JLL report says King Salman Energy Park is set to boost sectors of Dammam Metropolitan Area's real estate market
The development of King Salman Energy Park (SPARK), one of the largest investments in Saudi Arabia's Eastern Province, is set to boost sectors of Dammam Metropolitan Area’s real estate market and in the long term contribute to national GDP, according to a new report.
Real estate consultants JLL said SPARK presents a more positive outlook for the DMA region as development of the park is expected to enhance the region’s office market as tenants come on board.
The energy park is being undertaken by Saudi Aramco and aims to be an economic catalyst, creating tens of thousands of jobs in a global industrial hub for energy-related manufacturing services.
“The plans to diversify the Saudi economy away from the oil and gas sector presented a less positive outlook for oil-rich Dammam compared to other cities across Saudi. However, this new energy-hub demonstrates major investments being made within the energy sector itself to fuel economic growth,” said Craig Plumb, head of research, MENA at JLL.
As part of the National Transformation Program, the energy park is estimated to contribute SR22.5 billion ($6 billion) to the national GDP annually once developed by 2035.
It will boost the downstream petrochemicals sector and will increase the contribution of local content across different industrial sectors, JLL said in the report.
It added that in the first half of 2018 the office market continued to soften but demand is expected to increase in the medium to long term, in line with the target for Saudi Aramco to source 70 percent of its inputs from local companies.
Across other sectors, the residential stock continued to grow, albeit at a slightly slower rate than in previous years while the retail sector recoded no new completions in H1, with the total stock remaining around 1 million sq m.
The report also noted that the hospitality sector was active in H1, with five new hotels and two serviced-apartment projects entering the market in DMA.