Real estate consultant sees long-term positive impact of launching projects such as Al Qiddiya and Amaala
Increased government spending and progress on giga-project developments provide a catalyst for future investment opportunities in Saudi Arabia, according to real estate consultant JLL.
Its latest report on Saudi Arabia said that conditions remained soft across most sectors of the real estate market in 2018.
However, the hospitality and entertainment industries witnessed several major development announcements including the launch of Al Qiddiya in Riyadh and Amaala, the luxury wellness destination forming part of a giga-projects investment portfolio launched by The Public Investment Fund (PIF).
“The government’s continued focus on strengthening the business environment and attracting foreign investment should have a positive impact on the real estate sector in the long run,” said Dana Salbak, associate, JLL MENA.
“These milestone projects are key drivers of Saudi Arabia’s non-oil economic growth and are expected to trigger other large scale real estate development activity. In addition, the wave of development across the Kingdom and other reforms promoting Saudization are expected to create a surge of job opportunities in the long run,” added Salbak.
The entertainment sector saw the return of cinemas sparking development opportunities and significant retail opportunities in the field of 'shoppertainment'.
While economic reforms have weighed on the purchasing power of residents, namely VAT, subsidy cuts and expatriate levy, the retail sector overall is set to benefit from the long term growth potential presented by reformative changes, JL said.
It added that the inauguration of the King Salman Energy Park (Spark) in 2018 is another milestone project expected to fuel demand for commercial and industrial real estate in the Eastern Province.
Saudi Arabia’s potential as a global transport hub has led to the development of major infrastructure projects focused on connecting cities, in turn providing private and foreign investment opportunities.
2018 saw significant progress with the inauguration of the 448km Al Haramain High Speed Railway and the soft opening of the new King Abdulaziz International Airport in Jeddah.
“The market dynamics in Saudi Arabia have seen a major shift in the last year, with significant government investment and new reforms expected to have a positive long term impact on the Kingdom’s real estate market,” said Thierry Delvaux, CEO, JLL MEA.