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Region prepares for circular plastics economy

23 June 2023

 

Representatives from the Gulf petrochemicals industry, plastics manufacturers and wider derivatives producers gathered at the Gulf Petrochemicals & Chemicals Association plastics conference in Saudi Arabia in May. There, it was agreed that while a “demonisation” of the plastics industry had indeed taken place, this was not entirely unjustified.

The Gulf region is a major producer of plastic products, among other petrochemicals derivatives. Furthermore, the GCC has been investing significantly in building large production complexes for petrochemicals – the basic feedstock for the manufacturing of plastics. 

However, despite irresponsible plastics usage and wastage being major environmental pollution issues worldwide, only about 10 per cent of plastics are recycled at present. This is due to the variability of plastics waste, contamination and gaps in the existing infrastructure.

“Every person on this planet is probably horrified by the pictures of plastic objects floating in the ocean, wildlife entangled in or ingesting plastic and mountains of plastic on dump sites and littered everywhere,” says Martyn Tickner, chief adviser of circular solutions for Alliance to End Plastic Waste, an industry-funded non-profit organisation based in Singapore. 

“Such pollution is a problem of lack of basic waste management. Three billion people – more than 35 per cent of the global population – are considered to lack access to adequate solid waste collection and properly managed disposal.”

Major pollution source

About half of global plastic waste is sent to landfill, about 20 per cent is incinerated, and the rest is either littered or burned in the open, causing severe pollution both on land and in the seas.

“Plastic, due to its non-biodegradable nature and potential toxicity, demands responsible usage and disposal,” says Hani Tohme, managing director – Middle East and head of sustainability in the Middle East and North Africa (Mena) region at Roland Berger, an international management consultancy headquartered in Germany. 

“However, current consumption patterns – particularly the reliance on single-use plastics – coupled with often insufficient waste management infrastructure, lead to widespread environmental pollution. 

“When not properly managed, plastic contributes significantly to land litter, marine pollution, and overall environmental degradation,” he says.

The need for recycling

Many of the severe environmental pollution problems arising from unsustainable plastics utilisation and the consumption of single-use plastics can be mitigated through the adoption of a circular plastics economy.

This is a system aimed at “reducing plastic waste globally”, say Devesh Katiyar, principal, and Jayanth Mantri, manager, at Strategy& Middle East, part of the PwC network. 

“It involves products designed for recyclability, efficient collection and sorting of plastic waste, advanced recycling technologies and policies to promote recycling.” 

They add that the scope of a circular plastics economy is global. “Annually, about 400,000 tonnes of plastic waste is traded globally, despite several restrictions. Driving circularity in plastics helps to reduce waste, conserve resources and avoid emissions and energy use associated with virgin plastics production, thereby promoting a sustainable and eco-friendly approach to managing plastics.”

Roland Berger’s Tohme adds that a circular plastics economy “disrupts the traditional linear model of ‘take-make-waste’ by adopting a restorative and regenerative approach”. 

“This framework incorporates the principles of ‘reduce, reuse and recycle’, along with strategies for designing out waste and pollution, maintaining products and materials in circulation and regenerating natural systems.”

Developing a circular and low-carbon economy for plastics requires changes at every stage of the plastics value chain, both upstream and downstream, says Tickner.

“Upstream solutions are those that endeavour to reduce the magnitude of the problem through the elimination of unnecessary use, the adoption of more sustainable alternatives and the redesigning of supply chains and delivery models to encourage reuse.” 

These solutions disrupt the root causes of today’s environmental crisis, he adds. “Reuse within the commercial, business-to-business supply chains – for example of packaging used to deliver from factory to warehouse – can be adopted quite quickly.”

Downstream solutions, meanwhile, are post-use. “Here, 100 per cent collection is a basic requirement to eliminate leakage into the environment,” Tickner explains.

The successful implementation of a circular plastics economy requires systemic changes and collaboration among stakeholders, including governments, businesses and consumers
Hani Tohme, Roland Berger

Open or closed loop

The plastics recycling process can be categorised as open-loop or closed-loop. 

Open-loop recycling is typically mechanical – converting plastic waste into less demanding plastic applications or using it in other material economies, such as the construction industry.

Closed-loop recycling means returning plastic back into high-value plastic applications, either directly, through advanced mechanical or dissolution technologies, or back to chemicals feedstock via chemical recycling. 

The technologies required to recycle almost all types of materials are available, or are rapidly emerging. As a result, overcoming the recycling challenge is primarily an issue of creating the right financial environment to enable major investment in the collection, sorting and recycling infrastructure.

The commercial case for plastics recycling 

Role of governments

Regional governments and regulatory authorities will need to play a role in supporting the growth of the plastics industry, as well as in ensuring the effective and sustainable consumption of plastics.

“A circular plastics economy offers a transformative approach to addressing the plastic waste crisis, promoting economic growth while reducing environmental impact,” says Tohme. “However, the successful implementation of this model requires systemic changes and collaboration among stakeholders, including governments, businesses and consumers.” 

Robust frameworks and proven best practices “play a pivotal role in guiding organisations to develop sustainable strategies, innovative business models and effective operational transformations, ultimately determining the success of their transition to a circular economy”, he says.

Strategy& Middle East’s Katiyar and Mantri note that governments and regulatory authorities can support the sustainable growth of the plastics industry in several ways. 

“They can implement policies and regulations such as bans and taxes on single-use plastics, extended producer responsibility programmes and incentives for advanced recycling and imports of plastic waste destined for recycling.

“In addition, they can create global closed-loop supply chains and material marketplaces to gain access to feedstock. And they can develop infrastructure for the collection, sorting and recycling of plastic waste – both within the region and abroad,” they continue. 

“The Mena region has the potential to attract investments of between $30bn and $40bn over the next two decades,
to build a truly world-class recycling infrastructure.”

The problems with plastics
  • Non-biodegradable: The environmental concerns surrounding plastic stem largely from its non-biodegradable nature. Most plastics take hundreds of years to decompose naturally. This inherent property means that plastic waste tends to accumulate in the environment over time rather than breaking down and returning to the ecosystem.
  • Microplastics and toxic chemicals: When plastics degrade, they break into tiny particles known as microplastics rather than biodegrading. These particles can be ingested by wildlife, with detrimental and often fatal results. Moreover, certain types of plastics contain chemicals that can leach out over time, particularly when exposed to heat or sunlight. These chemicals can contaminate soil and water, posing risks to wildlife and potentially infiltrating the food chain.
  • Greenhouse gas emissions: The impact of emissions is related on the one hand to the production of plastics – making virgin plastics, for instance, from oil – and on the other hand to the open burning and incineration of plastics after they have been disposed of in systems that lack proper waste management. This is happening in both developing and developed countries.
Addressing the environmental impact of plastics
  • Reusability: Most plastics consumed today are single-use plastics, in packaging and fast-moving consumer goods (FMCG) products such as plastic bags, straws and cutlery. A shift from single-use to reusable plastics is an important way to reduce the volume of plastic being consumed, thus reducing the overall impact. 
  • Light-weighting: Another key way to reduce the volume of plastic consumed is to reduce the weight of the plastics in products. This has been an area in focus for FMCG and packaging companies in recent years.
  • Design: Plastic packaging and products that are made of plastic layers glued with other fibres and laminates cannot be recycled easily, or at a cost that does not exceed the actual value of the material. Therefore, designing plastics products and packaging that are recyclable is another way to address the environmental impact of plastics.
  • Inadequate waste management and resulting pollution: Compounding these issues, an inadequate waste management infrastructure in many parts of the world is unable to effectively handle the volume of plastic waste. This leads to widespread littering of landscapes and waterways, accumulation of plastic in landfills and marine pollution. About 8-12 million metric tonnes (mt) of plastic enters our oceans each year, significantly threatening marine life – some estimates are even as high 14 million mt. On land, plastic waste similarly disrupts habitats and negatively impacts wildlife.

 

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Indrajit Sen

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  • Investors focus on residential sector for new deals

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    This package also includes: Saudi real estate to surge in 2026
    A series of legislative changes were made in 2025 to facilitate further growth of the sector in 2026

    Saudi Arabia’s real estate market continued to gather momentum at the Cityscape Global 2025 event, with a record SR237bn ($63.1bn) of deals signed.

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    The headline of the event was the series of agreements … signed by Saudi Arabia’s NHC

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    A SR525m ($140m) contract was awarded to local firm Zaid Alhussain & Brothers Group for infrastructure works in the Khuzam area north of Riyadh, while Saleh Abdulla Almahana Company secured a SR651m ($173m) contract to build 1,290 units for the Rose House project in Al-Ahsa.

    NHC also awarded Riyadh-based Alomaier Trading & Contracting Company a contract to carry out infrastructure works at its Khuzam residential development in Riyadh. The scope of work covers all infrastructure works across an area of 4 million sq m.

    NHC also announced the construction of 1,085 villas within the Al-Ghoroub project in Medina.

    More announcements

    NHC’s signings were complemented by further deals announced by major developers and government entities.

    > Diriyah: Saudi gigaproject developer Diriyah Company awarded two construction contracts with a combined value of over SR5.7bn ($1.5bn) on the sidelines of the event.

    The first, valued at about $800m, was awarded to the local BEC Arabia Contracting Company for the construction of offices in the Media and Innovation district of the Diriyah development. Within the same district, BEC Arabia will also build residential assets on the Manazel Al-Hadawi plots.

    The other contract, estimated to be worth $900m, was awarded to local firm Almabani General Contractors for the main construction works on King Khalid Road.

    > King Salman Park: The King Salman Park Foundation, Ajdan Real Estate and Sedco Capital announced a partnership agreement to build a SR3.8bn ($1bn) mixed-use real estate project within King Salman Park in Riyadh. The project will feature over 600 residential units, 200 hotel rooms, 45,000 sq m of office space and retail and service facilities covering 106,000 sq m.

    > Urubah Investment: Local firm Urubah Investment unveiled a 53-floor residential and commercial tower in Riyadh’s Al-Yasmin district, with a built-up area of 160,000 sq m.

    > Zood Real Estate: The firm announced the launch of a 10-tower mixed-use project on Riyadh’s Northern Ring Road.

    > Ajdan Real Estate: The developer launched the Ajdan Infiniti complex and signed a financing agreement with Alawwal Bank. It also launched the Ajdan Towers project in Riyadh.

    > Masar: Jeddah-based Masar sold three plots of land in its Masar Destination in Mecca for the construction of residential and hotel towers, with investments reaching SR1.6bn ($426m). It also signed an agreement for two plots for the development of two residential towers, with investments exceeding SR1bn ($266m). 

    Masar also signed a land sale deal for a 500-unit hotel tower, with total investments exceeding SR1bn ($266m), and a SR700m ($186m) land reservation agreement with Al-Diyar Al-Arabiya to develop a 300-unit residential tower.

    > Mohammad Al-Habib: The developer launched a $1.3bn mixed-use project in the north of Riyadh.

    > Al-Awaly: Jizan-based firm Al-Awaly announced signing a contract to establish Jazan Water City on an area of 114,000 sq m with an investment value of SR200m ($52m).

    > Alothaim: The firm announced the launch of three mixed-use projects in Dammam, Medina and Khamis Mushait.

    > Al-Majdiah Development: The firm signed a memorandum of understanding (MoU) with Alinma Bank to develop financing solutions that support its future projects.

    > Roshn Group: The Saudi gigaproject developer signed partnership agreements for educational and residential developments and the localisation of supply chains. These include an MoU with the UK’s Cognita Schools to develop a private school in its Sedra residential community in Riyadh.

    On the residential side, Roshn launched Sedra Residence, the construction contract for which has been awarded to Building Construction Company. 

    Roshn was also granted the first instant licence for off-plan sales projects. 

    In addition, local developer Maskan purchased land in Roshn’s Al-Arous community in Jeddah. Maskan will develop a mixed-use project at an investment of SR1.7bn ($453m).

    > Sedco Capital: The firm signed agreements to develop a 540-unit residential complex and a 200-unit residential tower, with total investments of SR1.8bn ($479m). Sedco also signed a deal to develop a Courtyard by Marriott-branded hotel with 1,100 rooms within the Masar Destination in Mecca.

    > Saudi Real Estate Refinance Company: The firm signed an agreement with Al-Rajhi Bank to purchase two real estate financing portfolios worth SR10bn ($2.6bn).

    > Osus Real Estate: The developer launched two mixed-use projects in the Al-Malqa and Al-Qayrawan districts of Riyadh, with a total investment of about SR3bn ($800m).

    > Liwan Real Estate: The firm launched a 151,300 sq m project comprising 2,500 residential units, along with a hotel, offices and commercial facilities, at an investment of SR4.5bn ($1.2bn).

    > Kooheji Developments: The firm launched a three-tower development with 1,250 units, located in Al-Khobar.

    > Bank Albilad: The bank launched a SR4.4bn ($1.1bn) fund to develop a mixed-use project in the Qurtuba district of Riyadh.

    > SAB Invest: Together with Dallah Health and Aljazira Capital, SAB Invest will develop medical, commercial and hotel facilities near Dallah Al-Nakheel Hospital in Riyadh at an investment of SR1.2bn ($319m).

    > Heyazah: The firm announced a mixed-use project spanning 103,000 sq m in the vicinity of King Salman Park in Riyadh.

    > Riyad Capital: The investment company launched a SR1.7bn ($453m) fund to develop the One Mountain View project, featuring over 500 villas in the north of Riyadh.

    > Al-Basateen: The developer launched the Al-Basateen Tower project at the intersection of Riyadh’s Northern Ring Road and King Fahd Road.

    > Alinma Bank: The bank launched a fund worth SR3bn ($800m) to develop 2.7 million sq m of land in the Al-Janadriyah district of Riyadh.

    READ: Saudi real estate to surge in 2026 

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    Yasir Iqbal
  • Saudi real estate to surge in 2026

    29 December 2025

     

    This package also includes: Investors focus on residential sector for new deals
    Deals worth $63.1bn were signed at the Cityscape Global 2025 property show in Riyadh

    After nearly a decade of Saudi sovereign wealth vehicle the Public Investment Fund (PIF) taking on the delivery burden of the kingdom’s largest projects, Riyadh is now turning to private sector real estate developers to help deliver its ambitions. 

    The shift reflects both opportunity and necessity. The PIF-led model has enabled Saudi Arabia to fast-track its gigaprojects and anchor Vision 2030’s transformation objectives. Riyadh is now looking for the private sector to maintain this momentum.

    Opening the market

    To encourage more real estate activity, the kingdom’s long-awaited foreign ownership law was approved in August 2025. It will come into force in early 2026 after a 180-day implementation period. It introduces a comprehensive structure for non-Saudi ownership of real estate.

    The law allows non-Saudi individuals and companies to own, lease and use property in designated areas, subject to restrictions by type and location. Foreign residents can own one home for personal use outside restricted zones, excluding Mecca and Medina. 

    Meanwhile, companies with foreign shareholders can acquire real estate across the kingdom, including in Mecca and Medina, provided it is for business purposes or employee housing and in line with financial regulations. 

    The intention is to help Saudi Arabia tap into international property demand – as Dubai has done – to boost foreign direct investment (FDI). 

    In 2024, the kingdom attracted SR119bn ($31.7bn) in FDI, up 24% year-on-year and 37% above earlier estimates, but still short of the $100bn annual target for 2030. 

    Manufacturing led inflows with SR35bn, followed by wholesale and retail trade, construction and financial and insurance services. Real estate did not feature among the top-performing sectors, underlining the potential for growth.

    Land and finance

    While the foreign ownership law focuses on demand, the revised white land tax regime, effective from 22 August 2025, targets supply. The law aims to curb land hoarding, boost urban land availability and support development priorities.

    Key provisions include an annual white land tax of up to 10%, with zones graded between 10% and 2.5%; a vacant building fee of up to 5%, potentially rising to 10%, subject to approval by Saudi Arabia’s Council of Ministers; and the classification of cities according to supply-demand conditions and development needs. 

    The white land tax is likely to have a dual effect. It should prompt some landowners to bring idle plots into development, sell to active developers or enter into partnerships, thereby alleviating a long-standing structural bottleneck in Riyadh and other major cities. At the same time, it introduces a new cost for holding undeveloped land, which will need to be priced into feasibility studies and could initially push some asking prices higher as owners seek to pass on part of the burden.

    Over time, if enforcement is seen as consistent and predictable, the white land tax could help normalise more active land markets and support the private sector’s expanded delivery role. But 2026 is likely to be a transitional year, with a mix of opportunistic sales, legal challenges and recalibrated land valuations.

    The government has also intervened directly in the rental market, most notably with a rent freeze in Riyadh. 

    In response to double-digit rent increases in some districts, driven by non-oil growth, gigaprojects and corporate relocations, the authorities have imposed a five-year suspension of annual rent increases for residential and commercial leases in the capital.

    For tenants, the freeze offers immediate relief and increases predictability, particularly for middle-income households and small businesses exposed to volatile rents. It also serves as a counterweight to fears that opening the market to foreign buyers in 2026 will drive another surge in rental prices.

    For investors and developers, however, the impact is more challenging. Compressed rental growth in Riyadh reduces the upside on income-producing assets, especially where financing structures assumed steady nominal increases. 

    Running alongside these regulatory reforms is a quieter but significant development in real estate finance: the launch of Saudi Arabia’s first residential mortgage-backed securities by PIF subsidiary the Saudi Real Estate Refinance Company. This new asset class aims to enhance liquidity in the housing finance market and diversify investment opportunities.

    In the longer term, a thriving, diversified real estate sector underpinned by such instruments can support the development of a broader ecosystem of mortgage issuers, servicers and investors, reducing systemic risk and broadening access to housing finance.

    As the kingdom takes deliberate steps to open its market to foreign buyers, mobilise idle land, protect tenants and strengthen financial infrastructure, much will depend on execution. If the new foreign ownership rules are applied effectively, 2026 could mark the start of a more sustainable, private sector-led growth phase. If not, uncertainty could dampen the very investment the reforms aim to attract. 

    READ: Investors focus on residential sector for new deals

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    Colin Foreman