The real estate market in Saudi Arabia has seen many positive developments following the announcement of the Kingdom’s Vision 2030 and the changing business landscape that Crown Prince Mohammed bin Salman has presented in recent years.
The vision has brought many opportunities to local developers. However, this was also a challenge for them as they now have to keep pace with competitive regulations as a more globalized Saudi market will be open and attractive to international developers and investors.
The main obstacle for local developers, in my opinion, is how they can stay in the market and expand their market share to meet the expected huge demand for real estate projects that would result from the Saudi vision.
More than 95% of local property developers are primitive in their work, Prince Mohammed said in a television interview in April. The old ways of doing business for them would impose a huge challenge in providing the market with high quality office buildings, as the Kingdom has dictated that all foreign companies, which have contracts with the government, must move their headquarters to Saudi Arabia. This means that the country needs more office buildings to meet international standards to meet the huge demand for foreign companies and investors.
The market will experience aggressive competition between local and international developers. I think the former have to change their strategies to survive and they can only do that by adopting international standards and practices.
As a result, we will see a slight increase in real estate projects in Riyadh and newly developed giga-projects, such as Qiddya, Amaala and NEOM. These areas will only be home to high quality projects, which means those in Riyadh and elsewhere must satisfy established clients or they will switch to new giga projects.
Faced with these assumptions, I think we need a market maker who leads the local real estate market and becomes an industry champion. He must apply higher standards and abilities and get others to take the course.
I highly recommend international real estate companies to enter the Saudi market as soon as they can to secure their place and gain market share. Because it is a growing and promising market which is in its early stages in full swing.