Saudi Arabia is undergoing a significant transformation.
The kingdom is embarking on an ambitious economic diversification agenda under Vision 2030 that will increase the contribution of non-oil exports to the Gross Domestic Product (GDP) to 50 percent.
And for Saudi Arabia, diversification is about more than simply adding new industries to its economic portfolio; it is also about creating a resilient and sustainable economy that provides the fertile ground in which established industries can innovate, revolutionise, and flourish to best serve its citizens for the future.
It is widely recognised that a robust real estate market is fundamental to the economic development of any nation. The cohesive and strategic development of a state’s land and property assets serves as a tangible indicator of a country’s economic strength and stability.
Driven by vast multi-asset class development projects and a reimagining of urban living for the Saudi people, the kingdom’s real estate market has emerged as a powerful driver of this economic expansion and diversification, contributing some 7 percent to annual GDP.
Urban and residential development in the kingdom is occurring at a scale that vastly outpaces that of other key markets, with the real estate market expected to reach a value of SAR241 billion ($64.43 billion) in 2023 and grow at a Compound Annual Growth Rate (CAGR) of 7.89 percent to reach SAR353.21 billion ($94.19 billion) by 2028.
Building diversification
The kingdom’s real estate boom is more than just a construction frenzy; it’s a pivotal force behind the nation’s economic diversification and growth and is the result of an ambitious strategy by government and key real estate developers, such as ROSHN.
Recognising the potential of real estate in its diversification agenda, Saudi Arabia has strategically invested in the sector through the establishment of numerous Public Investment Fund-(PIF) backed giga projects.
ROSHN Group was established three years ago as one such giga project, with a clear mandate to contribute to Vision 2030’s objectives to boost Saudi home ownership to 70 percent and improve quality of life across the kingdom.
Over the last three years, we have solidified our presence on a national scale as Saudi Arabia’s largest multi-asset class real-estate developer. The size and scope of our project pipeline is unprecedented and will see the development of high-quality real estate on a landbank of over 200 million sqm distributed across nine Saudi provinces, bringing best-in-class residential, healthcare, educational, sports, leisure, entertainment infrastructure to the people of Saudi Arabia.
The progression of ROSHN’s contribution to Saudi real estate has been evident in recent weeks and months, with the sales launch of the third phase of our flagship integrated SEDRA development in Riyadh – the first giga-project to deliver to customers; the groundbreaking and sales launch of WAREFA, a 1.4 million square metre high quality, integrated community living in Riyadh’s eastern district of Al Janadriyyah; and the announcement of MARAFY, our groundbreaking new canal-side giga mixed-use development in Jeddah, the first of its kind in Saudi Arabia.
With ROSHN’s projects alone expected to boost national GDP, the collective economic contribution of the group’s real estate giga-projects will be profound and long-lasting.
Rapid gains evident
The positive impact of ROSHN’s forcefield of real estate might across Saudi Arabia’s economy is already evident.
The historic pace of growth in Saudi Arabia’s real estate market has driven an enrichment of domestic supply chain markets, industries, business, services, and products in the kingdom. This has added momentum to the Vision 2030 goal of increasing SME and private sector contribution to GDP to 35 percent and 65 percent respectively and can be demonstrated by the 139 percent increase in the number of SME licences granted during the first half of 2023, largely fuelled by real estate projects.
At ROSHN, our partnerships extend along various interconnected domestic supply chains and span the full range of our activity, from design, to development, technology, and maintenance. In 2022 alone, we implemented over 70 collaborative partnership framework agreements across 14 consultancy services and signed 11 contracts with six private sector real estate developers worth SAR 2.2 billion.
ROSHN has also flagged over 100 opportunities to work with private sector suppliers, sub-developers, factories, infrastructure and technology providers across the supply chain – contributing to our commitment to re-energise local economies and create jobs.
The growth of the multi-asset class real estate also supports economic development by creating jobs across various skill levels and beyond the industry itself, influencing various ancillary services such as retail, hospitality, and transportation. More jobs mean more disposable income, which, in turn, fuels consumption and economic growth.
ROSHN is achieving this by offering more than just homes – but by deepening our portfolio into strategically important sectors including retail, entertainment, healthcare, and education, which will act as a key tool for private sector enablement, localization, and talent development.
Real estate giga-projects have led to the establishment of key international partnerships and collaboration that have attracted both foreign direct investment (FDI) and sophisticated private sector players to local shores, advancing Vision 2030’s aim of increasing FDI contribution to GDP from 3.8 percent to 5.8 percent.
Foreign investors are seeing the potential for substantial returns, not only through property appreciation but also by participating in the broader development of the country. This foreign capital has helped bolster Saudi Arabia’s financial markets and overall economic stability.
The growth of the real estate sector has led to significant urban development and infrastructure improvements that put people first. The construction of modern smart cities, entertainment complexes, and innovative business hubs has not only enhanced the quality of life for Saudis but also made the kingdom more attractive for international businesses, expatriates and visitors.
Additionally, international partnerships in real estate have led to the import of key international skill sets and expertise, which has the cumulative impact of ensuring international best practise is applied locally and that domestic workers are upskilled, in alignment with the required market skills.
Building for the future
Saudi Arabia’s real estate sector is not just about constructing buildings; it’s about constructing a diversified and resilient economy. The kingdom’s commitment to nurturing this sector as a pillar of economic growth is evident in its long-term planning and strategic investments.
As the real estate market continues to flourish, giga-project projects such as ROSHN will propel Saudi Arabia toward a diversified revenue future, fostering a more prosperous and sustainable nation for generations to come.
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