Expatriates fuel strong demand for housing in Riyadh, Jeddah: report

Expatriates fuel strong demand for housing in Riyadh, Jeddah: report
Rooftop view of Riyadh city districts. Shutterstock
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Updated 11 November 2024
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Expatriates fuel strong demand for housing in Riyadh, Jeddah: report

Expatriates fuel strong demand for housing in Riyadh, Jeddah: report
  • Visa policy reforms, regulatory changes to attract more foreign investment into the sector

RIYADH: Residential real estate demand in Riyadh and Jeddah is expected to stay robust due to population growth, particularly from expat inflows, according to a new report from S&P Global.

The report forecasts an average annual growth of 3.3 percent in the residential real estate sector from 2024 to 2027.

Rental yields are also maintaining strong growth, with Riyadh seeing a 9 percent year-on-year increase in the first half of 2024, while Jeddah’s rental yields grew by 4 percent. Residential real estate remains a vital part of Saudi Arabia’s economy, contributing about 7 percent to the country’s gross domestic product and supporting a range of sectors.

“We recently revised the outlook on our sovereign ratings for Saudi Arabia to ‘positive’ from ‘stable’ to reflect our view of the country’s strong prospects for non-oil growth and its resilience to volatile oil prices,” the S&P report noted.

The Saudi government’s Vision 2030 aims for a 70 percent homeownership rate by 2030. The homeownership rate stood at 63.7 percent by the end of 2023, according to the Ministry of Municipal and Rural Affairs. The report also highlighted that new residential units and mortgages are expected to rise in 2024 in line with this target.

The report further pointed out that visa policy reforms and regulatory changes could attract more foreign investment into the real estate sector. For example, the introduction of five new products under the Premium Residency program in January 2024 is expected to stimulate demand from foreign buyers, which will contribute to population growth.

“The Saudi government remains committed to the Vision 2030 goals, and we expect these reforms to drive further growth, though domestic factors, like homeownership targets, will remain the key drivers of the real estate market,” the report said.

Despite the optimistic outlook, the report noted challenges for private developers, including rising construction costs and competition for financing from other Vision 2030 projects. Nevertheless, the supply of residential units is steadily increasing. Riyadh now has 1.5 million residential units, following the delivery of 16,200 units in the first half of 2024. In Jeddah, the number of residential units reached 891,000 after 11,300 units were delivered in the same period.

The total number of units in both cities is expected to increase by 16,000 more by the end of 2024. As domestic migration to urban centers continues, demand for residential properties will remain high, leading to a continued shortage of housing in major cities.

In the first half of 2024, Saudi Arabia’s real estate transactions totaled SR127.3 billion ($33.89 billion), with residential properties making up the largest share, according to a separate report by Sakan, a real estate platform.

Sakan’s data revealed that residential properties are the fastest-growing segment in terms of transaction value. The platform also reported a 1.6 percent rise in average prices in the third quarter of 2024. As part of Saudi Arabia’s Vision 2030, the country will need to build more than 1.2 million new housing units to meet its homeownership target.

The demand for high-quality residential properties in key neighborhoods is pushing prices higher, especially for premium apartment spaces. The report noted disparities in prices depending on the neighborhood, unit availability, and property quality.

When it comes to apartment rentals, the report emphasized that the growing expat population is contributing to rent fluctuations. In September 2024, housing rents increased by 11.2 percent, according to the General Authority for Statistics. With high-quality apartments in short supply, tenants often find themselves on waitlists or settling for available units.

Platforms like Sakan are playing a crucial role in the growth of Saudi Arabia’s real estate sector, offering technology-driven solutions to streamline property transactions. The platform connects international buyers to the Saudi market, facilitating a more efficient and transparent real estate process, and helping users make informed decisions.


Saudi Arabia, UAE lead MENA deal boom with $71bn in activity: EY

Saudi Arabia, UAE lead MENA deal boom with $71bn in activity: EY
Updated 17 November 2024
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Saudi Arabia, UAE lead MENA deal boom with $71bn in activity: EY

Saudi Arabia, UAE lead MENA deal boom with $71bn in activity: EY
  • UAE and Saudi Arabia were the top investment destinations, accounting for 52% of the region’s total deal volume and 81% of deal value
  • Sovereign wealth funds played a key role in driving M&A activity in the region

RIYADH: Saudi Arabia and the UAE led Gulf region merger and acquisition activity, which increased 7 percent in value to $71 billion in the first nine months of the year. 

According to EY’s MENA M&A Insights 9M 2024 report, the Middle East and North Africa region saw a total of 522 deals during the period, with deal volume rising 9 percent year on year. 

The value growth was largely fueled by a surge in cross-border transactions and substantial investments from sovereign wealth funds, such as the UAE’s Abu Dhabi Investment Authority and Mubadala, and Saudi Arabia’s Public Investment Fund. 

Brad Watson, EY MENA strategy and transactions leader, said: “Deal activity in the MENA region has seen a notable improvement this year, driven by strategic policy shifts, the liberalization of investment regulations and robust capital inflows from investors.” 

He added: “With companies actively seeking opportunities to grow and diversify their operations, we have observed a surge in cross-border M&A volume and value.” 

The UAE and Saudi Arabia were the top investment destinations, accounting for 52 percent of the region’s total deal volume and 81 percent of deal value, with 239 transactions worth $24.5 billion. Both nations continue to benefit from their favorable business environments and strategic economic policies. 

“In particular, the UAE remained a favored investment destination during the first nine months of 2024 due to its business-friendly regulations and efficient legislative framework,” said Watson. 

Sovereign wealth funds played a key role in driving M&A activity in the region, supporting national economic strategies. These funds were particularly active in sectors aligned with long-term diversification plans, such as technology, energy, and infrastructure. 

Cross-border M&A deals dominated, representing 52 percent of the overall volume and 73 percent of the value, the report added. 

However, domestic M&A activity also saw a notable increase, rising 44 percent year on year to $19.3 billion, driven by government-related entities making significant acquisitions in the oil and gas, metals and mining, and chemicals sectors. 

Insurance and oil and gas emerged as the most attractive sectors, accounting for 34 percent of the total deal value. Technology and consumer products led domestic M&A by volume, with 78 deals representing 31 percent of activity. 

Saudi Arabia recorded the region’s largest domestic transaction, with energy giant Aramco’s $8.9 billion acquisition of a 22.5 percent stake in Rabigh Refining and Petrochemical Co. from Sumitomo Chemical. 

The US remained a top target for MENA investors, with 32 deals valued at $18.3 billion. The US-UAE Business Council helped facilitate these partnerships, with prominent US firms collaborating with UAE public and private sectors on various initiatives. 

Outbound and inbound deals 

Outbound M&A was the largest contributor to deal value, with 147 transactions totaling $41.4 billion, led by insurance and real estate investments. The US and China represented 70 percent of outbound deal value. 

Inbound deals also witnessed growth, rising 20 percent in volume and 47 percent in value to $10.4 billion. The US and UK were the leading contributors, driving activity in technology and professional services. 

Mega deals 

Ten of the region’s largest deals were concentrated in the Gulf Cooperation Council. These included Mubadala and partners’ $12.4 billion acquisition of Truist Insurance Holdings and an $8.3 billion investment in Chinese shopping mall operator Zhuhai Wanda Commercial Management Group. 

“Strengthening regional relationships with Asian and European economies, alongside existing ties with the US, enabled MENA countries to gain access to larger and growing markets,” said Watson. 

As Gulf nations continue diversification strategies and prioritize digital transformation, sectors like technology, energy, and infrastructure are expected to drive further M&A growth. Saudi Arabia and the UAE’s proactive policies and substantial sovereign wealth fund activity position the region as a global investment hotspot. 


Craig Smith explores the media’s role in AI conversations

Craig Smith explores the media’s role in AI conversations
Updated 17 November 2024
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Craig Smith explores the media’s role in AI conversations

Craig Smith explores the media’s role in AI conversations

RIYADH: The media’s primary role is to translate complex ideas into digestible content for the public, said Craig Smith, host of the Eye on AI podcast and a former correspondent.

In a recent conversation with the Saudi Data and Artificial Intelligence Authority’s GAIN podcast, Smith discussed the rapidly evolving field of artificial intelligence and the challenges media faces in accurately covering it amid both excitement and misinformation.

“You can put AI in a robot, but robotics is one field, and AI is another,” Smith explained, stressing the need for more precise portrayals of AI in the media.

As AI discussions have intensified in the past two years, particularly around its potential threats, Smith emphasized that these debates are meant to encourage further research into AI safety and prompt regulation. However, he noted that the popular press often misinterprets the purpose of these discussions, leading to sensational headlines that contribute to widespread fear.

“The purpose of that discussion is to generate more research around the safety of AI and to spur regulation to get the governments looking at what’s happening,” Smith said.

“But the media often misses this goal, resulting in alarmist narratives like AI will ‘kill us all,’ which detracts from the vital work of understanding and regulating this technology.”

While it’s easy to imagine a dystopian future for AI, Smith pointed out the far more nuanced reality. “We’re still working on getting large language models to be truthful and stop spouting nonsense,” he said, illustrating the long and challenging path ahead in developing reliable AI systems.

Reflecting on the rapid pace of change in the field, Smith highlighted the exciting progress in AI research, particularly since the introduction of the transformer algorithm in 2017.

“It was Ilya Sutskever at OpenAI who built a model around the transformer algorithm and scaled it up,” Smith noted, acknowledging the profound impact this algorithm has had on the development of large language models like ChatGPT and Claude.

Smith’s insights underscored the media’s crucial responsibility in accurately covering AI. By bridging the gap between complex technological advancements and public understanding, journalists have the power to foster informed discussions that will ultimately shape the future of AI in society.


Oman’s non-oil sector grows 4.2% in H1

Oman’s non-oil sector grows 4.2% in H1
Updated 55 min 48 sec ago
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Oman’s non-oil sector grows 4.2% in H1

Oman’s non-oil sector grows 4.2% in H1
  • Non-oil sector contributed 13.5 billion Omani rials to GDP
  • Oman’s banking sector saw positive growth in the first half of 2024

RIYADH: Oman’s non-oil sector experienced a 4.2 percent growth year on year in the first half of 2024, driven by the country’s strategic focus on economic diversification as outlined in its 10th Five-Year Plan (2021-2025).

In an interview with the state-run Oman News Agency, Nasser Al-Mawali, undersecretary of the Ministry of Economy, highlighted that this expansion marks significant progress in Oman’s efforts to reduce its dependency on oil revenues and build a more resilient economic base, in line with the objectives of Oman Vision 2040.

By mid-2024, the non-oil sector contributed 13.5 billion Omani rials ($35.1 billion) to the country’s gross domestic product, up from 13 billion rials during the same period in 2023. This sector now accounts for 72.2 percent of Oman’s GDP at constant prices.

Al-Mawali attributed the continued growth in non-oil activities to national programs aimed at accelerating economic diversification and expanding the productive capacity of the economy. The 10th Five-Year Plan, which forms the first phase of Oman Vision 2040, prioritizes increasing private sector participation, supporting small and medium-sized enterprises, and broadening the country’s economic base.

According to Al-Mawali, strategic initiatives under this plan have reached a 90 percent implementation rate as of 2024, with major accomplishments in sectors such as green hydrogen, logistics, pharmaceuticals, and fisheries.

Foreign direct investment in Oman reached approximately 26 billion rials by mid-2024, up from about 17.8 billion rials at the end of 2021.

The country’s overall GDP, at constant prices, grew by 1.9 percent in the first half of 2024, rising from 18.4 billion rials to 18.7 billion rials compared to the same period in 2023. At current prices, GDP increased from 20.4 billion rials to nearly 21 billion rials.

While the non-oil sector posted strong growth, Oman’s oil sector experienced a 2.5 percent decline during the same period, primarily due to a 4 percent drop in crude oil production. On a more positive note, natural gas activities saw a 6.6 percent increase, providing a boost to the energy sector.

Al-Mawali emphasized that the rise in non-oil activities has helped provide a stable foundation for economic growth, buffering the country against fluctuations in global oil prices. Key projects, such as the Duqm Refinery and the development of the integrated economic zone in Al-Dhahirah in partnership with Saudi Arabia, have significantly bolstered Oman’s industrial capabilities and enhanced export potential.

The Duqm Refinery, inaugurated earlier in 2024, is expected to play a crucial role in increasing the manufacturing sector’s contribution to GDP.

Oman Vision 2040 targets an average annual GDP growth rate of 5 percent. So far, the country has achieved a growth rate of around 4.5 percent over the first three years of the 10th Five-Year Plan, indicating strong progress toward this goal.

The 10th Five-Year Plan also aims for an annual growth rate of 3.2 percent in the non-oil sector, with a long-term objective of increasing the sector’s contribution to GDP to 90 percent by 2040.

On a separate note, Oman’s banking sector saw positive growth in the first half of 2024, with total credit rising by 5 percent, reaching 32 billion rials by the end of September. Credit extended to the private sector increased by 4.2 percent, amounting to 26.7 billion Omani rials.

The majority of this credit was allocated to non-financial corporations, which accounted for 45.2 percent, followed by individual borrowers at 45 percent. Financial corporations received 6.3 percent, and other sectors made up the remaining 3.5 percent.

Total deposits in Oman’s banking sector grew by 13.7 percent, reaching 31.6 billion rials as of September. Private sector deposits saw a significant increase of 12.7 percent, totaling 20.7 billion Omani rials.

According to the Central Bank of Oman, individuals held the largest share of private sector deposits at 50.2 percent, followed by non-financial corporations at 29.5 percent, and financial corporations at 17.8 percent. Other sectors accounted for 2.5 percent of the total private sector deposits.


Saudi Arabia’s non-oil economy to grow 4.4% in 2025: PwC

Saudi Arabia’s non-oil economy to grow 4.4% in 2025: PwC
Updated 17 November 2024
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Saudi Arabia’s non-oil economy to grow 4.4% in 2025: PwC

Saudi Arabia’s non-oil economy to grow 4.4% in 2025: PwC
  • Kingdom’s non-oil economy expanded by 3.8% in first half of 2024
  • Saudi Arabia is aligning its economic diversification efforts with sustainability goals

RIYADH: Saudi Arabia’s non-oil economy is expected to grow by 4.4 percent in 2025 as the Kingdom continues its path toward economic diversification, according to a new analysis. 

In its latest report, professional services firm PwC Middle East said Saudi Arabia is aligning its economic diversification efforts with sustainability goals, including achieving net-zero emissions by 2060. 

In the first half of the year, the Kingdom’s non-oil economy expanded by 3.8 percent, with the non-energy private sector seeing a 4.9 percent growth in the second quarter, it added. 

Strengthening the non-oil private sector is a core objective of Saudi Arabia’s Vision 2030 program, which aims to reduce the Kingdom’s dependence on oil revenues. 

“Saudi Arabia’s transformational journey combines economic diversification with sustainable growth. The expansion of renewable energy, focus on advanced industries, and vision for a green future highlight the Kingdom’s commitment to its national goals and its role in the global energy transition,” said Riyadh Al-Najjar, Middle East chairman of the board and Saudi Arabia senior partner at PwC Middle East. 

PwC said the Kingdom’s trade and hospitality sectors grew by 6.4 percent year on year in the first half of the year, while transport and communications, and finance and business services also posted positive growth of 4.8 percent and 3.8 percent, respectively. 

The report noted Saudi Arabia’s progress in the electric vehicle sector, with significant investments in EV manufacturing. 

The Kingdom is building a hub in King Abdullah Economic City to produce 150,000 vehicles by 2026 and 500,000 by 2030. 

The Saudi government is expanding EV infrastructure through the Electric Vehicle Infrastructure Co., a joint venture between the Public Investment Fund and Saudi Electricity Co., to install 5,000 fast chargers by 2030. 

“Saudi Arabia’s drive toward a diversified and sustainable economy showcases its adaptability and resilience. These efforts reflect our nation’s commitment to a greener future and set a benchmark for global energy transition,” said Faisal Al-Sarraj, deputy country senior partner in Saudi Arabia and PwC Middle East consulting clients and markets leader. 

In October, Moody’s projected that Saudi Arabia’s non-hydrocarbon real GDP would grow by 5 percent to 5.5 percent from 2025 to 2027, driven by increased government spending. 

The International Monetary Fund also projected Saudi Arabia’s economy to grow by 4.6 percent in 2025, largely driven by the Kingdom’s diversification strategy and the expansion of the non-oil private sector. 


Saudi Arabia, Tunisia sign deal to boost bilateral investments

Saudi Arabia, Tunisia sign deal to boost bilateral investments
Updated 17 November 2024
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Saudi Arabia, Tunisia sign deal to boost bilateral investments

Saudi Arabia, Tunisia sign deal to boost bilateral investments
  • Deal focuses on sharing regulations and laws to enhance investment environment in both countries
  • Talks covered several sectors of mutual interest, including industry, transport, and logistics

RIYADH: Saudi Arabia and Tunisia have signed a memorandum of understanding to strengthen bilateral cooperation and promote direct investments between the two nations. 

The deal, which was inked by Saudi Minister of Investment Khalid Al-Falih and Tunisian Minister of Economy and Planning Samir Abdel Hafeez in Tunis, focuses on sharing regulations and laws to enhance the investment environment in both countries. 

The agreement, which also aims to improve investment opportunities, was discussed during a meeting attended by Saudi Ambassador to Tunisia Abdulaziz bin Ali Al-Saqr. The talks covered several sectors of mutual interest, including industry, transport, and logistics, with a focus on enhancing collaboration and facilitating joint ventures, the Saudi Press Agency reported. 

Tunisian President Kais Saied welcomed Al-Falih, where the Saudi minister conveyed greetings from King Salman and Crown Prince Mohammed bin Salman, expressing the Kingdom’s commitment to Tunisia’s ongoing progress and stability.  

Saied thanked Saudi Arabia for its leadership role in the Arab and Islamic worlds, praising the Kingdom’s efforts in fostering regional unity and development. 

He added that the agreement marked a significant step in strengthening economic ties between the two countries, with the MoU serving as a catalyst for joint development initiatives. 

The deal follows recent discussions on strengthening industrial and economic cooperation.  

In October, Saudi Vice Minister of Industry Affairs Khalil bin Salamah confirmed to Arab News that collaboration with Tunisia was imminent, noting that the two countries were in the process of selecting key sectors, such as pharmaceuticals and automotive components, for initial investments. 

He emphasized the need for common policies among Arab nations to serve as a foundation for regional collaboration across various industrial sectors. 

On the sidelines of the Multilateral Industrial Policy Forum in Riyadh las month, Tunisian Minister of Industry, Mines, and Energy Fatma Thabet Chiboub also pointed out that Tunisia’s distinctive mining resources presented significant opportunities for Saudi investors.  

She emphasized the automotive components and pharmaceutical industries as key areas for potential collaboration, while also expressing concern that the current level of investment from Saudi Arabia did not fully reflect the bilateral relationship’s potential. 

The MoU is seen as a crucial step in deepening the economic and industrial ties between Saudi Arabia and Tunisia, both of which are looking to diversify their economies and create new growth opportunities through strategic partnerships.