Saudi Arabia Reaches $1.25 Trillion in Real Estate Projects
For the past few years, the real estate landscape in Saudi Arabia has largely been shaped by Vision 2030, an effort to diversify the kingdom’s economy away from oil and expand its property sector. Vision 2030 is an ambitious initiative aimed at rapidly increasing the number of available units in the market. Consequently, numerous real estate and infrastructure projects have been initiated to achieve this goal.
According to a new report, there are currently $250 billion worth of commissioned projects in Saudi Arabia, which puts the all-time total over $1.25 trillion. Many have said that Vision 2030 is the most expansive real estate development program ever launched, with a projected total that only continues to increase.
Growing Funding for Development in Saudi Arabia
In the past year, the number of planned residential units grew by about 30 percent to 660,000, which is an effort to address the recent spike in prices. With demand growing sharply in a market limited by supply, the cost of real estate in Saudi Arabia has grown tremendously in the past year. As a result, many Saudi nationals have been priced out of the market, frustrating them. Essentially, they are witnessing the rapid expansion of the real estate market's value but are unable to participate due to affordability constraints. The increased supply is expected to contribute to a decrease in property prices in Saudi Arabia. However, developers must adopt a strategic approach to pricing the expanded constructions to ensure their success. If the price point is not low enough, it will only attract new foreign investment rather than purchases by Saudi nationals.
Much of the construction planned for the coming year is based in Western Saudi Arabia. This part of the kingdom is expected to deliver $687 billion in real estate projects before the end of the current decade as part of Vision 2030. However, other parts of the kingdom are also getting a lot of attention. One project that people across the globe have been following closely is NEOM, a smart megacity that will boast about 300,000 homes once completed. NEOM has had about $70 billion in subprojects assigned and is at an estimated completion rate of 45 percent. What makes this achievement truly remarkable is that this city, emerging from what was essentially a desert landscape, now holds the potential to become one of the most influential hubs in the world for sustainable development.
Development Plans for the Capital City Riyadh
Another major location for construction is the capital, Riyadh. Approximately $229 billion worth of real estate projects are currently in progress within the city, constituting around 20 percent of the total investment in the kingdom. Saudi Arabia is making substantial investments in entirely new constructions and fabricated cities, offering valuable insights into urban development. Therefore, while Riyadh is witnessing a surge in new projects, the kingdom is also striving to alleviate the strain of overpopulation by establishing entirely new destinations. With the money pledged, Riyadh will add 241,000 homes by the end of 2023, as well as more office space to relieve the pressure felt by companies trying to relocate there.
Moving forward, construction in Riyadh is set to pick up significantly in the years to come. Altogether, about $1 trillion is projected to be spent in the capital as Saudi Arabia vies for the rights to become the 2030 World Expo host. This bid involves the development of basically every sector of real estate, including infrastructure. These investments will help secure Riyadh as a leading financial capital of the world. A lot of this funding will be used to address the shortage of office space in the capital, although it may come later than the ideal time. Project HQ, an initiative meant to attract new businesses to the city, is well underway, with the deadline to take advantage of the deal fast approaching. This mandate requires foreign firms to establish local headquarters within the country. Failure to comply with this requirement could result in the loss of access to lucrative government contracts.
Focus Areas for Investment within the Riyadh City Limits
The large investment in Riyadh over the coming years will be concentrated in certain key areas. One project that already stands out from others in the city is King Salman Park. This giga project is poised to become one of the most advanced destinations in Riyadh. The development itself involved an investment of $9 billion and nearly an equivalent amount awarded in contracts throughout the community. King Salman Park remains far from opening, with a projected completion date of 2027, but it is already quite impressive. The final project will introduce more than 12,000 new homes into the space, along with 600,000 square meters of office space and half a million square meters of retail space.
Many other projects have been announced for Riyadh, including a $146 billion international airport. Furthermore, the city has ambitious plans for the Green Riyadh initiative, which entails planting 7.5 million trees throughout the urban area. This substantial undertaking is projected to require an investment of $23 billion.
Meanwhile, the ALNAMA Smart City project will create a new mini-development within Riyadh that will become the first zero-carbon zone within the capital and house around 44,000 people. In addition, there are several new hospitals and educational institutions planned, not to mention Riyadh Sports Boulevard, a project that will cost $500 million.