The Saudi real estate market achieved remarkable growth in 2021, shrugging off market stagnation caused by the negative impacts of Covid-19. The Saudi General Authority for Statistics reported a 0.2% increase in the Kingdom’s real estate price index, mainly due to price rises in the residential sector.
We expect to see heightened demand over the coming period, particularly for housing units. This is being driven by multiple government initiatives, including efforts by the ‘Eskan’ housing program, one of the Saudi Vision 2030 initiatives that aims to raise the proportion of residential ownership to 70 percent by 2030. This is making the sector more attractive to private sector investors.
As the market continues to stabilize, we are working on a gradual return to our pre- 2020 rental rates.
In 2021, we signed an MoU with a new strategic partner to develop a mixed-use project in Abha in the Kingdom’s southern Asir province. The development encompasses a mega shopping center, hotel and serviced apartments. We are also in discussion with potential equity investors who have sent formal expressions of interest to develop one of SEDCO’s most prized land assets. The potential development is expected to offer a unique mix of innovative retail, upscale gourmet outlets, a luxury resort hotel and branded residences.
Saudi Arabia’s real estate market has been buoyed by government announcements of further real estate initiatives in Riyadh and Jeddah to meet Vision 2030 targets, with the Al Balad quarter in Jeddah earmarked for redevelopment because of its historical significance and designation as a UNESCO world heritage site.
There is also considerable excitement around our investment to develop 5.7 million sqm of land overlooking the Red Sea. It will include four landmarks – an opera house, museum, sports stadium and aquarium – in addition to 17,000 residential units, 2,700+ key hotel projects, and integrated solutions for the business sector. The project will also feature a marina and beach resorts, restaurants, cafés and shopping outlets.
In the year ahead, we aim to capitalize on this positive sentiment. We will further review our real estate strategy in anticipation of further government projects and continue to execute our sales plans.
The acquisition of new income generating assets to enhance Group income remains a priority and we are working on the repositioning of a major asset to maximize its full financial potential. We also have several long-term lease agreements in the pipeline that we expect to generate substantial yields and continue to strengthen our Saudi real estate portfolio.