RIYADH: Saudi Arabia’s real estate sector underwent a major transformation in 2024, driven by the goals of Vision 2030. The market saw significant changes, fueled by unprecedented investments and key policy reforms. As a result, the Kingdom has positioned itself as a global leader in innovation, sustainability, and economic diversification within the real estate industry.

Vision 2030

Since its launch in 2016, Vision 2030 has served as Saudi Arabia’s roadmap for economic diversification, with real estate playing a central role. By 2024, the Kingdom had invested SR4.9 trillion ($1.3 trillion) in infrastructure, significantly boosting residential, commercial, and hospitality capacities. Notable projects aim to introduce over a million residential units, as well as expand retail and office spaces by 7 million sq. meters each.

“Saudi Arabia’s policy reforms and investment under Vision 2030 have transformed the Kingdom’s real estate landscape, making it one of the most dynamic markets in the region,” said Tarek Lotfy, president of Mercer in India, Middle East, and Africa, in an interview with Arab News.

He emphasized that these reforms have accelerated the sector by aligning with broader initiatives to increase homeownership, improve livability, and attract foreign investments. This has been achieved through eased ownership regulations and the creation of Special Economic Zones.

According to Sally Menassa, partner at Arthur D. Little Middle East, these reforms have included “easing foreign ownership restrictions, enhancing transparency in real estate transactions, introducing incentives for green building practices, and establishing a national framework for smart city development.”

The establishment of a real estate transaction registry has been a particularly significant step in boosting market confidence, as it reduces the risks of fraud and increases investor trust.

Menassa further highlighted the role of mega-projects in fostering investor confidence: “The involvement of the PIF in major development projects such as the Diriyah Gate Development reassures investors of the Kingdom’s commitment to high-quality, sustainable development and the stability of such developments.”

Lotfy added that alongside these advancements, the rapid pace of development has also created challenges, including increasing competition for skilled labor in construction and smart city infrastructure.

Recruitment and retention will be key themes in 2025, as companies will need to focus on developing long-term talent strategies, investing in training, and fostering a culture that attracts and retains top-tier talent, according to Lotfy.

Catalysts for transformation

Saudi Arabia’s giga-projects, led by the Public Investment Fund, underscore the Kingdom’s commitment to large-scale innovation and ambitious transformation. High-profile projects like NEOM, Qiddiya, and the Red Sea Global are set to redefine urban living, culture, and tourism.

NEOM alone spans 28,000 sq. km and is envisioned as a smart city powered by renewable energy and cutting-edge technology. Menassa emphasized the uniqueness of NEOM, pointing to initiatives like Oxagon, a floating industrial complex designed for sustainability and advanced technologies. “This is expected to attract high-tech industries and global talent, driving demand for residential and commercial properties,” she said.

Meanwhile, Qiddiya is being developed as a world-class entertainment hub, featuring theme parks, cultural centers, and sports complexes. Menassa added that Qiddiya’s growth as a major cultural and entertainment destination would further boost tourism and the hospitality sector, creating demand for mixed-use assets that combine retail, leisure, and residential components.

The Red Sea Project is another transformative initiative focused on sustainable tourism. According to Menassa: “Focusing on eco-friendly concepts and incorporating sustainable practices in its development, starting from construction, it (The Red Sea Project) will set new standards for regenerative and sustainable tourism and real estate development.”

Residential market

Saudi Arabia’s residential sector saw substantial growth in 2024, driven by government-backed initiatives and strong demand. Programs like Sakani and the National Housing Program have been essential in advancing the Vision 2030 goal of achieving 70 percent homeownership.

Menassa underscored the significance of these efforts: “The addition of over a million homes as part of Saudi Arabia’s residential expansion efforts, aligning with the goal of achieving a 70 percent homeownership rate under Vision 2030, is expected to significantly impact homeownership rates and affordability, creating a big socio-economic shift in the nation.”

A 38 percent increase in real estate transactions during the first half of 2024, valued at SR127.3 billion, highlights the sector’s dynamic growth. Cities like Riyadh and Jeddah have seen rising property prices, with Riyadh expected to reach a population of 10 million by 2030.

Hospitality and tourism

Tourism, a cornerstone of Vision 2030, has already surpassed expectations. The Kingdom achieved its target of 100 million visitors in 2023 and now aims to attract 150 million tourists annually by 2030.

“The 2034 FIFA World Cup will play an instrumental role in shaping the future of the short-term rental market in Saudi Arabia over the next 10 years,” said Anna Skigin, CEO of Frank Porter, in an interview with Arab News. “We will see a significant increase in the number of properties being developed as savvy investors look to capitalize on the announcement. We will also see more people buying properties and converting these into short-term rentals,” she added.

Short-term rentals are reshaping the tourism landscape, creating new opportunities for various types of travelers. Skigin noted: “There is the opportunity for larger groups to travel — potentially multi-generational family travel and other large groups of family and friends.”

She further explained, “Short-term rentals can cater to a variety of different budgets while offering more space than hotel rooms. These rentals also provide more privacy for travelers.”

Menassa also highlighted the Kingdom’s focus on luxury resorts, boutique hotels, and eco-friendly accommodations as part of its broader tourism strategy. Developments like Jeddah Al-Balad, Diriyah, and Qiddiya are generating demand for integrated, mixed-use assets, boosting both tourism infrastructure and the overall quality of life, she explained.

Proptech boom

Saudi Arabia’s digital transformation has positioned proptech as a key component in the evolution of its real estate sector. Innovations such as digital mortgages, AI-driven property recommendations, and virtual tours are revolutionizing the home-buying experience.

“Digital mortgages will allow streamlined processes, expediting the buying process by automating many of the steps involved, enhancing accessibility, and increasing transparency. Buyers can now compare rates, get pre-approved for loans from their homes, and explore homeownership opportunities with greater ease,” said Menassa.

She also highlighted the integration of smart city infrastructure like NEOM’s, which incorporates advanced technologies to enhance urban living.

“This also extends to urban planning and management, including advanced surveillance systems, smart street lighting, emergency response, traffic forecasting, and energy consumption management,” Menassa added.

Outlook

Despite its rapid growth, the Saudi real estate sector faces challenges such as economic volatility and rising project costs. Lotfy warned that as the Kingdom moves towards smart cities and sustainable development, the demand for advanced technical skills will increase.

However, the opportunities outweigh these challenges. Skigin concluded: “The Kingdom has been significantly pushing tourism for both international and domestic tourists,” and these efforts will continue to shape the future of Saudi Arabia’s real estate sector in the coming years.

JEDDAH: Saudi Arabia’s Vision 2030 agenda gained significant momentum in 2024, with the Kingdom securing a series of high-profile strategic partnerships that span multiple industries.

These deals, coupled with the country’s ongoing reforms, are positioning Saudi Arabia as a global economic and financial powerhouse. Experts emphasize that these agreements have long-term potential to diversify the Kingdom’s economy and reduce its dependency on oil revenues.

In the past year, Saudi Arabia signed key agreements with international governments and corporations in sectors including education, tourism, IT, finance, manufacturing, and renewable energy, according to Yaseen Ghulam, associate professor of economics and director of research at Al-Yamamah University in Riyadh.

Tourism sector takes off

The Saudi Tourism Authority reached a major milestone in May by unveiling the Kingdom’s unique summer destinations at the Arabian Travel Market. This initiative resulted in over 40 new agreements, including partnerships with Saudia, Riyadh Air, flyadeal, Noon, and China’s i2i Group.

“Tourism is expected to play a major role in the Kingdom’s economic transformation,” Ghulam said, underscoring the importance of these agreements in promoting the sector and creating new employment opportunities, particularly for youth and women. These efforts are in line with Vision 2030’s broader objectives. Saudi Arabia aims to develop year-round attractions and position itself as a top global destination. By blending traditional culture with modern experiences, the Kingdom is appealing to both domestic and international tourists, further strengthening its tourism strategy.

Strategic alliances

Abdullah Al-Maghlouth, a member of the Saudi Economic Association, pointed out that the Kingdom’s strategic alliances focus on diversifying the economy, attracting foreign investments, and boosting trade with international partners. These partnerships span regions, including the US, China, Europe, and Africa, and cover sectors such as technology, infrastructure, tourism, education, and renewable energy.

“These partnerships include collaborations with the US, China, European countries, and African nations, focusing on areas like energy, technology, infrastructure, tourism, education, and renewable energy,” he explained.

The agreements target key areas such as reducing reliance on oil, improving infrastructure, and fostering innovation while supporting flagship projects like NEOM, Qiddiya, and The Red Sea Project.

“These alliances will improve product and service quality, promote innovation, and help Saudi companies adopt modern technologies,” Al-Maghlouth added.

Education sector

2024 also saw significant strides in education. In November, top American universities visited Saudi Arabia, leading to an agreement aimed at strengthening academic and scientific cooperation. This partnership will increase exchanges between students and faculty, foster joint research projects, and introduce advanced academic programs.

Additionally, Saudi Arabia’s Technical and Vocational Training Corp. launched a cooperation program with the UK’s Department for Business and Trade, reinforcing the Kingdom’s growing reputation as a hub for international academic collaborations.

Another key development was a service agreement between the University of Strathclyde and Princess Nourah bint Abdulrahman University, signaling an open door for more British universities to establish partnerships in Saudi Arabia.

Space and digital transformation

In a groundbreaking move, Saudi Arabia signed a major agreement with NASA in 2024 to strengthen ties in space exploration, research, and education. “This agreement has a huge significance and shall pave the way for further collaboration and related economic activities,” said Ghulam.

On the digital front, LEAP 24, a major tech event organized by the Saudi Data and Artificial Intelligence Authority, resulted in agreements worth $24 billion to boost AI research and digital technology localization.

Highlights include Amazon’s $5.3 billion investment in training initiatives, including the AWS Saudi Arabia Women’s Skills Initiative, which aims to train 4,000 women. Additionally, Aramco Digital announced partnerships with US tech companies to build the world’s largest AI supercomputer center in Saudi Arabia.

“All these agreements are expected to generate employment opportunities and help diversify the economy greatly,” Ghulam said.

Construction, renewable energy sectors

In the construction sector, a notable partnership was formed between Saudi Arabia’s National Housing Co. and China’s CITIC Construction. The agreement focuses on developing industrial cities and logistics zones to support residential projects and strengthen the real estate sector. Ghulam emphasized that these zones would boost construction, support local industries, expand the domestic materials market, and improve housing quality.

Renewable energy also made waves in 2024. In January, ACWA Power, a Saudi company, led a $1.5 billion wind energy project in Egypt, one of the largest onshore wind energy projects globally. “This initiative will provide electricity to 1 million homes in Egypt and reduce carbon emissions by 2.4 million tonnes annually,” Ghulam pointed out.

This project not only supports Egypt’s energy needs but also solidifies ACWA Power’s position as a key player in the global renewable energy sector, alongside other leading Saudi brands like Aramco and the Public Investment Fund.

PIF’s expanding role

The Public Investment Fund continues to be a driving force behind the Kingdom’s economic transformation. Since 2017, PIF has created nearly 644,000 jobs and launched 94 new businesses. In 2024, PIF acquired a 15 percent stake in Heathrow Airport for $4.12 billion, signaling its intent to expand its influence in global infrastructure projects.

PIF also partnered with Google Cloud to establish an AI hub in Saudi Arabia, a project that is expected to contribute $71 billion to the country’s GDP over the next eight years.

“This cooperation seeks to strengthen the Saudi workforce and assist the country’s goal of a 50 percent increase in the information and communication technology industry in coming years,” Ghulam noted.

In the renewable energy sector, PIF has been instrumental in localizing the production of wind turbines, solar cells, and other renewable technologies. In partnership with Jinko Solar and Vision Industries, PIF is working to produce solar power ingots and wafers, further advancing Saudi Arabia’s green energy ambitions.

Additionally, in April, PIF joined forces with BlackRock to launch a multi-asset investment platform in Riyadh, aimed at expanding Saudi Arabia’s capital markets and attracting global investors.

A transformative year

The strategic partnerships and investments forged by Saudi Arabia in 2024 reflect the Kingdom’s commitment to economic innovation, diversification, and global collaboration. By focusing on developing human capital, cutting-edge industries, and sustainable growth, Saudi Arabia is positioning itself as a leader on the world stage across multiple sectors.