Saudi Arabia’s real estate to grow by 2030 with $1trln investment; S&P

By Arya M Nair, Intern Reporter
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The Kingdom of Saudi Arabia (KSA) will see sustained property market growth, fuelled by Vision 2030 and the Iskan program, with $1 trillion invested in real estate and infrastructure projects, said top rating agency S&P Global Ratings. 

By the end of 2030, there will be more than 1.3 million new homes in at least eight new cities, most of which will be located around the Red Sea coast. Additionally, many projects are planned for existing major cities. By 2030, Riyadh’s population is expected to increase to over 15 million from around 8 million, with the ambitious goal of being one of the ten largest cities in the world, by 2018 estimates.

Saudi Arabia’s retail property market has a lot of long-term growth potential. Real estate will gain from various new programs to provide local housing and invigorate the business and financial sectors via investments in commercial real estate, S&P said.

Winning sectors

Looking at sectors that stand to win from Saudi Arabia’s Vision 2030 S&P said energy, real estate, transport, tourism, health care, and digital infrastructure will see meteoric growth.

“It will fall to the debt capital markets to support a large portion of these new opportunities, as the government and the banking sector alone will not be able to meet all the required funding needs. We do not anticipate taking any immediate rating actions on Saudi corporate entities, even as they carve out significant CAPEX budgets over the next two-to-five years, because of their healthy balance sheets and strong liquidity,” said S&P. 

Utilities sector

Utilities face the mammoth task of reducing Saudi Arabia’s fossil fuel dependency and meeting 70 percent of energy needs from renewables by 2030. “We expect more public-private partnerships (PPPs) and significant investments in the country’s grids,” S&P said.

By 2030, Saudi Arabia targets to generate half its power via green assets and the other half from gas. To rapidly decrease its reliance on fossil fuels, the government has initiated the early decommissioning of some oil-fired power and water plants.

Seawater reverse osmosis installed capacity is expected to increase by more than five million cubic meters per day by 2026. Saudi Arabia is also working on becoming a major supplier of hydrogen worldwide to diversify away from oil exports.

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