Riyadh starts $43bn housing programme

23 May 2023

Saudi Arabia’s Municipal, Rural Affairs & Housing Ministry has started a five-year, SR160bn ($43bn) plan for the construction of housing across the kingdom. The programme, which involves the construction of 240,000 units, is one of the largest of its kind anywhere in the world.

The capital investment programme is being overseen by the ministry’s investment arm, the National Housing Company (NHC). The NHC works with private sector real estate companies on the development of individual projects located across Saudi Arabia.

The largest element of the programme is the construction of 108,000 units in and around Riyadh at a cost of SR72bn for the units’ construction and SR9.7bn for the associated infrastructure.

Central to this is the Al-Fursan development announced earlier in the year. The development covers about 35 square kilometres (sq km) in the northeast of Riyadh and will have an eventual population of 250,000 people living in 50,000 residential units. 

The other significant upcoming housing development in the capital is the second phase of the Khozam suburb, which, when completed in its entirety, will also have 50,000 units spread across 30 sq km.

Planned projects

Other major current and planned projects include a total of 31,500 housing units at the Mayar, Khayala, Al-Sadun and Jawhara developments in Jeddah, which, in addition to another 10,000 units in other, smaller schemes in the city, will involve an estimated investment of SR28bn. Further major projects include the 19,400-unit Al-Wajeha suburb in Dammam, and the 7,000-unit Al-Dar development in Medina.

In addition to the SR160bn investment in housing for the kingdom-wide programme as a whole, the plan calls for SR21.6bn in spending for associated infrastructure and SR1.3bn for parks and tree planting.

The majority of the future projects will be independent villas and townhouses for Saudi nationals, although there will also be some apartment buildings. Generally, the NHC and private real estate developers sell the units off plan during the construction process as a means of funding the projects and securing a return on investment.


MEED's latest special report on Saudi Arabia includes:

> GIGAPROJECTS: Saudi Arabia under project pressure
> ECONOMY: Riyadh steps up the Vision 2030 tempo
> CONSTRUCTION: Saudi construction project ramp-up accelerates
> UPSTREAM: Aramco slated to escalate upstream spending
> DOWNSTREAM: Petchems ambitions define Saudi downstream
> POWER: Saudi Arabia reinvigorates power sector
> WATER: Saudi water begins next growth phase
> BANKING: Saudi banks bid to keep ahead of the pack
> DATABANK: Riyadh holds its buoyant economic heading

https://image.digitalinsightresearch.in/uploads/NewsArticle/10873909/main.jpg
Edward James
Related Articles
  • GCC becomes a top tourist destination

    28 March 2024

    The GCC’s pulling power as a tourist destination was reinforced in early March when Dubai-based developer Emaar announced that Dubai Mall was the most visited place on earth in 2023, with 105 million visitors – a jump of over 19% from the 88 million recorded in 2022.

    The developer also revealed that the performance has continued into 2024, with 20 million people visiting the mall during the first two months of this year.

    Dubai Mall’s performance is just one facet of Dubai’s resurgent tourism industry. After a difficult year in 2020, the emirate has bounced back as a tourism destination and is now welcoming more visitors than it did before the Covid-19 pandemic. 

    In 2023, Dubai welcomed more tourists than ever before. There were 17.15 million international overnight visitors, according to data published by the emirate’s Department of Economy & Tourism. The total represents 19.4% growth when compared to the 14.36 million tourist arrivals recorded in 2022. 

    The 2023 total also exceeded the previous record of 16.73 million visitors that was registered in 2019.

    The performance has continued into 2024. Dubai welcomed 1.77 million international tourists in January 2024, an increase of 21% compared to the 1.47 million visitors recorded in the same period of 2023.

    Dubai Mall was the most visited place on earth in 2023, with 105 million visitors

    Saudi tourism growth

    While full-year data for most other GCC markets has yet to be reported, one other GCC country that has recorded strong numbers for 2023 is Saudi Arabia. 

    The kingdom welcomed more than 100 million tourists last year, achieving its 2030 goal seven years early. The 2023 total comprised 77 million domestic and 27 million international visitors, generating revenues of $27bn for the kingdom. 

    Saudi tourism numbers cross 100 million

    Riyadh wants more growth and aims to emulate Dubai by developing ambitious projects that are designed to be global attractions in the future. The target now is to increase tourist numbers to the kingdom to 150 million by the year 2030, with a split of 80 million domestic and 70 million international tourists.

    Saudi Arabia welcomed more than 100 million tourists last year, achieving its 2030 goal seven years early

    Regional travel

    Digging deeper into the data for Dubai reveals an interesting trend. Western Europe ranked first in terms of source markets for international tourists with a share of over 18%, or 327,000 visitors. This was closely followed by the GCC countries with 311,000 visitors, representing nearly 18%.

    Intra-GCC tourism has been identified by policy makers as a key driver for future growth in the region. The logic is simple: the six-country block is home to 60 million people with many wealthy frequent travellers. 

    The importance of GCC travellers is evidenced by statistics from GlobalData, which show that Saudi Arabia was the largest source market for travellers visiting the six GCC states in 2023, with a total of 6.3 million travellers. 

    Oman and Kuwait were also in the top 10, accounting for 2.3 million travellers each. 

    The GCC is also promoting travel within the region by implementing a unified tourist visa for the six countries. The concept was discussed, along with the Gulf Tourism Strategy, at the eighth meeting of GCC tourism ministers in Doha earlier this year.

    The GCC tourist visa is expected to significantly improve the Gulf states’ standing as a tourist destination by making travel within the region easier for visitors from outside. 

    The visa, which is expected to operate in a  similar way to the EU’s Schengen Visa, will allow tourists to visit GCC countries on a single visa. 

    The move to make travel within the region more frictionless should enhance the performance of the GCC’s tourism sector in the future. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11640340/main.gif
    Colin Foreman
  • Spanish firm wins $102m Saudi water design deal

    28 March 2024

    Saudi Arabia's National Water Company has awarded Seville-headquartered technology and engineering firm, Ayesa, a €95m ($102m) contract to design 190 sanitation and drinking water distribution projects in Saudi Arabia.

    Ayesa will provide design consultancy services for the projects, which will require a capital expenditure of €5bn.

    The project is part of a broader plan by NWC, the kingdom's main potable water and wastewater collection and treatment entity, to invest a total of roughly €200bn by 2030 "into comprehensive water cycle infrastructure including water treatment and sanitation processes to the delivery of potable water to its population".

    Ayesa will design major hydraulic infrastructure across four regions in Saudi Arabia: south, west, northwest, and north.

    The comprehensive plan includes the construction of multiple water storage tanks to enhance the reliability of the water supply, alongside the development of pumping stations, treatment plants, purification facilities and widespread distribution networks.

    Ayesa will deliver the design of the planned hydraulic projects as well as provide environmental services such as environmental impact assessment and ecological assessments to the NWC during the bidding stage for the construction packages of the planned infrastructure.

    The firm plans to tap "the most innovative technologies in water treatment, sustainable materials, and measures to optimise energy usage".

    Related readGrowth inevitable for the Saudi water sector

    Photo: Pixabay

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11639566/main.jpg
    Jennifer Aguinaldo
  • Riyadh maintains Vision 2030 focus

    28 March 2024

    Commentary
    John Bambridge
    Analysis editor

    Riyadh is not allowing anything to distract it from its ambitious goals for economic diversification as part of the country’s Vision 2030 development plan. This includes the war in Gaza and the secondary conflict escalating in the Red Sea, despite its proximity and its direct implications for Saudi Arabia.

    After nearly a decade of a destabilising, demoralising and ultimately fruitless war in Yemen, the court in Riyadh appears to have lost not only its appetite for military adventurism, but also the will to get involved in regional conflict in any way. In this regard, Saudi Arabian foreign policy has drawn much closer to the default position of much of the rest of the Gulf, which is to avoid regional tension and focus on the business angle – and this is partly born of necessity. Riyadh has ambitious plans not just for its own development, but for the volumes of foreign direct investment that it can draw into the country with those plans. Conflicts risk poisoning investor sentiment.

    Saudi Arabia’s reforged foreign policy of relative quiescence, detente with Iran and peace negotiations with the Houthis is working wonders. Non-oil growth is soaring, business sentiment is well-stoked and private equity managers, venture capitalists, consultants and other business hopefuls are swarming its high-profile investment events. And Riyadh is committed. In February it invited companies to prequalify to develop a new airport terminal at Abha, the capital of the Yemen-adjacent Asir Province, as a public-private partnership – a clear sign that it believes the south’s risk-prone days are behind it.

    Riyadh is now so disinclined to lower the music at its own party that it has sat on the sidelines as the US has put together a naval coalition to deter Houthi attacks on shipping – leaving its close ally Bahrain to provide a comparatively inconvenient port of call for Western destroyers. This has remained true even though the two most grievously damaged commercial vessels have both been linked to Saudi trade, with one carrying outbound fertiliser and the other inbound steel and vehicles. The crisis has also contributed to the steep inflation of construction material costs. Still Riyadh remains unmoved.

    The sum of all of this leaves no doubt as to where the full attention of the Saudi state now lies – and that is laser-focused on the delivery of its Vision 2030 and the country’s associated suite of gigaprojects. This is good for the country, and good for investors. If Riyadh is to deliver on its promises, it needs to watch the practical implementation of its plans with a steely and hawk-eyed gaze. With the sums of money involved, any deviation, any waste, could prove catastrophic not just to the budget, but also to the country’s prospects for long-term prosperity. The stakes could not be higher, and foreign affairs are a distraction by comparison.

     


    MEED's April 2024 special report on Saudi Arabia includes:

    > GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
    > BANKING: Saudi lenders gear up for corporate growth
    > UPSTREAM: Aramco spending drawdown to jolt oil projects
    > DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector

    > POWER: Riyadh to sustain power spending
    > WATER: Growth inevitable for the Saudi water sector
    > CONSTRUCTION: Saudi gigaprojects propel construction sector
    > TRANSPORT: Saudi Arabia’s transport sector offers prospects


    https://image.digitalinsightresearch.in/uploads/NewsArticle/11628777/main.gif
    John Bambridge
  • Region must rethink talent acquisition

    28 March 2024

    Despite multiple policy reversals over the years, the GCC continues to stand out as one of the leading destinations of cross-border migration globally.

    This reflects the long-standing dependence of the regional private sector on imported labour. 

    However, the majority of immigration to the Gulf has always involved relatively unskilled labourers engaged in construction, trade, hospitality and household services. While there has always been a segment of skilled migration, the regulatory treatment of the foreign labour force has not meaningfully differentiated people by profession or educational background. The GCC has stood out due to its sharp regulatory demarcation between domestic and foreign human capital. 

    In a world that is being disrupted by technological change and an advancing demographic transition, the recognition of the strategic importance of attracting and retaining skilled individuals is growing. This is tempered in some cases by populist anti-immigration impulses but, if anything, this political climate tends to reflect popular frustrations with policies that do not effectively differentiate among migrants. Technological innovation can moderate the need for migration, but will not eliminate it.

    Strategic talent attraction is also an increasingly salient issue. The aspirations of creating a diversified, knowledge-based economy underpinned by productivity put a premium on talent attraction in the Gulf region. With appropriate regulations and incentives, the region has an opportunity to move away from its historical labour intensity in many lower-productivity sectors through technology adoption.

    Growing the talent pool 

    While the impact of technology on jobs can be ambiguous, a more productivity-driven economy requires more skills. Moreover, innovative capacity is linked to talent diversity.

    The Gulf countries are exceptionally well positioned for a pivotal position in the emerging global economic order thanks to their connective infrastructure, increasingly competitive regulations and their attractive lifestyle. 

    However, the ability to leverage these advantages hinges on multidimensional competitiveness that has to include human capital. The way forward has to combine more effective solutions for educating and training local talent.

    These realities mean that the Gulf countries will have to navigate their way from the traditional labour laws based on the idea of temporary residency to something more fit for purpose. 

    Efforts to liberalise the traditional labour laws have created opportunities such as self-sponsorship while generally making it far easier for expatriate employees to move between jobs. Such reforms have also made it possible for non-nationals to stay in the region past the age of retirement. 

    The introduction of health insurance reforms and the progressive scaling back of subsidies has meant that the growing non-national residency base no longer imposes fiscal costs, which has sometimes been a source of contention in the past. Increasingly, foreign residents have become a source of significant government revenue.

    More recently, there have been initiatives to introduce new visa categories to attract entrepreneurs and investors. 

    Similarly, more governments now recognise the strategic importance of longer-term residency options that can give expatriates certainty beyond the traditional default option of two-year work visas. These efforts have coincided with initiatives to develop attractive housing options, international private education and steps to improve the quality of life.

    In a world that is being disrupted by technological change and an advancing demographic transition, the recognition of the strategic importance of attracting and retaining skilled individuals is growing 

    Gradual reform

    While these reforms do not yet amount to a holistic immigration policy, they reflect a progressive shift in thinking. Some regional economies now offer a pathway to citizenship for long-term residents, even if the process is seldom formally defined and can involve considerable discretion. 

    All these steps recognise that global competitiveness in the race for talent requires the regulatory flexibility to match the conditions available elsewhere. 

    Steps to reform long-standing policies typically have to be gradual as their success depends on creating a public buy-in. However, the transition to a sustainable approach to talent attraction is growing in urgency. 

    The number of people aged 65 and over is expected to rise from 783 million in 2022 to 1 billion by 2030 and 1.4 billion by 2043. Developing economies are now ageing more quickly than advanced economies historically did.   

    As old age dependency ratios increase, more working-age professionals will find employment opportunities closer to home. This will entail a growing premium on foreign talent at a time when the structural need for it is increasing, not least because the GCC population is no less affected by the demographic transition than the rest of the world. The success of the ongoing economic paradigm shift of the Gulf hinges on devising sustainable policies for competing for talent.

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11640002/main.gif
  • Marubeni team wins Abu Dhabi waste-to-energy contract

    27 March 2024

    Register for MEED's guest programme 

    Abu Dhabi-based utility offtaker Emirates Water & Electricity Company (Ewec) and Abu Dhabi Waste Management Company (Tadweer) have awarded the contract to develop and operate Abu Dhabi's first waste-to-energy (WTE) project.

    A team of Japan's Marubeni Corporation, Switzerland's Hitachi Zosen Inova and Japan Overseas Infrastructure Investment Corporation won the contract.

    As MEED previously reported, the winning team proposed a levelised waste treatment cost of AED175 ($47.6) a metric tonne (MT) for the project.

    This is equivalent to 45% of the tariff of AED391/MT proposed by the second team, which comprises France's Suez and the local Pal Cooling Holding, according to industry sources.

    MEED understands the power tariff for the project is fixed at 11.215 fils a kilowatt-hour (kWh). 

    Regional projects tracker MEED Projects estimates the scheme will require an investment of about $600m.

    US/India-based Synergy Consulting is the financial adviser to the Marubeni consortium.

    The WTE plant will be located near the Al Dhafra landfill in Abu Dhabi. It will have a processing capacity of 900,000 tonnes of waste a year and generate enough electricity to power up to 52,500 households once complete.

    The clients issued the request for proposals for the contract in July 2022 and completed the site visit with the companies qualified to bid in September of the same year.

    The project will involve the financing, construction, operation and maintenance of the WTE plant, which will use advanced moving grate technology to convert municipal solid waste into electricity using a high-efficiency steam turbine generator set.

    The plant is expected to reduce carbon dioxide equivalent emissions by up to 1.1 million tonnes a year, equivalent to removing more than 240,000 cars from the road.

    The successful developer consortium will own a 40% shareholding in the project's special-purpose vehicle and sign a waste- and power-purchase agreement with Tadweer and Ewec.

    The local/Australian Tribe Infrastructure Group is the client's financial adviser, while the UK's Ashurst and Denmark's Ramboll are legal and technical advisers, respectively.

    The project aligns with the UAE's aim to divert 75% of waste away from landfills.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11637002/main.jpg
    Jennifer Aguinaldo