Saudi Vision 2030 reshaping local real estate landscape
As part of its economic transformation efforts, the Kingdom of Saudi Arabia has unleashed numerous ambitious, long-term strategies and plans to bolster its industries, bring prosperity to and ensure the wellbeing of its citizens, and maintain its resiliency in the face of present and emerging challenges.
Guiding the Kingdom’s initiatives is the all-encompassing, integrated Saudi Vision 2030, which captures the government’s resolve to cement its global leadership in all fields and disciplines. The Kingdom, the most prominent regional economic power today, is well-positioned to achieve its global aspirations under Vision 2030. It is because Saudi Arabia is not only a vital contributor to global energy supplies; the strategically located Kingdom also links Asia, Africa, and Europe, making it a hub for trade flows and logistics.
Strengthening the economic base is one of the pillars of the ambitious Vision 2030. As such, many mega construction projects have been launched over the past years to grow and diversify the national economy. These projects have resulted in the remarkable development of infrastructures, especially airports, ports, commercial and residential real estate investing, and road networks, and have led as well to enhanced industrial, trade, and export activities supported by modern facilities. The real estate sector, a vital economic tributary, has particularly gained new momentum and increased its strength as a result of these projects of national importance.
The local property sector is rising to become the main engine for national economic growth. It is a priority in the Kingdom’s steady transformation towards a more diversified, resilient, and sustainable economic model, which will effectively reduce its heavy reliance on oil. Within the industry, the housing segment proves to be the most attractive amid a series of government initiatives and radical solutions to housing challenges facing many Saudi citizens. Under Vision 2030, massive investments in housing projects have been made to provide nationals with wider options, targeting an increase in homeownership to 70 percent by the end of the decade.
Furthermore, the new strategy of the Public Investment Fund will drive more real estate activities, as a large part of the Fund’s estimated SAR 150 billion annual economic investments will go to the property sector. This will accelerate the sector’s growth and contribution to the gross domestic product (GDP) through the generation of more job opportunities for locals, especially among young Saudi professionals. The investments are also seen to help balance supply and demand within the residential sector, thereby increasing its competitiveness while ensuring more housing options to meet the growing needs of Saudi society.
The decision issued recently by the Custodian of the Two Holy Mosques to merge the Ministries of Housing and the Municipal and Rural Affairs into one will also address pressing housing challenges. The move will increase the support for housing development efforts, as well as promote municipal and rural development as an integrated profile. Because of their close connection, the merger will lead to wider support for the expansion of the residential sector and other associated industries. For instance, it is expected to support the growth process of the various economic sectors and give rise to more value-added activities in the areas of contracting and building materials trading; real estate and engineering consultancy; urban planning; landscaping; and infrastructure development, among others.
Arguably, the real estate sector’s rapid development, driven by unwavering government support, will lead to a new era of development in Saudi Arabia. The property sector’s expansion will help strengthen the Kingdom’s regional and global economic influence and enable the government to build a more diversified and flexible economic system. The real estate community is poised to become the cornerstone of the Kingdom’s continuing economic growth.