RIYADH: Saudi Arabia's retail real estate sales are expected to grow from 2.4 percent in 2024 to 2.7 percent by 2027 to reach $183.2 billion due to modernization and urban development.
In its latest Saudi Arabia real estate forecast release, global consultancy firm Deloitte, citing the Economist Intelligence Unit, revealed that retail sales will reach $142.7 billion in 2022.
The 10th Annual Forecast Report, which assessed the Kingdom's real estate market in 2023 and projected trends in various sectors to 2024, said Saudi Arabia's post-pandemic economic recovery has accelerated, driven by travel restrictions and improved visa processing.
The changes have boosted the hospitality sector, streamlined online visa applications have increased access to tourists and spurred a revival in travel and tourism.
The state has climbed to third place in the 2023 edition of the Global Retail Development Index, a biennial survey conducted by US consulting firm Kearney, due to an increase in non-cash transactions from 16 percent in 2016 to 62 percent in 2022.
Saudi Arabia is actively advancing its real estate sector through a number of strategic initiatives. The Kingdom is focused on developing mega-projects such as NEOM, a $500 billion smart city, and the Red Sea project, which aim to transform the tourism landscape.
A Deloitte report estimates the construction industry's contribution to the nation's gross domestic product to reach $37.4 billion this year, up from $35.2 billion last year.
In 2023, the residential real estate market saw a decrease in transaction volume, despite an increase in sales prices for villas and apartments.
Deloitte's review shows that despite a slowdown in transaction activity, rising prices reflect continued demand for residential properties in key urban areas.
This trend poses potential challenges for affordability but also indicates confidence in the long-term prospects of the real estate market.
“Residential preferences are shifting toward homes that accommodate remote work by incorporating wellness-focused amenities,” the report said: “Simultaneously, the retail and hospitality sectors are adapting to changing consumer behavior with a focus on e-commerce and experiential spaces.”
Deloitte highlighted that Saudi Arabia's office sector has benefited from growth in financial and business services, with employment in these sectors expanding by 4 percent annually in 2023, according to UK-based independent economic advisory firm Oxford Economics.
“In the post-COVID real estate landscape, key trends include sustainability and technology integration. As demand for flexible workplaces continues to grow, developers are leading the way in innovating office designs suited for hybrid work models,” the report said.
Fuel-based industrial and logistics sectors are poised for substantial growth with the introduction of four special economic zones in 2023, the report said.
These include King Abdulaziz City, Jazan, Ras Al-Khair, and King Abdullah City for Cloud Computing Science and Technology.
These zones are designed to create opportunities for sustainable business development, attract foreign investment and enhance Saudi Arabia's position as a logistics hub. SEZs are expected to spur economic activity and contribute to the state's diversification strategy.
