Summary:
- Saudi retail real estate to hit $183.2 billion by 2027.
- Saudi Arabia rises to third in global retail index.
- New economic zones and projects boost industrial and logistics sectors.
Saudi Arabia’s retail real estate sales are expected to rise from 2.4% in 2024 to 2.7% by 2027, reaching $183.2 billion, fueled by modernization and urban development.
Deloitte’s latest report, based on data from the Economist Intelligence Unit, revealed that retail sales hit $142.7 billion in 2022. The 10th annual predictions report highlighted the Kingdom’s economic recovery post-pandemic, supported by relaxed travel restrictions and improved visa processes, which have revitalized the hospitality sector and increased tourism.
Saudi Arabia has climbed to third place in the 2023 Global Retail Development Index by Kearney, driven by a surge in non-cash transactions from 16% in 2016 to 62% in 2022.
The Kingdom is advancing its real estate sector with major projects like NEOM, a $500 billion smart city, and the Red Sea Project aimed at transforming tourism. Deloitte reports that the construction industry’s contribution to GDP is expected to rise to $37.4 billion this year from $35.2 billion last year.
In 2023, while residential real estate transaction volumes declined, prices for villas and apartments increased, indicating strong demand despite affordability concerns and suggesting a positive long-term outlook for the market.
“Residential preferences are shifting toward homes that accommodate remote work by incorporating wellness-centric features,” the report said, adding: “Simultaneously, the retail and hospitality sectors are adapting to changing consumer behaviors, with a focus on e-commerce and experiential spaces.”
Deloitte noted that Saudi Arabia’s office sector has thrived due to increased financial and business services, with employment in these areas growing by 4% year-on-year in 2023, as reported by UK-based Oxford Economics.
The report highlighted significant growth prospects for the industrial and logistics sectors, driven by the establishment of four Special Economic Zones (SEZs) in 2023: King Abdullah Economic City, Jazan, Ras Al-Khair, and Cloud Computing in King Abdulaziz City for Science and Technology. These SEZs aim to foster sustainable business development, attract foreign investments, and bolster Saudi Arabia’s role as a logistics hub, thus supporting the Kingdom’s diversification efforts.
Full report available here: KSA Real Estate Predictions 2024 report.
Source: Arab News, Deloitte, EIU
