Increased government spending and progress on multibillion-dollar construction projects may fuel growth in Saudi Arabia’s property sector, real estate services firm JLL said.
Public Investment Fund’s progress on projects such as entertainment city Qiddiya, and luxury resort Amaala will have a positive impact on real estate development in the kingdom, the business said in its 2018 report.
Reflecting on reforms and GDP growth in Saudi Arabia, JLL’s associate for the Middle East and North Africa, Dana Salbak, said: “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.
Hospitality and entertainment, supported by Qiddiya and Amaala, are sectors that could spark real estate activity.
“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 Saudisation are expected to create a surge of job opportunities,” Salbak said.
The lifting of a decades-long ban on cinemas is already creating commercial real estate opportunities in Saudi Arabia as developers look to provide greater entertainment options for residents. While spending power in Saudi has been dented by value-added tax, subsidy cuts, and an expat levy, JLL said real estate would continue to benefit from the “reformative changes” led by the kingdom.
King Salman Energy Park, commonly known as Spark, is another megaproject that will drive up demand for real estate. Located in the kingdom’s Eastern Province, the scheme’s modern infrastructure plans have already attracted foreign companies to participate in the project, which JLL said would benefit real estate development in the kingdom.
The inauguration of the 450km Haramain High-Speed Rail network, which has significantly cut the five-hour journey between Makkah and Madinah, is another improvement that could spur new projects. JLL’s chief executive officer for the Middle East and Africa, Thierry Delvaux, said the market dynamics, coupled with “significant government investment and new reforms” would have a long-term impact on real estate.