Saudi Arabia has the highest value of public-private partnerships (PPPs) in the region, according to a joint report published by Jones Lang LaSalle Incorporated (JLL) and DLA Piper.
The country's PPP sector reportedly has a total investment value of $42.9bn (SAR160.9bn) spread across 18 projects.
In a statement, JLL revealed that PPPs are increasingly being used as a platform to encourage more private-sector engagement in different sectors in the country, including real estate.
The report, titled “Public Private Partnerships: A new approach to Financing Real Estate Development in KSA”, points to PPPs as a key component of the country’s National Transformation Programme (NTP), which aims to increase the percentage of private sector investment from 40% of GDP in 2016 to 65% by 2030.
JLL further noted that the partnerships are also playing an instrumental part in the NTP’s plan to increase the contribution of the real estate sector to the country’s economy, from its current level of 5% of GDP to 10% by 2020.
Ibrahim Albuloushi, national director and country head of JLL Saudi Arabia, said: “There is an increased demand for reforming infrastructure across Saudi Arabia, which then provides a great incentive to attract more private sector involvement and in turn investment.
“With the government now striving to move away from oil dependency and introducing the NTP and the Saudi Vision 2030, the PPP model provides an important framework for both international and regional investors and developers to source a wide range of opportunities in the housing, education, and healthcare sectors of the Saudi market.”
Despite noting that the current pipeline of projects reflects the willingness of the private sector to enter PPPs despite the lack of a structured legal environment, JLL emphasised that for PPPs to become successful, the Saudi regulatory framework needs to evolve and undergo development.
Meanwhile, Basma Khashoggi, senior legal consultant, DLA Piper, commented: "The legal and regulatory frameworks in Saudi Arabia continue to evolve and undergo development to provide an environment that will encourage and facilitate the use of the PPP model.
"While there are still challenges to overcome, progress has been made over the past 18 months in this regard, and there is significant continued interest in PPPs from both the public and private sectors.
Khashoggi added: “As the report highlights, the developing nature of the legislative structure has not deterred investors and developers from entering the PPP market early to explore the potential opportunities in this space, but some concrete steps will be needed in the near future to maintain this momentum.”For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.