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Saudi Arabia’s real estate and infrastructure projects launched in recent years are now worth over $1.25 trillion, but affordability remains a major issue in the residential sector, according to a new study.
The kingdom’s Vision 2030 includes a number of initiatives aimed at developing the country’s industrial base, infrastructure, and service sectors, as well as creating more jobs for its growing population.
According to Knight Frank’s Saudi Giga Projects Report, the kingdom’s real estate development plans include commissioned projects worth $250 billion since the launch of its Vision 2030 agenda.
Saudi Arabia has over 600,000 residential units under development, with Riyadh accounting for 18% of the total. The value of these projects is estimated to be $229 billion; this includes plans to build over 241,000 homes by 2030.
“The volume of residential units planned [in Saudi Arabia] has risen to 660,000 units, up 30% in the last 12 months, which will come as welcome news to house hunters prevented by the recent spike in values,” said Faisal Durrani, Partner – Head of Research, Middle East & North Africa.
“That being said, affordability is still a key hurdle for many buyers, and so price points for the new inventory will be critical to reigniting domestic demand,” He added,
The development plans include over 289 thousand hotel keys, 5.3 million sqm in retail spaces, and 6 million sqm in office spaces.
This is meant to fix the current shortage in Grade A office spaces, a concern in financial hubs such as Riyadh.
Outside of Riyadh, the western provinces of Saudi Arabia are attracting major investment in gigaprojects, with a total of $687 billion worth of projects expected to be completed by 2030. This includes the $500 billion NEOM megacity, considered one of the most ambitious projects in the world.
“NEOM overall is also progressing rapidly, with $70 billion of projects now awarded, 45% of which has been completed,” said Harmen de Jong, partner and head of strategy, Saudi Arabia, at Knight Frank.
However, he adds that hurdles in the city’s development remain.
“The challenge for the nation’s gigaproject developers will be to cater to and appeal to domestic buyers,” he stated, “With most gigaprojects expected to launch residential products at over $1 million, bridging this gap between demand and expectations will undoubtedly emerge as a key consideration going forward.”
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