Saudi Arabia – The giant that still sleeps

The Kingdom of Saudi Arabia is located at the centre of the emerging Gulf States. It has a population of over 27 million people and, at approximately 2.15 sq km in area (some borders in dispute), it is the largest country in the Middle East.

With a per capita income of €20,700, Saudi Arabia is one of the fastest growing countries in the world. However, in terms of development activity Saudi Arabia has been one of the slower Gulf states to kick in to action. Sometimes referred to as a ‘sleeping giant’, it has to date been more conservative than some other Gulf states, and it has not exploited its development potential with the vigour of some of its neighbours to date. But should this change, it would be expected to outperform all other construction markets in the region.

Projects
At the centre of its development ambitions are six economic cities. King Abdullah Economic City is the largest of these mega projects, and it is planned for completion in 2020. The creation of these six industrialised cities will spearhead Saudi Arabia’s move away from dependency on oil and gas. Further infrastructure development will include a number of major port and railway projects, such as a 950km rail link between the capital Riyadh and the coastal city of Jeddah.

According to NCB Capital, in the coming years demand for residential units in Saudi Arabia will exceed 1.3million units. Recently amended Saudi investment laws now allow foreign investors to invest in a limited number of identified projects.

In the capital city Riyadh, there is a considerable shortage of housing, particularly amongst the lower and middle classes. Growing demand in these markets is expected to drive residential development activity in the capital for at least the next five years.

Outside of Riyadh, major residential projects include Al Khobar Lakes, the first phase of which covers 2.6million sq m, and says the developer, Emaar Middle East, ‘this has a development value of SR4.6bn (€830m). Al Khobar Lakes is one of the largest master-planned communities in the Eastern Province of Saudi Arabia and is located close to Al Khobar City, Dhahran and Dammam.

Another high profile residential scheme called Jeddah Gate is a €490m, 5,000 unit development which is currently on site at the old Jeddah Airport.

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