Industrial Zone for Building Material in the Saudi-Chinese Agreement
Industrial zones are valuable spaces for creating employment, attracting investments, and lifting the barriers that hinder industrialization processes. In Saudi Arabia, the creation of Industrial zones not only improves the asset base for real estate but also supports the transformation agenda in the 2030 Vision. The year 2024 marks an important turning point following the signed cooperation between the National Housing Co. (NHC) and China’s CITIC Construction Group. The deal which is worth SAR 3 billion will aid the construction of industrial city and logistics zones for building materials in the Kingdom. Let’s see how this is vital for the construction sector and the RE in the Kingdom…
What’s in the NHC Deal for the Realtors
NHC is one of the largest real estate firms in the Middle East. Part of the NHC’s plan is to deliver 600,000 housing units by 2026. The signed deal involves establishing an industrial city and logistic zones that will entail 12 factories. The planned factories aim to secure a supply of building materials for housing projects. This is also part of the initiative to ensure the Saudi government achieves 70% homeownership in the Kingdom by 2030.
Mohammad Albati , in his address during the Supply Chain Forum 2024 said that the Saudi-Chinese deal will encompass 20 factories to meet the current and future needs for building materials. In his address “The contracting sector in Saudi Arabia is witnessing a boom and various projects are taking place in more than one city and region in the Kingdom, which indicates the potential risk of a shortage of project implementation contractors.”
The deal will also ensure the creation of 10,000 jobs in the Kingdom.
The Need for Industrial Zones in the Kingdom
At a time when the Kingdom is poised to be a business hub, industrial zones will have far-reaching importance in the RE and the whole economy.
Economic Diversification
Industrial zones are pivotal in driving Saudi Arabia’s economic diversification, a core objective of Vision 2030. Historically reliant on oil revenues, the Kingdom aims to reduce this dependency by promoting other sectors such as manufacturing, mining, and logistics. Industrial zones provide the necessary infrastructure and environment to support these industries, thereby fostering economic stability and growth. They attract foreign direct investment (FDI) by offering favorable conditions such as tax incentives, streamlined regulatory processes, and world-class facilities. This influx of investment not only boosts industrial output but also enhances the country’s competitive edge in the global market.
Employment and Skills Development
The establishment of industrial zones significantly contributes to job creation, addressing unemployment and underemployment challenges within the Kingdom. These zones generate diverse employment opportunities across various skill levels, from unskilled labor to highly specialized technical roles. Furthermore, industrial zones often collaborate with educational institutions and vocational training centres to develop the local workforce’s skills. This collaboration ensures that Saudi citizens are equipped with the necessary expertise to meet the demands of modern industries, thereby fostering a culture of innovation and continuous learning.
Technological Advancement and Innovation
Industrial zones in Saudi Arabia serve as hubs for technological advancement and innovation. By clustering businesses, research institutions, and technology providers in close proximity, these zones facilitate knowledge sharing and collaborative development. This environment encourages companies to invest in research and development (R&D) activities, leading to the creation of new products, processes, and technologies.
The focus on innovation within industrial zones helps Saudi Arabia keep pace with global technological trends and enhances its ability to compete in international markets. Additionally, the emphasis on R&D contributes to building a knowledge-based economy, aligning with the long-term goals of Vision 2030.