- Investment includes strategic partnership to introduce modern and rapid construction methods to Saudi Arabia, creating 15,000 jobs
- Two major real estate construction contracts signed to build 15,000 houses and create more than 4,000 jobs
- Investments from United States and China reflect opportunities for international companies in Saudi housing sector
Riyadh, 25th October: The Saudi Arabian General Investment Authority (SAGIA) announced on Thursday three major investments in the Kingdom’s growing real estate and construction industry, as international businesses look to take advantage of rapidly growing demand in the sector.
The investments announced today are:
- A Memorandum of cooperation between US-based Katerra and the Eskan Program to introduce modern and rapid construction methods to Saudi Arabia
- A Memorandum of residential real estate development on the Al Asfar project worth SAR 10 billion between PowerChina International Group, the Ministry of Housing and National Housing Company to build 17,000 housing units over the next six years
- A Memorandum of residential real estate development on the Telal Alghoroob project between the Sakani program, Alameriah and Sany (a Saudi – Chinese Partnership).
The Saudi real estate industry is set to see significant growth of 5.3 percent CAGR over the next five years. This growth is underpinned by favorable demographics – 50 percent of KSA’s population is under the age of 30 – ensuring high demand for housing.
The government has dedicated a budget of US$15 billion towards housing development for the next five years, with more than one million housing units expected to be built during that period. As well as growing demand, investment opportunities are also being driven by the private sector’s contribution to the sector. Saudi Arabia aims to raise the contribution of approved real estate developers towards new housing development from 10 percent to 30 percent by 2020.
This announcement comes against the backdrop of advancing economic reforms in the Kingdom. This year Saudi Arabia achieved its best progress in the WEF Global Competitiveness index since 2012, moving to 39 of 140 economies. In addition, the World Bank ranked Saudi Arabia 2nd amongst the G20 countries in implementing economic reform.
The Kingdom’s investment attraction and promotion strategy is accelerating under the INVEST SAUDI initiative, in line with the objectives of Vision 2030. It seeks to support and build awareness of the significant opportunities that Saudi Arabia offers to international, regional and local investors, led by the Saudi Arabian General Investment Authority (SAGIA) in collaboration with partners across government. Under INVEST SAUDI, FDI growth in the first half of 2018 expanded 90 percent versus same period last year, with the number of licenses nearly doubling by end of the third quarter.
At the launch of the announcement Mr Ash Bhardwaj, Sales, Program Management, Software Development, Katerra, said: “This strategic partnership will introduce modern and rapid construction methods to Saudi Arabia. We expect that there will be a high demand for these technologies in line with the government’s approach to adopt sustainable and energy-saving systems. We look forward to partnering with the Ministry of Housing to provide rapid building solutions that fit the Kingdom’s environment.”
Mr Wu Wenhao, Branch General Manager and Vice-President of PowerChina International Group Ltd, said: “We are excited by the increased housing demand in the Kingdom of Saudi Arabia and the clear plan by the Ministry of Housing and Sakani Program to meet this demand in the Kingdom. We are delighted to be partnering with the Ministry of Housing to provide various types of residential units for the Kingdom’s citizens.”
Mr. Hejing Gao, General Manager of Sany-Alameriah, said: “The high demand for housing in Saudi Arabia and the government’s direction to initiate partnerships with the private sector and stimulate foreign investment have created an attractive environment for investment in this sector. We look forward to initiating the partnership we have agreed with the Ministry of Housing to build thousands of housing units.”