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Saudi Arabia’s drive to develop giga projects in the kingdom has resulted in an uptick in the total value of its real estate development plan to $1.3 trillion, rising by 4% from 2023, despite a slowdown in commissioned projects that witnessed a drop in value by $85 billion, according to the global property consultancy Knight Frank data.
Saudi’s Vision 2030 diversification plan that has propelled a shift in the kingdom’s dependence on oil and gas production, has given rise to a construction boom where real estate and infrastructure projects continue to contribute to the country’s GDP.
Yet, on one hand, even as the kingdom’s project pipeline hit a valuation of $249 billion, according to Knight Frank’s latest ‘Saudi Giga Projects Report’, a comparison to last year’s figures revealed a decline in the valuation of commissioned projects, dropping to $164 billion from the previous year’s $250 billion.
While the report did not cite reasons behind the dip, a December news report by Bloomberg quoted the Saudi finance minister Mohammed Al Jadaan confirming that some of the projects launched as part of its economic transformation plan past 2030 have now been delayed, allowing for the government to build capacity and avert huge inflationary pressures and supply bottlenecks.
Giga projects
Knight Frank data reveals that Saudi’s $1.3 trillion real estate plan includes the addition of one million plus residential units, more than 362,000 added hotel keys, a 7.4 million sqm increase in retail space and a 7.7 million sqm increase in office space.
“The development plans unveiled to date, we expect, will receive a further significant boost as new projects connected to the 2030 World Expo and the FIFA World Cup in 2034 unleash a slew of new developments across the city,” the report says.
The 2030 World Expo is expected to add as much as $7.8 billion in new economic activity to the capital over the next six years, according to Saudi financial services firm Al Rajhi Capital.
Riyadh has been at the centre of Saudi’s economic transformation with a rise in demand giving boost to the development activity in the city, with a total of $314 billion in real estate, infrastructure and transportation projects having been announced since 2016, with $60 billion in construction contracts awarded to date.
According to the report, the total value of Riyadh’s real estate and infrastructure projects in unveiled since 2016 has topped $195 billion.
Aside from Riyadh, Saudi’s western seaboard and the surrounding areas have 17 giga projects underway, which has seen a value of $685.5 billion of announced giga projects and infrastructure since 2016, with $ 54.4 billion in construction contracts, including those connected to the $500 billion city Neom.
Together, these projects will add 382,500 new homes to the kingdom’s housing stock, in addition to 3 million sqm of new offices, 4.3 million sqm of new retail space and 330,000 new hotel rooms by 2030.
(Reporting by Bindu Rai, editing by Brinda Darasha)
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