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RIYADH: 2023 has been a remarkable year for the real estate industry with more than 10 billion riyals ($2.66 billion) of deals signed on the first day of the Real Estate Future Forum. From 23rd to 25th January in Riyadh.
The strong start to the year is the result of a report published in December by PwC Middle East, which noted that the Kingdom has made impressive progress in transforming its housing sector over the past decade.
Strong government policies and initiatives, including the activation of a number of financial instruments, address key challenges facing the housing market, making homeownership a possibility for a new generation of Saudis and moving the sector forward. It said that
Faisal Durrani, head of Middle East research at global real estate consultancy Knight Frank, echoed the positive sentiment.
“We are tracking nearly 555,000 housing units that are due to be delivered across the Kingdom by 2030, as the Saudi capital prepares for an eventual 127% population growth. , is set to see another 200,000 homes in Riyadh alone,” he told Arab News.
However, he added a caveat: The caveat, of course, is to build adequate inventory to meet current and future extraordinary levels of demand. ”
With such an expansion on the horizon, it should come as no surprise that there is strong interest from investors looking to capitalize on the strong prospects in the Kingdom’s property sector.
Bahrain-based Investcorp, for example, announced in early January that it would invest up to $1 billion in Saudi real estate over the next five years.
“Saudi Arabia’s property market is undergoing rapid transformation as the kingdom’s appetite for megaprojects and economic prosperity grows under its Vision 2030 agenda,” said Youssef, Head of Personal Wealth, GCC at Investcorp. Al Youssef told Arab News.
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A report by S&P Global, published last December, showed Saudi Arabia’s real estate ambitions as part of its Vision 2030 program for economic diversification.
The kingdom plans $1 trillion in real estate and infrastructure projects, with at least eight new cities planned, mainly along the Red Sea coast, and more than 1.3 million new homes by the end of 2030, according to a report. be constructed.
Saudi Arabia remains the region’s largest construction market, according to Rani Majzoub, KPMG’s head of real estate advisory, out of a total of $87 billion worth of projects awarded in the first 10 months of 2022. , is projected to account for a share of $31 billion. professional service.
“While Saudi Arabia has the undisputed leadership in the region in terms of market size, it is also emerging as one of the leading countries in terms of real estate innovation on a global scale,” he told Arab News. rice field.
“The Kingdom is set to shape construction and development at an unprecedented pace, with a construction rate targeted to reach 8.8 per cent of its nominal gross domestic product in accordance with Vision 2030. Currently, the construction rate is set at It is estimated at 6.4 percent of GDP, equivalent to an annual expenditure of 197 billion riyals,” added Majzoub.
According to KPMG estimates, the share of construction is expected to reach SR 382 billion by 2030 due to GDP growth and an increasing contribution to GDP from the construction sector.
According to Majzoub, what sets Saudi Arabia apart is the number of megaprojects slated for development over the next decade that will contribute to the city’s digital transformation with heritage and culture at its core.
Some examples include Jeddah Central Development, Makkah Heritage District, Diriyah Gate Development, Qidiyah, King Salman Park, Riyadh Sports Boulevard, NEOM, Red Sea Project and Sudha Development.
Most of the mega-projects slated for realization over the next decade will not only change the landscape of the kingdom, but in many cases the daily lives of its inhabitants as well.
“Aiming to raise the home ownership rate of Saudi households to 70% by 2030, the Iskan program will provide the necessary infrastructure for housing and encourage landlords to develop real estate projects across Makkah, Jeddah and Dammam. We are tasked with doing so,” said director Sapna Jagtiani. , S&P Global Ratings.
“While the Whiteland Tax (on undeveloped land) has been in effect for several years and has met with some success, the government has sought to ensure fair competition and a balance between supply and demand for modern real estate. We have launched the second phase of our local program, said Ilya Tafintsev, Associate at S&P Global Ratings.
Mohammed Al-Otaibi, CEO of Ajdan Real Estate Development, said: “The Kingdom is currently undergoing a major transformation with Vision 2030 as an ambitious yet achievable mission.
“We believe the development project will help position Saudi Arabia as a leading tourism, entertainment and real estate destination to rival the likes of Dubai. We have greatly improved our services in Saudi Arabia.”
“As Saudi Arabia continues its continued economic growth, demand for residential properties will also increase,” Imad Shahouri, head of PwC’s Middle East consulting real estate cluster, told Arab News.
Saudi Arabia continues to be the largest construction market in the Middle East region, accounting for $31 billion of a total of $87 billion worth of project orders in the first 10 months of 2022.
Rani Majzoub, Head of Real Estate Advisory, KPMG Professional Services
“The Kingdom, as part of Saudi Vision 2030, has launched an extensive national programme, including a housing program aimed at providing housing solutions that enable Saudi citizens to own and benefit from suitable housing. The expanding project has set a mission to improve housing conditions and quantities for current and future generations.”
“In line with Vision 2030, the housing program will provide housing units to Saudi families, and by the end of 2030, Saudi home ownership is expected to reach 70 percent,” added Shahouri.
“Demand in the housing sector is being boosted by Vision 2030’s target of raising home ownership to 70% by the end of 2010, and as of mid-2022, Saudi Property Refinance Company is on track to reach 60% home ownership. We estimate that we have reached it,” Junaid Ansari said. Kamco Invest, Head of Investment Strategy and Research, told Arab News:
CBRE Saudi General Manager Pedro Ribeiro told Arab: news.
“Many of these developments will help provide the market with the supply it needs, but more importantly, the quality and property configuration it needs at an affordable price. It’s not just limited to, but also something like Jeddah, where many notable masterplans have been launched.”
Focus on Riyadh
With a number of projects slated for existing major cities, Riyadh, with a projected population of over 15 million by 2030, will become one of the 10th largest economies in the world by 2030. The big question is whether the government can achieve its ambitious goal of
“I am optimistic that Riyadh will continue to grow at an impressive rate. There is demand and there will be no shortage of industry professionals who are well equipped to meet the demand,” Al-Otaibi said. Told.
“In Ajudan alone, we are involved in many new housing projects that contribute significantly to Riyadh’s economy. Not to mention many other developers with large scale projects in both the private and public sector Needless to say, I am confident that the government will achieve its goals.”
“It may sound ambitious, but achieving this goal will require a great deal of effort on the economic, regulatory and development fronts. We have made the necessary efforts to achieve and implemented innovative ideas.”
He added:
“Regulatory measures such as lowering bank guarantee requirements for developers, moving regional headquarters of international companies to Riyadh and expanding industrial areas are some of the key steps taken by the government to spur much-needed growth. .”
“Large-scale projects like subways increase mobility, allowing cities to expand and create more development in suburbs like Diriyah,” Mayzoub explained. “On the one hand, his lifestyle projects such as Diriyah, King Salman Park and Qidiya will reflect a futuristic way of life that will attract expats and locals from other parts of the country. “
“The current growth trajectory, announced large-scale projects, government plans and regulations, and the response of the private sector are all showing positive signs, increasing the chances of achieving Riyadh’s ambitions,” he said. closed.
“This transformation in Riyadh-focused infrastructure and cross-cultural engagement is not limited to Riyadh,” concluded Shahouri. “Other major cities like Jeddah are also being transformed in large-scale redevelopment efforts. The picturesque waterfront of the Jeddah Central Project, and a similar initiative is underway in Madinah.”
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