LOGIC Consulting

  • Alumni
Contact Us

December 25, 2024

Thumb

Saudi Arabia’s Economic Landscape in 2024

Saudi Arabia's economic trajectory has been marked by pivotal advancements and enduring challenges as the Kingdom strives to fulfill the ambitious objectives of its Vision 2030. In recent years, substantial efforts have been made to enhance non-oil sectors, backed by significant public and private investments, the development of innovative economic zones, and the growth of non-oil industries. In the third quarter of 2024, Saudi Arabia's GDP grew by an estimated 2.8% year-on-year, driven by a 4.2% increase in non-oil activities, indicating a shift away from oil dependency.

Related Articles

Contact Us

Brochure

REAL ESTATE & INFRASTRUCTURE IN 2024 Evolving Opportunities

REAL ESTATE SECTOR

According to the latest CBRE Saudi Arabia Market Review for 2024, the Kingdom’s real estate sector is experiencing robust growth:

Residential Sector:

In Riyadh, residential sales transactions increased by 51.6% year-on-year in Q2 2024, totaling 18,500 transactions valued at approximately SAR 26.6 billion. Average villa prices in Riyadh rose by 3.3%, reaching SAR 5,824 per square meter, while apartment prices increased by 6.6% to SAR 4,971 per square meter.

Office Market:

Riyadh’s Grade A office rents grew by 11.5% year-on-year, averaging SAR 2,050 per square meter in Q2 2024. Occupancy rates for Grade A offices remained high at 100%, indicating strong demand.

Hospitality Sector:

The hospitality sector showed positive trends, with the Kingdom’s average occupancy rate increasing by 0.9 percentage points and Average Daily Rate (ADR) rising by 6.7% year-on-year as of June 2024. This led to an 8.2% growth in Revenue Per Available Room (RevPAR).

INFRASTRUCTURE

Project Pipeline:

Saudi Arabia leads the Middle East with a construction project pipeline valued at USD 1.5 trillion, accounting for 39% of the total MENA region’s pipeline. The construction sector represents USD 950 billion (62%) of this pipeline, while transportation, infrastructure, and utilities account for USD 582 billion (38%).

Mega Projects:

Ambitious projects like Neom, a planned USD 500 billion futuristic city, are central to the Kingdom’s development plans. However, reports indicate financial challenges, with delays and budget overruns leading to leadership changes within the project.

Economic Impact:

The construction industry is projected to attain SAR 287.38 billion by 2028, driven by investments in energy, tourism, and industrial projects.

KEY CHALLENGES
  • Economic Volatility: Fluctuations in economic conditions affect the real estate market’s growth and investment attractiveness.
  • Land Pricing: High land costs create barriers for affordable housing and development projects.
  • Infrastructure Gaps: Inadequate infrastructure in certain areas limits the feasibility of new developments.
  • Regulatory Delays: Bureaucratic inefficiencies and prolonged processes for approvals hinder timely project completion.
  • Market Misalignment: A mismatch between the supply of luxury properties and the demand for affordable housing.
REGULATORY AND POLICY REFORMS
  • Foreign Investments: Introduction of policies to attract foreign investment and partnerships in the real estate sector.
  • Urban Development Plans: Comprehensive urban planning initiatives to align with Vision 2030’s objectives.
  • Sustainability Regulations: Implementation of guidelines for energy-efficient and eco-friendly building practices.
  • Affordable Housing Incentives: Government support for developers focusing on affordable housing projects through subsidies and tax benefits.

Want To Read More?

You can download it and read it any time you want

Download Now