According to a study, Saudi Arabia’s intention to encourage international corporations to establish regional headquarters in the kingdom will assist the office sector in the Arab world’s largest economy.
According to a study by the Kuwait Financial Centre (Markaz), the decision will lead “regional occupiers to reassess their office footprint across the Middle East and begin preparing for the long term.” “The KSA will surely profit from the region’s rising market share of office occupiers.”
Saudi Arabia said this year that it will no longer award contracts to companies with regional offices outside the country beginning in 2024.
According to the Saudi Press Agency, the decision was made to encourage the development of local enterprises by international corporations that do business with the kingdom’s government, its agencies, and associated funds.
Following the decision, 44 major corporations have relocated their regional headquarters to the kingdom, including PepsiCo, Baker Hughes, Halliburton, Philips, Schlumberger, and Novartis.
“The 44 firms that have stated ambitions to build regional headquarters in Riyadh are estimated to deliver 67 billion Saudi riyals [$17.86 billion] in investment to the economy and generate 30,000 employment opportunities by 2030,” according to a research by global consultant Knight Frank.
“Clearly, this shows that, at least in Riyadh, demand for office space is not only being produced, but is also likely to be sustained.”
Saudi Arabia intends to finalize a significant development strategy for Riyadh this year, with the goal of transforming it into a major global city economy by 2030.
According to the board of the Royal Commission for Riyadh City, the kingdom plans to convert Riyadh into one of the top ten city economies in the world by 2030, tripling its population to 15 million to 20 million and boosting the number of tourists to more than 40 million.
According to Knight Frank, about three million square metres of new office space, as well as more than 12,000 hotel rooms, are being developed in the capital as the kingdom strives to diversify its economy and raise non-oil earnings.
According to the Markaz research, Saudi Arabia’s real estate market is likely to profit even more from favorable government initiatives and megaprojects such as Neom. The business sector is projected to benefit from increased employment and the reopening of the economy.
Meanwhile, the survey stated that the country’s population increase and improvements in lending legislation will benefit the residential property industry.
“Based on our analysis of numerous macroeconomic indicators, we feel that the Saudi real estate market is rebounding and gaining momentum, with a positive prognosis for the next several years.”