The positive impact of Saudi Arabia’s government-backed giga-projects and other Vision 2030 initiatives has helped stimulate growth across the Kingdom, with the property market set to benefit in 2022, JLL has said in its latest real estate outlook for the country.
Speaking at A Reset for the Real Estate Sector, a JLL event in Riyadh, Thierry Delvaux, CEO of JLL Middle East, Africa and Turkey, provided a deep dive in into Saudi’s property and construction market, and shared insights on the workforce of the future.
Sharing the macroeconomic overview at the event, Delvaux commented: “Globally, the pandemic has provided new impetus to many of the trends and themes that were already reshaping our cities – from changing work and lifestyle preferences to the core role of the digital economy and the need for more resilient, inclusive and sustainable communities.
In the KSA, the Saudi government has actively been spearheading initiatives and giga projects, as part of Vision 2030, to create a vibrant society, with more lifestyle developments coming into the picture. This has helped stimulate growth across the Kingdom, and we expect this to continue to positively impact the property market in 2022 as well.”
Amongst the key insights shared by JLL were:
- KSA Real Estate market overview:
The government has launched various initiatives in recent years in order to increase homeownership within the Kingdom. In the near-term, strong underlying demand for housing among Saudis is anticipated to underpin prices continuing on an upward trajectory – albeit the upcoming supply pipeline is likely to soften price growth over the next 12 months.
Additionally, forecasts from Oxford Economics show that, in 2022, consumer spending will see annual growth of 3.4% and retail sales will rise by 2.2%. If these projections are borne out, both will broadly recover to levels previously seen in 2019 which in turn should lend support to Saudi Arabia’s retail sector, helped by upcoming entertainment events.
- Developing towards Vision 2030:
The Saudi Vision targets a major increase in the number of Riyadh residents over the next 10 years from its current level of around 7.5 million to between 15 and 20 million by 2030. The only way that this massive increase in population can be accommodated in a sustainable fashion is through an increase in density, requiring a corresponding increase in demand for mid- and high-rise multi-family housing.
The need to increase residential densities is also central to the government’s bold vision to make Riyadh one of the most liveable cities in the world by 2030.
- Key construction cost trends for 2022:
Saudi Arabia is working towards its established Vision 2030 programme, supported by the continuation of the Kingdom’s associated gigaprojects. Neom, The Red Sea Project and AMAALA are providing new opportunities to own property on the West Coast.
In parallel, it is enabling job creation in construction and development, employment opportunities within the hospitality sector and investment in infrastructure and renewable energy. The planned projects across the Kingdom highlight the effort towards economic, social and cultural diversification, aligned with the 2022 budget announcement with an investment focus on the education, healthcare and social development sectors.
- Preparing for the workforce of the future:
While the COVID-19 crisis has incited a massive paradigm shift in the way people work and live, it is also providing a once in a lifetime opportunity to shape a better future of work. Future successful companies will be those that are bold and proactive in shaping their workplaces according to the changing needs and preferences of a changing workforce, where solutions are tailored to meet individual employee needs and help them thrive.
The JLL event in Riyadh follows the firm’s recent announcement that it has appointed a non-executive board of leading business figures in Saudi Arabia1. The newly created board will assist JLL in driving its medium and long-term strategic direction in Saudi, whilst also advising on key business developments for the firm in the Kingdom.
Joining JLL will be Jehad Alkadi, Chief Executive Officer of Arriyadh Development Company in the capacity of a board chairman; Hawazen Nazieh Nassief, Vice President ESG and External Affairs, National Energy Services Reunited Corporation (NESR); Mohammed Al Khars, Chairman of Innovest Properties; and Musaab Al-Muhaidib, Chief Executive Officer of Al Muhaidib Entertainment Ventures.