‘Attractive FDIs and generous government spend boosting Saudi Arabia’s economy’

jeddah esaithy pixabayWith the prospect of low oil prices continuing for longer than expected, the old social contract — one based on government employment, generous subsidies, and free public services — is no longer sustainable. (Image source: Esaithy/Pixabay)Increased government spending and progress on mega-project developments provide a catalyst for future investment opportunities in Saudi Arabia, outlines JLL’s 2018 Year in Review report

With stronger oil revenues and progress on new social reforms, GDP growth levels are expected to register 2.4 per cent in 2018, according to Oxford Economics, up from -0.9 per cent in 2017. 2019 is expected to witness ongoing activity on the back of the kingdom’s largest ever expansionary budget, and commitment to driving economic growth in line with Vision 2030’s objectives.

“The government’s continued focus on strengthening the business environment and attracting foreign investment should have a positive impact on the real estate sector in the long run,” said Dana Salbak, associate, JLL MENA.

With conditions remaining soft across most sectors of the market in 2018, the hospitality and entertainment industries witnessed several major development announcements. These included the launch of Al Qiddiya in Riyadh and Amaala, the luxury wellness destination forming part of a giga-projects investment portfolio launched by The Public Investment Fund (PIF).

“These milestone projects are key drivers of Saudi Arabia’s non-oil economic growth and are expected to trigger other large-scale real estate development activity. In addition, the wave of development across the kingdom and other reforms promoting Saudisation are expected to create a surge of job opportunities in the long run” Salbak added.

The entertainment sector saw the return of cinemas sparking development opportunities and significant retail opportunities in the field of ‘shoppertainment’. While economic reforms have weighed on the purchasing power of residents, namely VAT, subsidy cuts and expatriate levy, the retail sector overall is set to benefit from the long term growth potential presented by reformative changes.

The inauguration of the King Salman Energy Park (SPARK) in 2018 is another milestone project expected to fuel demand for commercial Increased government spending and progress on mega-project developments provide a catalyst for future investment opportunities in Saudi Arabia, outlines JLL’s 2018 Year in Review report.

With stronger oil revenues and progress on new social reforms, GDP growth levels are expected to register 2.4 per cent in 2018, according to Oxford Economics, up from -0.9 per cent in 2017. 2019 is expected to witness ongoing activity on the back of the kingdom’s largest ever expansionary budget, and commitment to driving economic growth in line with Vision 2030’s objectives.

“The government’s continued focus on strengthening the business environment and attracting foreign investment should have a positive impact on the real estate sector in the long run,” said Dana Salbak, associate, JLL MENA.

With conditions remaining soft across most sectors of the market in 2018, the hospitality and entertainment industries witnessed several major development announcements. These included the launch of Al Qiddiya in Riyadh and Amaala, the luxury wellness destination forming part of a mega-projects investment portfolio launched by The Public Investment Fund (PIF).

“These milestone projects are key drivers of Saudi Arabia’s non-oil economic growth and are expected to trigger other large-scale real estate development activity. In addition, the wave of development across the kingdom and other reforms promoting Saudisation are expected to create a surge of job opportunities in the long run” Salbak added.

The entertainment sector saw the return of cinemas sparking development opportunities and significant retail opportunities in the field of ‘shoppertainment’. While economic reforms have weighed on the purchasing power of residents, namely VAT, subsidy cuts and expatriate levy, the retail sector overall is set to benefit from the long term growth potential presented by reformative changes.

The inauguration of the King Salman Energy Park (SPARK) in 2018 is another milestone project expected to fuel demand for commercial and industrial real estate in the Eastern Province. With an expected GDP contribution of US$5.87bn by 2035 the park’s unique infrastructure is likely to act as a catalyst for attracting foreign investment and private sector participation.

Saudi Arabia’s potential as a global transport hub has led to the development of major infrastructure projects focused on connecting cities, in turn providing private and foreign investment opportunities. 2018 saw significant progress with the inauguration of the 448km Al Haramain High Speed Railway and the soft opening of the new King Abdulaziz International Airport in Jeddah.

“The market dynamics in Saudi Arabia have seen a major shift in the last year, with significant government investment and new reforms expected to have a positive long term impact on the kingdom’s real estate market,” according to Thierry Delvaux, CEO, JLL MEA.

JLL’s 2018 year in review report provides an overview of the Saudi Arabia’s real estate’s market performance across the residential, office, retail and hotel sectors, in light of macro-economic factors and new government initiatives affecting the market’s future outlook.

and industrial real estate in the Eastern Province. With an expected GDP contribution of US$5.87bn by 2035 the park’s unique infrastructure is likely to act as a catalyst for attracting foreign investment and private sector participation.

Saudi Arabia’s potential as a global transport hub has led to the development of major infrastructure projects focused on connecting cities, in turn providing private and foreign investment opportunities. 2018 saw significant progress with the inauguration of the 448km Al Haramain High Speed Railway and the soft opening of the new King Abdulaziz International Airport in Jeddah.

“The market dynamics in Saudi Arabia have seen a major shift in the last year, with significant government investment and new reforms expected to have a positive long term impact on the kingdom’s real estate market,” according to Thierry Delvaux, CEO, JLL MEA.

JLL’s 2018 year in review report provides an overview of the Saudi Arabia’s real estate’s market performance across the residential, office, retail and hotel sectors, in light of macro-economic factors and new government initiatives affecting the market’s future outlook.

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