UAE mandates private firms to reserve board seats for women
UAE mandates private firms to reserve board seats for women/node/2571883/business-economy
UAE mandates private firms to reserve board seats for women
The UAE also leads the world in women’s parliamentary representation, with women occupying 50 percent of positions in the Federal National Council. Reuters/File
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Updated 18 September 2024
MOHAMMED AL-KINANI
UAE mandates private firms to reserve board seats for women
Updated 18 September 2024
MOHAMMED AL-KINANI
JEDDAH: The UAE has mandated private joint-stock companies to reserve at least one board seat for women, reinforcing the nation’s commitment to gender equality in leadership.
The Ministry of Economy issued this new directive, which will take effect once the current board terms expire, aligning with the Gulf state’s goal of enhancing global competitiveness. This initiative highlights the leadership’s dedication to empowering women and advancing sustainable development goals.
The ministerial resolution, which regulates the governance and operations of private joint-stock companies, builds on a similar mandate introduced for public joint-stock firms in 2021. This earlier measure has yielded positive results by improving institutional performance and economic outcomes.
The UN Development Program recently announced that the UAE has climbed to 7th place in the 2024 Gender Inequality Index, a significant rise from 49th in 2015 and 11th in 2022. This announcement was made during the 68th session of the Commission on the Status of Women in New York.
In 2015, the Gulf country established its Gender Equality Council, a federal entity tasked with developing and implementing the gender equality agenda. The council aims to close the gender gap across all government sectors, positioning the UAE as a global model for equality.
The UAE also leads the world in women’s parliamentary representation, with women occupying 50 percent of positions in the Federal National Council. Additionally, women are highly represented in the labor market, specialized professions, and emerging fields, according to the UAE government portal.
Minister of Economy Abdullah bin Touq Al-Marri emphasized that, under the guidance of the UAE’s leadership, the country is committed to enhancing women’s contributions across various fields, particularly in economic development.
“The decision will reinforce the UAE’s vision to enhance gender balance, empowering women in the business sector and increasing their presence in leadership and decision-making roles,” he was quoted as saying by the UAE’s official news agency.
The minister added that the initiative will further strengthen the Gulf nation’s global competitiveness and its position as a leader in gender equality.
Al-Marri pointed out that women in the UAE have consistently demonstrated their capabilities over the past decades, making significant contributions to the business, financial, and investment sectors.
“Today, they are indispensable partners in economic growth and vital to the UAE’s global competitiveness. This decision will bring added value to private joint-stock companies, enhancing their institutional performance by drawing on the insights and experiences of successful businesswomen in the country,” he said.
He expressed his deep gratitude to Sheikha Manal bint Mohammed bin Rashid Al-Maktoum, president of the UAE Gender Balance Council, for her efforts to enhance women’s participation in the economy.
Mona Ghanem Al-Marri, vice president of the council, emphasized the strategic collaboration between the Ministry of Economy and the council, noting that the ministry’s decision will significantly advance gender balance.
She added that the decision reflects the productive partnership between the ministry and the council, underscoring the country’s unwavering commitment to empowering women economically and increasing their participation in the workforce.
The Ministry of Economy announced that the implementation of this decision will commence in January 2025 and urged relevant companies to integrate this requirement into their future board restructuring plans.
Ƶ’s industrial production holds steady in September: GASTAT
The manufacture of chemicals and chemical products grew by 2 percent, while food product manufacturing saw a 12.3 percent increase
GASTAT revealed that the sub-index for mining and quarrying activity remained stable in September
Updated 20 sec ago
Nirmal Narayanan
RIYADH: Ƶ’s industrial production held steady in September, showing a slight year-on-year decrease of 0.3 percent due to a modest decline in manufacturing output, official data showed.
According to data from the General Authority for Statistics, the Kingdom’s manufacturing sector decreased by 0.5 percent in September, bringing the Industrial Production Index to 105.6 points. This decrease was largely attributed to a 12.3 percent drop in the production of coke and refined petroleum products.
In contrast, the manufacture of chemicals and chemical products grew by 2 percent, while food product manufacturing saw a 12.3 percent increase.
Ƶ’s growth in the manufacturing sector is crucial to achieving the goals outlined in Vision 2030, as the Kingdom continues to diversify its economy and reduce its dependence on crude revenues.
GASTAT revealed that the sub-index for mining and quarrying activity remained stable in September compared to the same month in 2023.
“Oil production level in Ƶ reached 8.97 million barrels per day in September 2024, which is the same level recorded in the previous year,” said GASTAT.
In a bid to maintain market stability, Ƶ, in alignment with the decision of OPEC+, reduced its oil output by 500,000 barrels per day in April 2023. This cut has now been extended until December 2024.
IPI is an economic indicator that reflects the relative changes in the volume of industrial output and is calculated based on the industrial production survey.
According to the report, the sub-index for electricity, gas, steam, and air conditioning supply activity recorded a 4.9 percent annual decrease in September, while the sub-index for water supply, sewerage, and waste management activities increased by 2.5 percent during the same period.
The authority revealed that the index for oil activities decreased by 2.5 percent in September compared to the same month the previous year.
On a positive note, the index for non-oil activities increased by 5 percent year on year in September, supported by growth in all non-oil economic activities except for electricity, gas, steam, and air conditioning supply.
Compared to August, Ƶ’s IPI decreased by 1.2 percent.
The Kingdom’s sub-index for mining and quarrying activity decreased by 0.2 percent in September compared to the previous month, while manufacturing activities saw a decline of 2.6 percent.
Month-on-month, the index for oil activities decreased by 1.6 percent, and the index for non-oil activities declined by 0.3 percent.
Saudi startup boom creates ‘entrepreneurial bridge’ with Egypt
Updated 09 November 2024
Nour El-Shaeri
RIYADH: Ƶ’s thriving startup ecosystem has created an entrepreneurial bridge with neighboring countries, attracting a growing number of founders to the nation.
This trend is particularly pronounced among Egyptian tech entrepreneurs, drawn by market potential, government initiatives, and abundant funding opportunities.
The Saudi market, characterized by its large size and high consumer purchasing power, presents lucrative opportunities for tech startups.
Additionally, Vision 2030 and various entrepreneurship support programs have fostered a stimulating environment for innovation.
“Ƶ’s government initiatives and funding opportunities are major attractors for Egyptian tech entrepreneurs,” Motaz Abuonq, CEO and founder of Value Makers Studio, told Arab News.
VMS is a Saudi-based venture studio that supports Egyptian and regional startups with funding opportunities and consulting to boost their entry into the Kingdom.
The entrepreneurial bridge
Abuonq explained that Egyptian entrepreneurs benefit from Ƶ’s advanced infrastructure, simplified regulations, and substantial financial backing from entities such as Saudi Venture Capital Co. These resources provide a robust foundation for startup growth.
“The regulatory environment is being streamlined to attract foreign investment, making it easier for businesses to establish and operate,” Abuonq added.
Motaz Abuonq, CEO and founder of Value Makers Studio. (Supplied)
Extensive funding opportunities are available from both private and public sectors, with many investors leaning toward innovative tech solutions, he added.
Saudi entrepreneurs find Egypt appealing due to its skilled workforce, cost efficiency, and strategic location, Abuonq explained.
Egypt’s position as a gateway to African and Middle Eastern markets and its thriving entrepreneurial community in Cairo enhances its attractiveness.
“Egypt offers a large pool of educated tech professionals and relatively lower operating costs, which are significant advantages for Saudi startups,” noted Abuonq.
Mohammed Al-Zubi, founder and managing partner of Saudi-based VC Nama Ventures, echoed Abuonq’s sentiment about Egypt’s large talent.
In an interview with Arab News, Al-Zubi explains that Nama is interested in investing in Egyptian startups due to the size of the market and the vast talent pool.
Mohammed Al-Zubi, founder and managing partner of Saudi-based VC Nama Ventures. (Supplied)
“Egypt is the biggest country in the Arab world in terms of population, and Egyptians are leaders in terms of tech talent and their price per value factor,” he said.
Abuonq further explained that the advanced entrepreneurial community in Cairo, with numerous incubators and accelerators, supports startups and fosters a collaborative environment.
“Cultural and historical ties, including a shared language and similar customs, further ease business operations and collaboration between the two countries,” he added.
Abuonq explained that despite many similarities, the two nations also share differences.
“Ƶ’s decision-making process tends to be more conservative and time-consuming due to multiple approval layers, while Egypt’s regulatory environment, although stable, includes bureaucratic challenges,” Abuonq stated.
“Ƶ is reforming its business laws to attract foreign investment, but navigating these changes can be complex,” he added.
Conversely, Egypt’s regulatory environment may be more stable, but it will also face bureaucratic hurdles.
Intellectual property protection is another differentiator, with Ƶ enhancing its laws under Vision 2030, providing better safeguards for technological innovations compared to Egypt, Abuonq explained.
Nama Ventures has successfully navigated the cultural and regulatory differences between the two countries, facilitating seamless investments in Egyptian startups.
“In terms of Nama, we have been able to seamlessly invest in Egyptian startups just as we do with Saudi startups, in terms of investing using standard investment instruments at the holding level and then having these holding companies own the operating companies in Egypt almost 100 percent,” Al-Zubi said.
Glowing case studies
Success stories exemplify the potential for cross-border entrepreneurship.
“Egyptian startup EYouth has become a notable educational partner for Saudi institutions, while Saudi companies like Mrsool and Foodics have successfully penetrated the Egyptian market, capturing significant market shares and becoming well-known brands,” Abuonq said.
These examples highlight the unique opportunities each market offers. In Ƶ, large projects such as NEOM and Red Sea Global create avenues for AI, renewable energy, and smart city solutions, he added.
Egypt, with its youthful population and numerous innovation hubs, is a fertile ground for new technologies.
“A large segment of young people in Egypt are ready to adopt new technologies, and numerous innovation centers and business incubators support startup growth,” Abuonq said.
Success stories, such as Egyptian last-mile company ShipBlu, demonstrate the potential for cross-border entrepreneurship. Al-Zubi highlighted ShipBlu as an example of a great bet by Nama Ventures, attributing its success to the complementary nature of its leadership team.
Several startups have announced plans to expand to the Saudi market this year with the latest being Egypt’s e-commerce marketplace Kemitt.
In February, Egyptian fintech Khazna also announced its plans to enter the Saudi market through a partnership with Khwarizmi Ventures.
Two months later, Egyptian group-buying startup Waffarha secured a seven-figure seed round from VMS, enabling it to initiate its plans to expand to the Saudi market.
Egypt’s artificial intelligence firm Intella has also seen significant growth in the Kingdom, enough to relocate its headquarters to Ƶ.
In an interview with Arab News last year, Nour Taher, CEO of Intella, said that the Kingdom is becoming a hub for tech companies.
“Ƶ is currently our largest market with 70 percent of our business coming from there. We have just taken the decision to relocate our HQ there to better serve our existing clients and further expand our business. We are also inspired and aligned with Ƶ’s Vision 2030,” she said.
Crossing the bridge
To address expansion challenges, thorough market research, regulatory compliance, and cultural adaptation are essential.
Abuonq emphasized the importance of building partnerships and hiring local consultants to navigate regulations.
“Understanding local consumer behavior and adapting business strategies to align with cultural differences are crucial for success,” he advised.
Building partnerships with local companies can facilitate market entry while hiring local legal and business consultants can help navigate regulations and ensure compliance with the law, he explained.
Enhancing partnerships between the Saudi and Egyptian tech ecosystems requires strategic initiatives such as bilateral trade agreements, transnational incubators, and joint ventures, as well as cultural exchange programs and joint innovation platforms.
“Governments and organizations should facilitate cross-border operations and create platforms for startups to collaborate and share technological advancements,” Abuonq suggested.
He added that joint ventures and partnerships between companies from both countries can leverage strengths and market insights, and cultural exchange programs can promote understanding and collaboration among entrepreneurs and tech professionals.
In his experience assisting Egyptian tech entrepreneurs in Ƶ, Abuonq identified regulatory navigation, market adaptation, and cultural sensitivity as primary challenges.
Helping startups understand and comply with complex and evolving regulations in Ƶ is crucial, as is assisting them in adapting their products and services to meet local market needs and consumer behavior.
“Ensuring startups are culturally sensitive and adaptable in their business practices is another significant challenge,” he noted.
For Al-Zubi, fostering stronger partnerships between the Saudi and Egyptian tech sector involves enhancing exposure to each country’s entrepreneurial landscape.
“Any effort that strengthens exposure to each ecosystem’s startups is a positive effort in our opinion,” he stated, aligning with the strategic initiatives suggested by Abuonq.
Addressing the challenges and opportunities in assisting Egyptian startups expanding into Ƶ, Al-Zubi emphasized the importance of a strong foundation.
“I would highly encourage Egyptian startups to scale to Saudi from a position of strength, not weakness,” he advised.
He further stressed the need for these startups to demonstrate success in their native market and ensure that their business models are functioning in a healthy fashion before considering expansion into Ƶ. “It should be a market expansion strategy and not a migration play,” Al-Zubi added.
Preserving the Past, Building the Future: Ƶ’s cultural heritage and business synergy
Updated 09 November 2024
Reem Walid
RIYADH: As Ƶ embarks on an ambitious journey toward a thriving economy, the nation is uniquely positioned to harmonize the conservation of its rich cultural heritage with the development of vibrant business opportunities.
The Kingdom is committed to various initiatives, such as cultural tourism projects and the revival of artisanal craftsmanship, which not only safeguard its diverse cultural tapestry but also drive economic growth.
This approach showcases the symbiotic relationship between tradition and innovation, demonstrating how honoring cultural heritage can foster sustainable development and enhance Ƶ's global influence.
Under the Vision 2030’s Quality of Life Program, the nation is transforming with rapid developments in the cultural sector among others.
This comes as the cultural sector is expected to contribute more than $47.9 billion to the Kingdom’s gross domestic product by 2030.
In the Quality of Life Program 2023 annual report, Saudi Crown Prince Mohammed bin Salman said that the Kingdom is striving to cultivate a deep sense of pride in the nation and actively contribute to global development and progress, across economic, environmental, cultural, and intellectual dimensions.
The report further revealed that in 2023, the Ministry of Culture targeted 108,010 employees in the Saudi cultural sector, but recorded 216,878 workers during the year, reflecting an achievement rate of 201 percent.
The Kingdom also aimed for nine Saudi participants in international cultural events, but actually witnessed 32.
When it comes to the number of cultural events days, Ƶ was targeting 2,093 in 2023 but recorded 3,934 – reflecting an achievement rate of 188 percent.
As for the number of cultural facilities, the Kingdom was aiming for 41 in 2023 but achieved 45.
Cultural tourism’s contribution to economic development
Cultural tourism has been essential in diversifying the Kingdom's economy by boosting local hospitality, retail, and service industries, while also enhancing Ƶ's global standing in cultural diplomacy.
“The revitalization of cultural landmarks such as AlUla, Diriyah, and UNESCO-listed sites has significantly enhanced Ƶ’s international appeal, repositioning the Kingdom as a global destination not only for religious pilgrimage but also for its rich history, arts, and traditions,” Patrick Samaha, partner at Public Sector at Kearney Middle East & Africa told Arab News.
“With 30 million international tourists visiting in 2023, the influx has boosted local businesses in hospitality, retail, and services, generating new jobs, particularly in regions where tourism was previously underdeveloped,” Samaha added.
The Kearney partner went on to add that the Kingdom’s active participation in cultural diplomacy has resulted in stronger global relationships and a growing international appreciation for its rich heritage.
“This is reflected in the government’s significant investment in cultural landmarks, which will further open opportunities for hosting international events, forums, and conferences. Without a doubt, Ƶ is well on its way to becoming a leader in cultural tourism,” he said.
There is no doubt that the Kingdom is working to diversify its economy by attracting visitors to explore its diverse landscape and rich cultural heritage.
Tamer El-Leisi, consulting partner at PwC Middle East told Arab News that the Kingdom has reported the highest growth among G20 countries in 2024, gaining international recognition, fostering cross-cultural understanding as well as enhancing the country's global image as an open and welcoming destination.
“It has also supported the preservation of historical sites and provided income opportunities for local artisans,” he added.
Tamer El-Leisi, consulting partner at PwC Middle East. (Supplied)
The PwC Middle East consulting partner said this work has a “profound impact” on economic growth, enhancing the labor market, and supporting local businesses.
“As cultural tourism grows, so does the demand for professionals in various sectors, such as hospitality, entertainment, and creative arts, which in turn boosts employment and economic growth,” El-Leisi added.
He highlighted that as a result of these efforts, the number of international and domestic tourists exceeded 100 million tourists in 2023, spending more than SR250 billion ($66.6 billion).
“These numbers have even increased during the first quarter of 2024 by 10 percent with an increase of around 17 percent in spending. By 2030, the tourism sector aims to account for over 10 percent of the country’s GDP,” he said.
As Ƶ strives to become a global center for cultural tourism, building international partnerships with other nations, cultural institutions, and global organizations is crucial for success.
Balancing cultural heritage and business growth
The Saudi government has been crucial in safeguarding the Kingdom’s heritage while promoting an economically sustainable sector by supporting the heritage ecosystem, attracting private investment, and developing local talent.
According to Samaha, Ƶ has recognized the importance of preserving its heritage at a time when it is embracing global cultural exchange, which is why heritage plays a central role in its Vision 2030.
“Rightfully so, key government initiatives have focused on boosting the socio-economic impact of heritage and the broader cultural sector, aiming to create a sustainable industry that appeals to younger generations. To achieve this, the Kingdom has developed a robust ecosystem, composed of both government and non-government entities, mandated to unlock the socio-economic potential of the sector and attract private investment,” the Kearney partner said.
He added: “For example, the creation of the Heritage Commission under the Ministry of Culture has enabled heritage sites to become catalysts for economic activity and offers various training programs to develop local talent in the heritage field.
Shahid Khan, partner and global head of Media, Entertainment, Sports, and Culture at management consulting firm Arthur D. Little.
Samaha continued to note that the Royal Institute of Traditional Arts was established to nurture talent in local crafts and generate business opportunities for artists through incubators and apprenticeship programs.
“These are just two examples of the many impactful initiatives being implemented by the Saudi government,” he said.
Undoubtedly, the Kingdom has demonstrated a firm commitment to cultural heritage by employing innovative and forward-thinking strategies to safeguard and preserve it for future generations. Those efforts foster a strong connection between cultural preservation and economic development.
“This is evident in many ways. For instance, the rehabilitation, restoration and promotion of historic sites and cultural attractions is encouraging exploration of cultural sites. Meanwhile, an emphasis on cultural tourism is strengthening national identity, fostering unity and shared purpose among the population,” El-Leisi said.
He stressed that local communities are actively engaging with tourists, not only enriching visitors’ experiences but also supporting community development.
“Furthermore, investing in sustainable tourism practices is ensuring that the country's cultural heritage is preserved for future generations while minimizing the environmental impact of tourism activities. The Saudi government is focusing on responsible tourism, implementing green initiatives, and supporting eco-friendly businesses in the tourism sector,” the PwC partner added.
Preservation cultural heritage to attract investments
The preservation of Ƶ’s cultural heritage plays a key role in attracting investment, fostering sustainable growth, and enhancing the Kingdom’s global standing, aligning with Vision 2030.
“By protecting heritage sites, especially those recognized by UNESCO, Ƶ boosts tourism and diversifies its economy. Traditional crafts and cultural practices also stimulate the creative industries, drawing investment into cultural and luxury sectors,” Shahid Khan, partner and global head of Media, Entertainment, Sports, and Culture at management consulting firm Arthur D. Little, told Arab News.
“Globally, these efforts enhance Ƶ's cultural diplomacy and soft power, strengthening its influence in international affairs. Through these initiatives, the Kingdom builds a sustainable, diversified future while positioning itself as a cultural leader on the world stage,” Khan added.
Ongoing initiatives that effectively blend the preservation of cultural heritage
Ƶ is effectively merging the protection of its cultural heritage with economic growth through important initiatives outlined in Vision 2030.
“AlUla is being transformed into a global tourist destination, preserving ancient tombs and relics while generating jobs and revenue through luxury tourism. Similarly, Diriyah, the historic birthplace of the Saudi state, is undergoing restoration, combining heritage conservation with commercial and luxury developments,” Khan said.
“The Red Sea Project focuses on eco-tourism, safeguarding both natural and cultural heritage while creating employment and diversifying the economy,” he added.
The Arthur D. Little partner went on to note that in Jeddah, the restoration of its UNESCO-listed historic district is boosting tourism through traditional markets and cultural festivals.
“These projects illustrate how Ƶ is harmonizing tradition with modern business opportunities to foster sustainable growth. The region can further draw inspiration from countries like Japan and Morocco, which have successfully promoted their cultural heritage while reaping significant economic benefits from tourism and cultural industries,” Khan said.
Real estate becoming a cornerstone of Ƶ’s economic diversification, experts say
Updated 09 November 2024
MIGUEL HADCHITY
RIYADH: Ƶ’s real estate market has rapidly emerged as a key pillar in the Kingdom’s quest for long-term sustainability and economic growth, benefiting local residents and foreign investors alike, experts have told Arab News.
Under Vision 2030, the Kingdom is reshaping the sector through strategic investments, sweeping reforms, and mega-projects that are not only enhancing the nation’s infrastructure but also creating new opportunities.
A central objective of the initiative is to diversify Ƶ’s economy by developing non-oil sectors, making it more resilient to global market fluctuations.
Real estate, as part of this strategy, is playing an increasingly important role in stimulating growth across the country, with tourism, entertainment, and the hospitality sector all assisting in reshaping the housing and commercial space landscape.
The Saudi government has enacted a series of reforms designed to enhance real estate development and attract private investment.
Key among these is the introduction of the Saudi Real Estate Refinance Co., established in 2017 to provide liquidity to the mortgage market and increase access to financing for homebuyers.
In an interview with Arab News, Sally Menassa, partner at international management consulting firm Arthur D. Little Middle East, said: “The Kingdom’s openness to foreign ownership in real estate, coupled with incentives for international companies, is expected to fuel increased FDI.”
Garvan McCarthy, chief investment officer at consulting firm Mercer, told Arab News the Vision 2030 goal of boosting private sector contributions has led to an increase in real estate activity.
“Reforms in regulations, such as easing foreign ownership restrictions and introducing public-private partnerships, have been undertaken to create a more attractive investment climate,” he added.
Another development is the introduction of the White Land Tax, which imposes a 2.5 percent tax on undeveloped residential land.
This is aimed at increasing the supply of developable areas and encouraging private sector investment in housing projects.
Additionally, government initiatives like Ejar, a rental services app, are enhancing transparency in the rental market and encouraging more investments in the tenancy sector.
Recent investments have been heavily directed toward urban development projects, including modern infrastructure such as roads, airports, and public transportation networks.
These investments are driving up property values in both urban and suburban areas, particularly in newly developed zones that are set to become key economic hubs.
Real estate as a catalyst for homeownership
Another core component of Vision 2030 is the government’s effort to raise homeownership rates among Saudi citizens to 70 percent by 2030.
In pursuit of this goal, Ƶ has launched several initiatives aimed at providing affordable housing solutions and easing access to financing.
The Sakani program aims to make homeownership more attainable for Saudi families by providing financial support, facilitating loans, and subsidizing housing.
This initiative has significantly reduced barriers to homeownership, stimulating residential real estate development.
The residential real estate sector has been growing at a 4.5 percent compound annual growth rate since 2017, with projections indicating it will double by 2028, reaching SR51 billion ($13.5 billion), according to Menassa.
McCarthy added: “Since the introduction of these reforms, homeownership in Ƶ has seen a substantial increase, driven by both governmental support and private sector development.”
The percentage of homeownership has exceeded 63 percent, up from 47 percent in 2016, reflecting the effectiveness of the Sakani program and other related initiatives.
Mega projects shaping the future of real estate
Several landmark real estate projects have become symbols of Vision 2030’s far-reaching impact. These projects are not only reshaping Ƶ’s urban landscape but also positioning the Kingdom as a significant player in the global real estate market.
NEOM
Located in northwestern Ƶ, NEOM is one of the most ambitious projects under Vision 2030. This multi-billion-dollar smart city aims to be a global hub for technology, sustainability, and innovation and provides opportunities for real estate development.
Menassa described NEOM as a “key aspect of this real estate transformation,” noting its role in the broader Vision 2030 agenda.
She pointed out that the development will incorporate smart city technologies, with a focus on industries such as energy, water, and biotechnology, as well as food, advanced manufacturing, and entertainment.
This forward-thinking approach is expected to attract both domestic and international real estate investors looking to capitalize on NEOM’s innovative urban vision.
Qiddiya
Qiddiya, another flagship project under Vision 2030, is positioned to become a global destination for entertainment, sports, and the arts. Situated near Riyadh, this expansive development will feature theme parks, concert venues, sports arenas, and cultural institutions.
The project’s focus on entertainment and tourism is expected to drive significant residential and commercial real estate development in the surrounding areas.
McCarthy added that Qiddiya is poised to transform the region into a vibrant entertainment capital, drawing millions of visitors annually and offering extensive opportunities for investors in hotels, commercial spaces, and residential properties.
The Red Sea
The Red Sea Project is one of the world’s most ambitious tourism initiatives, aiming to develop a luxury tourism destination along Ƶ’s Red Sea coastline. Covering 28,000 sq. km, the project will include 50 hotels, 1,000 residential properties, and a host of leisure facilities.
Menassa pointed out that the project involves “developing real estate in the form of boutique hotels, museums, and cultural venues that enhance visitor experiences while respecting and preserving historical significance.”
This high-end tourism hub is expected to drive growth in the luxury residential and hospitality sectors, contributing significantly to Ƶ’s tourism and real estate markets.
The future of Saudi real estate
As Ƶ moves toward becoming a more diversified and sustainable economy, the real estate sector will continue to play a critical role in this transformation.
According to a report by King Abdullah Petroleum Studies and Research Center, Ƶ’s economic diversification will lead to an increase in high-value industries such as advanced manufacturing, pharmaceuticals, and renewable energy, all of which will drive further demand for commercial real estate.
Menassa observed that the Kingdom’s commercial real estate market size is estimated to grow “at a strong CAGR of around 8.6 percent to 2028.”
McCarthy added: “As Ƶ diversifies into advanced manufacturing, renewable energy, and pharmaceuticals, commercial real estate should benefit from the demand for specialized facilities.”
Moreover, as sectors such as tourism, entertainment, and retail flourish under Vision 2030, demand for hospitality and retail spaces is expected to rise substantially.
The ongoing transformation is positioning Ƶ as a key player in the global real estate and tourism industries, with Riyadh at the heart of its ambitious vision.
Saudi bank loans reach highest growth rate in 19 months, surpassing $761bn
Updated 08 November 2024
Dayan Abou Tine
RIYADH: Saudi bank loans reached SR2.85 trillion ($760.84 billion) in September, representing an annual growth rate of 12.16 percent — the highest in 19 months, according to recent data.
Figures from the Saudi Central Bank, also known as SAMA, showed that corporate lending dominated the sector, making up around 53.5 percent, with individual loans comprising the remaining figure.
The former category grew by 15.75 percent, outpacing the 8.3 percent annual growth in personal loans, underscoring the increasing demand for business financing across key sectors.
Real estate activities led corporate lending, accounting for 20.37 percent of all business loans and growing by 28.63 percent to reach SR310.83 billion.
The wholesale and retail trade sector followed, constituting 13.07 percent of these loans, with SR199.45 billion in financing. Lending to manufacturing came third, making up 11.78 percent, totaling SR179.83 billion.
Loans to the electricity, gas, and water supply sectors accounted for 11.25 percent of total lending, amounting to SR171.62 billion. This category experienced a growth rate of 29.35 percent.
While professional, scientific, and technical activities represented a small portion of total corporate loans at just 0.63 percent, they posted the highest annual growth rate of 79.6 percent, amounting to SR9.69 billion.
In September, Saudi banks’ loans-to-deposits ratio slightly declined to 79.66 percent, down from 79.71 percent in the same month of 2023, as per data from the SAMA.
The calculation includes loans minus provisions and commissions, providing a clearer view of actual lending capacity.
SAMA has set a regulatory limit of 90 percent for loans-to-deposits ratios, balancing banks’ lending capacity with liquidity stability while supporting economic growth through corporate and individual borrowing.
Compared to other GCC nations, such as the UAE where loans-to-deposits ratios can exceed 100 percent, SAMA’s cap reflects a more cautious approach, prioritizing liquidity stability in the banking sector.
Corporate real estate lending in Ƶ has surged as banks align with Vision 2030’s targets for urban expansion, economic diversification, and investment attraction.
This focus on real estate as the largest component of corporate lending is supported by robust demand for infrastructure, from commercial and residential developments to giga-projects like NEOM and the Red Sea.
Riyadh is a key beneficiary, attracting regional and international companies, which has increased the need for high-quality office spaces.
The office market in the Saudi capital has seen a boost from the Regional Headquarters Program, drawing numerous global companies seeking a central base in the Middle East.
The government’s recent regulatory advancements are also pivotal in driving this lending trend. With improved transparency and a structured land registry, investors and developers now have greater confidence in the market.
The General Authority for Statistics recently reported a 2.6 percent annual rise in the real estate price index in the third quarter of this year, highlighting demand for residential and commercial spaces.
Major cities like Jeddah and Riyadh have seen considerable price increases in both land and building categories, driven by strong demand across residential, office, and mixed-use spaces.
The Real Estate General Authority anticipates that Ƶ’s property market, one of the Middle East’s fastest-growing sectors, will reach a market volume of $69.51 billion in 2024 and $101.62 billion by 2029, with a projected compound annual growth rate of 8 percent.
Catalyzing growth in sectors under Vision 2030
Ƶ’s scientific, professional, and technical services sector is driven by a rapid expansion of research, development, and innovation.
The launch of the Saudi Minds Platform by the Research, Development, and Innovation Authority in October is playing a key role in this shift.
This platform creates an advanced digital environment to support the RDI ecosystem, providing resources to researchers, innovators, and institutions.
By promoting knowledge exchange, international collaboration, and access to funding, the platform fosters a thriving scientific landscape, which, in turn, stimulates demand for financial services, driving lending growth in this sector.
As Ƶ intensifies its efforts toward Vision 2030, investments in innovation and technology are expected to continue to fuel further growth in the RDI-driven economic landscape.
