Saudi Arabia boosts its real estate potential over the next decade
As global economies face what is expected to be a recessionary few months, with property markets hit by rising inflation, high energy prices and weak liquidity in international property markets, predictions point to the opposite situation in the economies of the Gulf States. Especially in the Kingdom of Saudi Arabia.
"Saudi Arabia has a lot of potential for the next ten years," Alex Igumnov-Galtsev, economist and CEO and founder of the Dubai-based real estate investment platform Realiste, told Al Arabiya English. "Investors who want to buy real estate understand that if someone is committed to investing so much in the country, it is going to grow," Igumnov-Galtsev told Al Arabiya English.
What Igumnov-Galtsev is referring to with these large investments is the multi-billion dollar mega-projects promoted by the Wahhabi Royal Court under the 'Saudi Vision 2030' strategic plan. This initiative was first announced in April 2016 by Crown Prince and Saudi Prime Minister Mohammed bin Salman, and its main objectives are to reduce oil dependence and diversify the economy into more developed sectors, such as health, education, tourism and infrastructure.
Thus, among the major real estate and infrastructure projects proposed is the futuristic intelligent mega-city of NEOM, in the northwest of the territory, in the province of Tabuk, which will include, in turn, the vertical city 'The Line' and - according to the organisation itself - "the largest floating structure in the world", Oxagon, a port development on the Red Sea that hopes to occupy more than 30 times the size of New York.
All this leads economist Igumnov-Galtsev to make a favourable prediction for the Kingdom, which already seems to be seeing the arrival of the first major investors. Bahrain-based investment giant Investcorp Holdings, a global manager of alternative investment products, announced a few days ago plans to boost Saudi real estate with up to $1 billion over the next five years. A move ahead of the sector's growth, which, in turn, could stimulate it further.
Investcorp Holdings, which has more than $40 billion in assets, has already acquired a logistics warehouse in the city of Ar-Dammam on the country's east coast, and could - according to an official statement - invest a further $100 million in other deals. "If [someone] can invest in Riyadh and, for example, buy 10-20 flats, when he returns after five years, [their value] will have grown 100, 200 or even 300 times," Igumnov-Galtsev said.
However, still in the shadow of Dubai in the real estate sector, Riyadh is also turning to the renewable energy and video games sectors. The first of these, linked to mega-city projects, is particularly related to 'The Line' city (worth over $500 million), which is expected to measure almost 35 kilometres from end to end, and which will be configured vertically in order to be able to run on 100% renewable energy.
On the other hand, the video games and e-sports market will mobilise more than 38 billion dollars (about 140 billion Saudi rials) for gaming companies in the country. The global gaming industry is expected to exceed 200 billion dollars by 2023.