Private-Public Partnerships Driving Saudi Arabia’s 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 Headline Global Gathering
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.
Structured vs. Unstructured PPPs in Saudi Arabia
Speaking at the event, Elias Abou Samra, CEO of Rafal Real Estate, introduced a classification system for PPPs in Saudi Arabia – structured and unstructured.
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.
Saudi Real Estate Market Opportunities Unveiled
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.
“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.
Challenges and Growth in Saudi Real Estate
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.
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.
Transitioning Saudi Real Estate Market
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.
Several initiatives are currently underway, including the headquarters group, which has seen a growing number of regional HQs moving to Riyadh.
Foreign Investment and Market Growth
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.
Residency Demand and Mortgage Industry in Saudi Arabia
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.
Abou Samra also discussed the burgeoning mortgage industry in Saudi Arabia, which is catching up on lost years of low uptake.
Future of Saudi Real Estate Market
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.
Partnerships and Innovation for Saudi Property Landscape
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.
AlUla’s Potential as a Sustainable City
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.