Investment opportunities available in the KSA construction
Stuart D’Souza, co-founder, Arabian Enterprises Incubators (AEI), shares his advice for getting into the Saudi construction market
We’ve all heard of Vision 2030 and the transformation that is happening in the Kingdom of Saudi Arabia but what do you need to know to be successful in the Saudi marketplace?
Firstly, the transformation is real and Vision 2030 has already proven to be a vehicle for dramatic change in the Kingdom, breaking down economic, social, regulatory and cultural barriers. The ambitious and progressive reform agenda in the Kingdom seeks to diversify the economy away from oil and to create and sustain jobs for Saudi citizens.
The infrastructure and construction sector of the country sits at the heart of investment opportunities with over 5,000 projects underway valued at approximatively $819 billion and which represent approximatively 35% of the total value of active projects across the GCC.
- Residential – 3.3 million homes to be built by 2025
- Hotels – 160 new hotels to be built by 2026
- Tourists – target of 100 million tourists per year by 2030
- Neom – new city and ‘semi-autonomous region’ in the north
- Amaala – luxury Red Sea resort with 700 villas and 2,500 hotel rooms by 2028
- Qiddiya – new entertainment city outside Riyadh
- Red Sea Project – $2bn of contracts already awarded, first 4 hotels opening in 2022
These are just some of the headline grabbing projects that many will have heard about already. There are, of course, others in adjacent sectors such as renewable energy, transport and logistics as well as sectors such as healthcare, education and training. Indeed the drive to develop and expand human capital in the Kingdom is critical to meet the objective of employing more Saudi Nationals.
So where do you start? It can be a bit overwhelming as the scale of everything in Saudi, from the number of opportunities to the size of the Kingdom, not to mention the 35 million population, is so much greater than other markets in the Gulf.
Here are four key tips to entering or expanding in the Saudi market:
- The ‘fly-in / fly-out’ days are over and you may well need to register an entity in Saudi. To complete registration, you’ll need an office and to employ at least one Saudi National.
- Take care if you opt to appoint a partner for Saudi, engaging on the right terms with clearly defined roles, responsibilities and your termination / exit rights is crucial.
- The regulatory environment is not a ‘cut and paste’ from other jurisdictions, you must understand your local liabilities and obligations.
- Embrace Saudisation and the drive to employ Saudi Nationals.
Above all seeking local, informed advice from experts on the ground is the key to success in Saudi. Good luck!
