RIYADH: Saudi Arabia's retail property sales will grow from 2.4 percent in 2024 to 2.7 percent in 2027, reaching $183.2 billion, driven by modernization and urban development.
In its latest release of Saudi Arabia Real Estate Predictions, global consulting firm Deloitte revealed, citing the Economist Intelligence Unit, that retail sales will reach $142.7 billion by 2022.
The 10th annual forecast report, which assessed the kingdom's real estate market in 2023 and projected trends for 2024 in various sectors, said Saudi Arabia's post-pandemic economic recovery was gaining momentum, driven by eased travel restrictions and improved visa processing.
The changes have boosted the hospitality sector, with streamlined online visa applications improving tourist access and fueling a resurgence in travel and tourism.
This comes as the Kingdom rose to third place in the 2023 edition of the Global Retail Development Index, a semi-annual survey by US consultancy Kearney, due to an increase in non-cash transactions from 16 per cent in 2016 to 62 per cent in 2022.
Saudi Arabia is actively promoting its real estate sector through several strategic initiatives. The Kingdom is focused on developing mega projects such as NEOM, a $500 billion smart city, and the Red Sea Project, which aims to transform the tourism landscape.
The Deloitte report said the construction industry's contribution to the country's gross domestic product is expected to reach $37.4 billion this year, up from $35.2 billion last year.
In 2023, transaction volumes in the residential real estate market decreased, even as sales prices for villas and apartments increased.
Deloitte's review suggests that despite the slowdown in transaction activity, the increased prices reflect continued demand for residential properties in key urban areas.
This trend poses potential challenges to affordability but also signals confidence in the property market's long-term prospects.
“Residential preferences are shifting towards homes that accommodate remote work by integrating wellness-centric features,” the report said, adding: “At the same time, the retail and hospitality industries are adapting to changing consumer behaviors, with a focus on e-commerce and experiential spaces.”
Deloitte further highlighted that the office sector in Saudi Arabia has benefited from growth in financial and business services, with employment in these segments increasing by 4 percent year-on-year to 2023, according to UK independent economic advisory firm Oxford Economics.
“In the post-COVID-19 real estate landscape, key trends include sustainability and technology integration. Demand for flexible workspace is increasing, leading developers to develop office designs tailored for hybrid work models,” the report said.
The industrial and logistics sectors are poised for significant growth, fueled by the introduction of four special economic zones by 2023, the report said.
These include King Abdullah Economic City, Jazan, Ras Al-Khair and Cloud Computing in King Abdulaziz City for Science and Technology.
These zones are designed to create opportunities for sustainable business development, attract foreign investment and strengthen Saudi Arabia's position as a logistics hub. The SEZs are expected to stimulate economic activity and contribute to the Kingdom's diversification strategy.
