The fourth quarter of the year 2022 ended with a smile of hope for investors and would-be investors in the Kingdom for various reasons.
- RE Price Index increased by 6%
- The residential prices increased by 2.6%
- The annual increase of the RE price Index was calculated to be 1.1%
- The Kingdom amended its real estate laws to boost foreign investment
- 30.7% year-on-year increase.
These trends are indicative of greater growth potential in the Kingdom’s real estate sector. It is vital to know the Kingdom’s real estate market growth potential.
Gaps in PropTech Solutions
Big companies with an appetite for high-potential markets such as Investcorp Holdings are already making inroads into the Kingdom’s real estate sector. For instance, the more than USD40 billion-asset company, Investcorp, acquired a warehouse in Ar-Dammam and intends to invest in other deals. However, one of the glaring gaps is in the proptech solutions which have the potential to double the existing growth. Industry thought leaders agree that the PropTech market gap in the Kingdom requires foreign investors to minimize the associated risks. The PropTech sector is also positioned to benefit from more than USD 6.4 billion in investments in digital technologies. With an opportunity to partner with local developers and players across different industries, PropTech solutions will enhance the overall performance of the real estate sectors.
Government Support for the Real Estate Sector
The Kingdom’s real estate has received and continues to receive considerable support from the Government, thanks to His Highness, Crown Prince Mohammed bin Salman and the 2030 vision he has put in place. Some of the visible outcomes include:
The public investment fund-backed Roshn has resulted in the groundbreaking of the Sedra and Warefa projects in 2023 amongst others.
- Increase in the number of deals signed with companies in the real estate sectors.
- Easing visa regulations to allow eligibility for visas on arrival.
- Robust vision 2030 has triggered growth in investment in the economy.
- Statistics show that 18 development deals have been signed in 2023 plus several others in the process.
- On-going work in AI-Arous in Jeedah is expected to host 18,000 housing units.
- The launching of Al-Fursan phase 1 and Khuzan suburb phase II in Riyadh
Sources: Middle East Economy.
The current institutional support for the real estate sector in the Kingdom is unrivalled. However, developers and construction companies that guarantee high-quality work and high service levels will enjoy the dominance in the Kingdom. The sectors are poised to experience further growth this year with more foreign investors expected to venture into the Kingdom.
New Megapolises Triggering the Market Growth
The Kingdom has invested in new megapolises such as the Red Sea Project, Neom, and Qiddiya. The estimated investment in these projects is 575 billion US dollars and will provide housing for 1.3 million Saudi citizens.
In sum, the local supply for investors cannot meet the current demand in the construction industry. This reflects an opportunity for foreign investors to gain from the market boom in the Kingdom. The Ministry of Investment (MISA) agree that the Kingdom’s real estate market and its growth potential make it an attractive investment destination with competitive advantages.