Saudi Arabia will spend half a trillion dollars on new cities
By 2030, eight new cities are planned to be built in Saudi Arabia.
By 2030, it is planned to reach the figure of 100 million foreign visitors to the kingdom per year
The partners of ARAVANA Multifamily Office, analysts of a multinational consulting company in Moscow, studied the real estate market in Saudi Arabia and conducted a study of consumer preferences of residents of the country, including 55 ultra high net worth individuals.
According to the study, by 2030 it is planned to build at least eight new cities, most of which will be located in the west of the country on the Red Sea coast. Almost $575 billion has already been allocated for the implementation of this plan. In total, these megaprojects will provide about 1.3 million new residential units, more than 4 million square meters of high-quality offices and about 100 thousand hotel rooms. In addition, by 2030 it is planned to reach the figure of 100 million foreign visitors to the kingdom per year.
The most expensive megaproject will be the city of Neom, which involves investments of $ 500 billion and is positioned as a model of the city of the future, characterized by an eco-friendly lifestyle, technological innovations and progress. More than 60% of the surveyed ultra high net worth individuals intend to invest in it.
Since the beginning of 2022, there has been a growing demand for real estate in the Middle East from Russian ultra high net worth individuals. More than 80% of the demand is in Dubai and Abu Dhabi, and more and more requests are coming for real estate in Saudi Arabia, Bahrain, Qatar and Egypt. It is expected that over the next two years, real estate in the Middle East will enjoy the greatest popularity among Russian ultra high net worth individuals due to the high investment potential and the interest of local authorities in attracting foreign capital.
Within the framework of the Vision 2030 state program in Saudi Arabia, it is planned to build several megaprojects — cities of the future, such as Neom, Qiddiya, Red Sea Project, Amaala, Al-Ula, Diriyah Gate and others. The capital of the kingdom of Riyadh will strengthen its position as the business center of the country: by the end of 2023, it is planned to release 100 thousand new residential units, as well as about 3 million square meters of office space and 12 thousand hotel rooms, which will be located in various projects totaling $ 63 billion. As a result, by 2030, the population of the capital is expected to grow to 15 million people.
As part of the study, the attitude of potential buyers to planned megaprojects was studied — for this purpose, 1003 households in the cities of Riyadh, Jeddah and Dammam were interviewed.
- 41% of respondents called Neom the most attractive investment of all megaprojects.
- In second place is the Red Sea Project (23%), also located on the Red Sea coast.
- The Diriyah Gate project in Riyadh is in third place: 13% of respondents said they are most likely to buy a house here.
It is noteworthy that the interest in the city of Neom has a directly proportional relation to the monthly income of the family: respondents earning more than $ 16 thousand per month (48%) called it the most preferred project for buying a home. Neom also tops the list in the “potential purchase” category: 72% of respondents said that one day they would like to buy a house there. In addition, those who vote for this project are most likely to overpay for the purchase of real estate, whereas, for example, respondents who consider Diriyah Gate the most attractive option are least likely to buy a house with a markup (37% of respondents).
The planned megaprojects are designed to transform life in Saudi Arabia. Neom deserves special attention, which should become a reflection of the progress of mankind. The giant project has already attracted the attention of investors, home buyers and tenants both inside and outside the kingdom. Now developers have a great opportunity to meet peak demand and customer expectations.
As part of the study of the Saudi real estate market, 55 ultra high net worth individuals were interviewed.
- 96% of them plan to buy real estate in one of the megaprojects, and 84% of this group are willing to overpay.
- At the same time, 60% of those wishing to buy real estate in one of the projects of the future chose Neom, as they consider it the most innovative, technologically progressive city with a huge potential for sustainable development.
- The Red Sea Project is in second place according to the preferences of ultra high net worth individuals (22%), and Al-Ula follows third (13%).
- At the same time, 42% of the surveyed ultra high net worth individuals specified that they plan to buy real estate in megaprojects as a second home
- 27% stated the investment purpose of such a purchase, and more than half of them expect an annual rental yield of 4-6%.
- A third of respondents expect that the price increase in all megaprojects will be more than 10% in annual dynamics.
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Lana Avetisyan
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