Foreigners can invest in real estate in Saudi Arabia
At the recent Riyadh Real Estate Future Forum, the Saudi Capital Markets Authority announced a major decision: for the first time, non-Saudis will be allowed to invest in listed real estate companies in Mecca and Medina. Behind this move is the Kingdom's continued efforts to ease real estate policies, including allowing foreigners to own property without the need for a guarantor, and allowing them to invest in Saudi real estate funds.
According to statistics, the value of real estate transactions in Saudi Arabia reached SAR 277 billion (USD 73.87 billion) in 2023, an increase of 24% compared to 2022, of which foreign investment accounted for 30% of the total development investment. This open-door policy has not only attracted the attention of global investors, but also promoted the boom in the real estate fund business, which now manages about 170 billion riyals in assets, accounting for one-third of the entire financial market.
The CEO of the General Directorate of Real Estate of the Kingdom of Saudi Arabia noted at the forum that the real estate sector contributes significantly to the country's GDP. Ahmad Raj, Minister of Human Resources and Social Development, also said that real estate development is a key force in creating jobs and promoting the progress of the industry, which can lead to the full vitality of the construction industry, supply chain, construction materials trading and engineering. According to the Saudi General Bureau of Statistics, investment in real estate development is expected to increase to SAR 500 billion (USD 133 billion) by 2030.
However, population growth is outpacing the construction of new residential units, resulting in Riyadh facing a housing shortage. In 2023, apartment rents have risen by 23%, and the expected pace of population growth is expected to accelerate further, which also means that the housing market will face greater challenges. To address this issue, the Saudi National Housing Corporation plans to develop 15 mixed-use residential complexes with 300,000 housing units by the end of 2025 to provide more housing options.
Real estate drives local construction
The booming real estate sector in Saudi Arabia presents huge opportunities for construction, supply chain, and other industries. Following the world's stunning 170-kilometre-long "The Line" urban plan, Riyadh is about to build a new landmark, the cube city of Mukaab. With a length of 400 meters, a width and a height of 2 million square meters, the Mukaab cube contains community, entertainment facilities, theaters, museums, office and residential spaces, and up to 9,000 hotel rooms.
Cube city Mukaab
Vision 2030 drives infrastructure investment
The Saudi government launched Vision 2030 in 2016, which aims to transform the kingdom from an oil-dependent country to a diverse, modern economy. At the heart of this plan is a huge investment in infrastructure and real estate projects, with a total planned investment of 4.13 trillion riyals (about 1.1 trillion US dollars) in infrastructure and real estate projects. The Saudi government plans to increase the home ownership rate to 70% by 2030 and improve the living conditions of the people by building new homes and providing housing loan support.
At present, Riyadh has announced real estate projects with a total value of up to $104 billion, and plans to build more than 555,000 residential units, more than 275,000 hotel rooms, more than 4.3 million square meters of retail space and more than 6.1 million square meters of office space.
The Saudi government has earmarked hundreds of billions of dollars in funding, with a focus on large-scale development of transportation, energy, housing, and industrial infrastructure. This move has made Saudi Arabia one of the largest construction sites in the world. At present, Saudi Arabia is in the midst of an infrastructure boom, and many major projects such as NEOM New City and The Line are in full swing. These projects will also revolutionize the Kingdom's urban and natural landscapes.
Among them, The Line project will build a 170-kilometre environment-first, people-centric urban environment of the future. The goal is to create a new living model, dedicated to creating an environmentally friendly, comfortable and livable living space. At the same time, the OXAGON project is the world's largest floating structure, aiming to build an advanced port and supply chain system with zero carbon emissions. The implementation of these projects has also brought a new development model to Saudi Arabia, laying a solid foundation for its sustainable development in the future.
OXAGON, the world's largest floating industrial complex
Let Saudi Arabia see the speed of China
Saudi Arabia's large-scale infrastructure demand has attracted a large number of Chinese construction companies to this hot land. With the alignment of the Belt and Road Initiative with Saudi Arabia's Vision 2030 strategy, Chinese companies are gradually playing a key role in Saudi Arabia's engineering sector. The importance of Sinopec, PetroChina, China Power Construction, China Railway Construction, China Communications Construction and other enterprises in Saudi Arabia is self-evident, while State Grid, CNOOC, China Energy Construction and other enterprises are also actively expanding their market share and winning many important projects.
Among them, China State Construction, China Power Construction and other enterprises have been deeply involved in a number of large-scale projects in Saudi Arabia, not only participating in the construction of sports facilities such as Jeddah Stadium, but also actively participating in the world's high-profile NEOM super project.
NEOM is a $500 billion future megacity in northwestern Saudi Arabia. Source: NeomIn NEOM's "The Line" pilot project, China State Construction is responsible for the construction of a traffic tunnel in Saudi Arabia, with a contract value of up to US$2.47 billion. China Harbour Engineering Co., Ltd. participated in the Mukaab project as the main contractor, and with its excellent and efficient technical and engineering capabilities, it invested up to 137 sets of advanced machinery and equipment, which greatly improved the construction efficiency. At the same time, China Railway Construction undertook the Jeddah Stadium and surrounding sports village project to build an important venue for the 2034 Saudi Football World Cup.
新卫星图像沙特阿拉伯“The Line”项目的进展
In addition, in May 2024, Saudi Arabia's Minister of Housing, Majid Khoqair, visited China and signed a series of high-profile cooperation agreements. The cooperation agreements cover a huge project to build 20,000 modern homes in cooperation with China Machinery Engineering Co., Ltd. (SINOMACH) and a huge industrial city with CITIC Construction Group to integrate the production and storage of building materials.
Chinese companies are rapidly promoting the construction of Saudi Arabia's cities
Panning for gold in Saudi Arabia's infrastructure wave
In this land, known as the "world's largest construction site", Chinese companies have a rare golden opportunity. By participating in infrastructure projects in countries such as Saudi Arabia, Chinese companies can not only transfer domestic production capacity, but also enhance the international status of their brands and technologies. Especially in the context of the current slowdown in domestic infrastructure, the expansion of the Saudi market is particularly important. At present, a large number of excavators and heavy trucks in China have taken advantage of Saudi Arabia's infrastructure boom, solved the problem of idle local equipment, and also seized the huge demand of overseas markets.
From the opening of the commercial real estate market to the construction of future cities to the extensive cooperation with the international construction sector, every step shows Saudi Arabia's determination to pursue development. With the deepening of the Belt and Road Initiative and the acceleration of the internationalization of Chinese enterprises, Saudi Arabia's infrastructure projects have also become a stage for Chinese enterprises to show their strength. In this "world's largest construction site", Chinese companies are not only participants, but also important creators.
Source: Sand Star, Saudi Eye