Saudi Round-Up: Work Advances on New Murabba
This week's Saudi Arabia business roundup highlights the Kingdom's impressive performance across various sectors, driven by strategic partnerships and a commitment to Vision 2030.
From 14 September to 21 October 2024
General Business and Economy
World Bank Predicts Strong Economic Growth for Saudi Arabia in 2025
The World Bank predicts Saudi Arabia's GDP will grow by 1.6% in 2024 and a strong 4.9% in 2025. This positive outlook is attributed to the success of Vision 2030 in diversifying the economy and increasing job creation. Inflation in Saudi Arabia is expected to remain low at 2.1% in 2024 and 2.3% in 2025.
Saudi Arabia's PIF Increases Green Investments to $19 Billion
Saudi Arabia's Public Investment Fund (PIF) has expanded its investments in green projects, reaching over $19.4 billion across 91 projects, as of June 30, 2024. This investment focuses on renewable energy, energy efficiency, green buildings, clean transportation, and sustainable water management.
The PIF has allocated $457 million to 18 operational projects and $18.9 billion to 73 projects currently under construction. Notable projects include Red Sea Global and NEOM Water Distribution.
Saudi Arabia and South Africa Strengthen Economic Ties at Business Forum
A business forum in Johannesburg aimed at strengthening economic cooperation between Saudi Arabia and South Africa saw the signing of a $25 million credit agreement between the Saudi Export-Import Bank and Standard Bank Group.
The agreement will provide increased funding support for companies in Saudi Arabia looking to trade with South Africa. A second memorandum of cooperation was signed between the Saudi Export Development Authority and Skytower Development Co. The Saudi Press Agency reported that trade between the two countries was estimated at $3.5 billion in 2023, and Saudi Arabia currently holds the top spot among South Africa's trading partners in the region.
Italy and Saudi Arabia Deepen Manufacturing Partnerships
Saudi Arabia and Italy are strengthening their partnership across multiple sectors, including aerospace and defense, as part of Saudi Vision 2030's objective to diversify the Saudi economy. Saudi Arabia plans to localize the manufacturing of key helicopter components, creating jobs and boosting the domestic aviation supply chain.
The partnership plans to leverage Italian expertise in companies like Leonardo, which has a longstanding presence in Saudi Arabia. The two countries also want to improve industrial cooperation in sectors like pharmaceuticals, vaccines, and electric vehicles.
Corporate Lending Drives Saudi Bank Loan Growth
Saudi bank loans reached SR2.82 trillion ($753.27 billion) in August 2024, which represents an 18-month high annual growth rate of 12.11%. This surge is primarily attributed to increased corporate lending for large-scale projects under Vision 2030.
Real estate lending, fueled by giga-projects and infrastructure investment, led the growth in corporate loans. Saudi’s Vision 2030's focus on economic diversification is creating a vibrant operating environment for Saudi banks.
Aviation
Saudi Arabia Boosts Advanced Air Mobility with New MoU
The General Authority for Military Industries (GAMI) and the General Authority of Civil Aviation (GACA) signed a memorandum of understanding (MoU) to enable the development of advanced air mobility in Saudi Arabia.
The agreement focuses on promoting technology for vertical take-off and landing aircraft and unmanned aerial vehicles. It will also expand the opportunities for maintenance and repair services, boost industrial capabilities, and support the growth of the aviation sector.
Transportation
Saudi Arabia Seeks Spanish Expertise to Strengthen Drone and Automotive Industries
Saudi Arabia is actively seeking partnerships with Spanish companies to develop its drone and automotive industries. During a visit to Madrid, the Saudi Industry and Mineral Resources Minister met with Spanish business leaders to discuss opportunities for collaboration in heavy-duty drone production, automotive component manufacturing, and geological surveying.
Construction
Saudi Aramco Explores Chinese Technology for Al-Khobar Stadium Construction
Saudi Aramco is considering using advanced building materials from China National Building Material Co. (CNBM) for the construction of its Al-Khobar Stadium. The stadium is intended to be a venue for the 2034 FIFA World Cup.
Aramco is looking to explore alternative building materials that can replace traditional, high-carbon emission materials with advanced, non-metallic options. This initiative could reduce carbon emissions and strengthen industry localization in Saudi Arabia. The stadium, with a capacity of 47,000 seats, will also be one of the venues for the AFC Asian Cup in 2027.
Saudi Arabia Reports Major Progress in Riyadh’s Mukaab Project
New Murabba, a PIF-owned company, is making meaningful progress in developing its world-class urban destination in Riyadh. Excavation for the Mukaab and surrounding areas is 86% complete, with over 10 million cubic meters of earth moved. The development is committed to worker safety, logging over 3 million safe work hours, and prioritizing the well-being of the workforce alongside innovative construction methods.
Real Estate
Saudi Residential Market Booms in Q3 with 25% Surge in Transaction Values
Residential transaction values in Saudi Arabia increased by 25% year-on-year in Q3 2024, reaching SR35.4 billion ($9.4 billion). The number of deals also increased by 12%, with Riyadh seeing the highest growth, a 16% rise in sales and a 41% increase in transaction values.
Surging Demand Drives %19 Increase in Grade A Office Space Rents in H1 2024
Riyadh witnessed a 19% surge in Grade A office space rents during the first half of 2024—growth driven by strong demand from international and domestic firms. The city added 52,000 square meters of office space, bringing the total market supply to 5.2 million square meters.
The northern part of Riyadh is attracting significant interest from companies due to ease of access, new infrastructure, and high-quality office options.
PIF Establishes SARCC to Address Staff Housing Needs in Saudi Arabia
The Public Investment Fund (PIF) of Saudi Arabia has launched a new property developer, Smart Accommodation for Residential Complexes Co. (SARCC).
The company will focus on building housing for workers involved in the Kingdom’s large-scale construction projects, with the aim of improving the staff housing market by developing and managing properties that meet international standards set by the International Finance Corporation and the European Bank for Reconstruction and Development.
The PIF expects this will transform the staff housing market.
Sustainability & Energy
Saudi Arabia Unveils First Regional Hydrogen Train Trials
Saudi Arabia has launched the first hydrogen train trials in the region, which makes a big step towards diversifying its energy sources. However, this initiative is also part of Saudi Arabia's broader strategy to explore and adopt green technologies, aligning with its Vision 2030 plan to reduce its reliance on oil.
The trials aim to establish regional standards and attract private sector investment in the railway sector.
Denzai Expands to Saudi Arabia to Support Renewable Energy Projects
Denzai, a Japanese heavy lifting and engineered transport company, has expanded its presence in Saudi Arabia by establishing a new office and a joint venture with FTE Logistics, a Saudi heavy lifting company.
Denzai aims to support Saudi Arabia's transition to a more diversified economy and contribute to the country's decarbonization and carbon neutrality goals by leveraging its expertise in wind power plant construction.
Technology
Swvl Expands Headquarters to Saudi Arabia
Swvl Holdings Corp, a provider of technology-driven mobility solutions, is expanding its operations in Saudi Arabia by establishing its regional headquarters in Riyadh.
The decision to move will enable the company to capitalize on government contract opportunities and contribute to the Kingdom's digital transformation by providing innovative transportation solutions for businesses and consumers.
Swvl has already secured $2.6 million in new annual contracts in Saudi Arabia, representing 10% of its total revenue in 2023.
Saudi Arabia's POS Spending in August Reaches $15.6 Billion
Saudi Arabia's point-of-sale (POS) spending reached $15.6 billion in August 2024, a 9.67% increase from the previous year. The growth was primarily fueled by a 4.72% rise in spending at restaurants and cafes, attributed to the Kingdom's economic growth and focus on tourism.
The hospitality sector is embracing advanced POS solutions to meet the demands of a growing, tech-savvy population. Riyadh, a hub for tourism and digitalization, leads in POS spending, reflecting its significant role in the Kingdom's evolving digital economy
Tourism
Saudi Arabia and China Partner to Strengthen Tourism and Investment
Saudi Arabia and China are strengthening their tourism ties to promote investment and travel opportunities between the two countries. The Saudi Tourism Minister met with Chinese officials and investors to discuss potential investments in the Kingdom's hospitality industry and explored ways to improve cooperation in the tourism sector.
This week’s advancements highlight the Kingdom's dedication to economic diversification, innovation, and sustainable development. Keep an eye out for next week's developments as Saudi Arabia continues to attract international investments and solidify its position as a global economic leader.
