Kingdom invests $80 billion for new developments
With Saudi Arabia’s massive $80 billion investment in infrastructure initiatives, including new ports, airports, railways, train stations, metro systems, and bus and road systems, new real estate opportunities have been created in the market, thereby promising to change the property market landscape in the kingdom.
To gain better understanding of the changing requirements and new driving forces in the Saudi real estate market, industry professionals from the kingdom and around the world are set to gather at the Riyadh Real Estate Summit, part of Cityscape Riyadh, next month.
“This year the interest of local, regional and international industry professionals is at its height, because of the vast amounts being invested in real estate projects by the kingdom’s government, as well as the private sector,” says Abdullah bin Mahfouz, chairman at National Exhibitions Company.
Envisioning Riyadh in 2030 is one of the main themes, providing an opportunity for delegates to discuss the driving forces that are evolving Riyadh and the greater region, looking at how infrastructure initiatives, such as new transportation systems, satellite cities and planned facilities, will dramatically change Riyadh’s landscape, which will affect property prices and the cost of suitable land plots.
“The benefits of infrastructure development are undeniable,” adds Youcef Betraoui, CEO of Land Sterling. “For instance, Dubai’s property sector owes its double-digit growth to the ever developing infrastructure and it’s now reaping the fruits of those early initiatives that seemed unviable five years ago due to huge outlays. In terms of data, SAR65bn has been earmarked by Saudi Arabia for the infrastructure and transport sector, up by 16 per cent in 2012.
This includes SAR30bn related to the development of 3,700 kilometres of roads, modernisation of existing ports, construction of regional and international airports and berths, as well as other infrastructure projects, sowing the seeds for a flourishing property market,” he adds.
New infrastructure investment will act as a catalyst for new property development, such as the Riyadh Metro, which will require feeder bus services and improvements in the current road network to enhance connectivity. Retail and commercial operations will get a huge boost with improved consumer access, while new property developments will push the government to invest heavily in electricity, water and telecommunications, according to Betraoui.
Recent issues facing the real estate market in Saudi Arabia will be one of the main topics of discussion on day two of the Riyadh Real Estate Summit. Experts speaking at the summit will look for short- and long-term solutions that developers and the construction industry should have in place to guarantee the availability of adequate manpower for future projects.
New projects, new opportunities
The Ministry of Housing has announced many projects across the kingdom and recently appointed a contractor to build 7,000 new residential units on Othman bin Affan road, north west of King Khalid International Airport in Riyadh. The project will include 24 mosques, schools and other supporting facilities. This is one of many projects undertaken by the ministry to address acute housing shortage.
Historically, Saudi Arabia’s economic performance is ranked among the best in the G-20, mainly driven by high oil prices that strongly contribute to government revenues, enabling the world’s largest oil exporter to carry out massive fiscal spending to fuel private consumption and create jobs.
Driven by efforts to diversify away from oil, the government continues to channel oil proceeds into public capital spending on massive infrastructure, power and housing projects, which will provide a boost to the its construction, real estate, transport and utility sectors.