes’. Gigaprojects such as NEOM, which go hand in hand with the aforementioned market reforms, are proving extremely successful in attracting foreign direct investment (FDI) into KSA’s real estate sector. According to a study conducted by Knight Frank, there is also a huge appetite for residential real estate in NEOM among domestic buyers, with 41% of respondents ranking the destination as the most attractive of all gigaprojects currently underway in the kingdom.

The recent announcement of NEOM Leyja, a sustainable tourism oasis, will no doubt add to this appeal – not to mention contribute significantly to HRH Mohammed bin Salman’s Vision 2030, which aims to invest $64 billion into the country’s entertainment sector.

Indeed, the kingdom has already gone to great lengths to establish its entertainment sector. An ever-expanding calendar of events is serving to strengthen its reputation as a tourism destination while convincing residents to forego overseas vacations in favour of the nation’s emerging arts scene.

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A bright future

In 2019, Saudi Arabia introduced its e-visa programme, which allowed visitors from 49 countries to travel to the kingdom for up to three months. This forward-thinking move helped to boost tourism significantly and, in turn, the country’s non-residential real estate market. Since then, e-visas have been extended to a further six new countries – a change that is predicted to raise tourism’s contribution to KSA’s GDP from 3% to 10% while providing one million job opportunities.

For me, this combination of legislative reforms, investments in leisure and entertainment, and visa relaxations have placed Saudi Arabia’s real estate market on an exciting path. It is heartening to see the kingdom’s economy and property sector become even more prosperous and dynamic, as this is further strengthening the Middle East’s appeal on the global stage.

Saudi Arabia’s road to becoming an international real estate hub may not yet be set in stone, but the ongoing commitment of the country’s leaders is going a long way towards turning this vision into reality.