We’ve all heard of Vision 2030 and the transformation that is happening in the Kingdom of Saudi Arabia but what do you need to know to be successful in the Saudi marketplace.
Firstly, the transformation is real and Vision 2030 has already proved to be a vehicle for dramatic change in the Kingdom, breaking down economic, social, regulatory and cultural barriers. The ambitious and progressive reform agenda in the Kingdom seeks to diversify the economy away from oil and to create and sustain jobs for Saudi citizens.
Saudi Arabia’s Vision 2030 has resulted in close to USD1 trillion of real estate and infrastructure projects being announced across Saudi Arabia since 2016. The government is also targeting to attract 100 million annual visitors. Not surprisingly nearly USD300 billion of the total spend is dedicated to new infrastructure, including vast new passenger rail networks and a brand-new airport for Riyadh (USD147 billion), which is expected to be the home base for a new national airline.
In terms of real estate, a total of eight new cities are planned, mostly on the country’s western seaboard, along the Red Sea coast, where nearly USD575 billion is being spent to deliver over 1.3 million new homes, more than three million sq m of world-class offices and over 100,000 hotel rooms.
Riyadh is to be reinforced as the commercial centre of the Kingdom, with more than 100,000 new homes expected by the end of 2023, along with over 12,000 hotel rooms and close to three million sq m of new office space across mega projects worth an estimated USD63 billion.
The most iconic giga-projects announced as part of the Vision 2030 include NEOM Smart City, Red Sea Resort Project, Qiddiya Entertainment City and Amaala Red Sea Riviera:
- NEOM Smart City – A USD500 billion mega-city located on the north-western edge of Saudi Arabia, it aims to become an international hub for a wide range of sectors and services including food, energy, water, environmental protection, urban living, and health and wellbeing. The project is seeking to become a living laboratory, a hub for innovation and a leading sustainable ecosystem for living and working. It stands to become the home and workplace for more than one million people and is expected to attract up to five million visitors annually, playing a key role in the Kingdom’s leisure tourism industry. Its contribution to the country’s GDP is projected to reach more than USD100 billion by 2030. The project broke ground in 2019, with the commencement of phase 1 of the NEOM city development. Completion is scheduled for 2030, but with a 26,500-sq-km site and 450 km of coastline, growth and development of the area is expected to continue well beyond then.
- Amaala Red Sea Riviera – Located on the north-western coast of the Red Sea, Amaala is an ultra-luxury tourism project. The development will cover an area of 3,300 sq km and serve as a resort and wellness destination with its own airport. It will consist of 2,500 luxury hotel rooms, 700 residential villas, an equestrian club and four yacht marinas. By 2030 it is expected to contribute 0.6% to GDP. Phase 1 of the development commenced in 2019 and the entire project is scheduled to be completed in 2028.
- Qiddiya Entertainment City – Located in south-west Riyadh, Qiddiya will be the world’s largest entertainment city, three times the size of the Walt Disney World Resort in Florida. The 334 sq km site will include over 300 recreational and educational facilities, including a 20,000-seat clifftop stadium, a Formula One racetrack, a Six Flags theme park, golf courses and cinemas. The development will offer experiences under five themes: parks and attractions; sports and wellness; motion and mobility; art and culture; and nature and environment. It has targeted attracting 14.5 million visitors per year and contributing SAR17 billion (USD4.5 billion) to the country’s GDP by 2030.
- Red Sea Resort Project – A luxury tourism venture being developed on 200 km of virtually untouched coastline on the west of the Kingdom. The site comprises nine islands surrounded by a vast desert landscape and mountains. It will include 50 new hotels with approximately 8,000 rooms, a new international airport, and a town for the 35,000 inhabitants who will eventually live and work there. It aims to decisively position Saudi Arabia on the global tourism map. The project aims to create 70,000 new jobs and contribute SAR22 billion per year to the economy. It will likely be a special economic zone as well, with its own rules and regulations. The first phase – which is to include 14 hotels with 3,000 rooms across five natural islands and two inland sites – is expected to be completed in 2022, while full completion is scheduled for 2030-35.
These are just some of the headline-grabbing projects that many will have heard about already. There are, of course, others in adjacent sectors such as renewable energy, transport and logistics as well as sectors such as healthcare, education and training. Indeed, the drive to develop and expand human capital in the Kingdom is critical to meet the objective of employing more Saudi Nationals.
Existing projects under construction include King Abdullah Financial District (KAFD) (USD10 billion), Riyadh Metro (USD22.5 billion), King Abdullah Economic City (USD100 billion), Diriyah Gate cultural and lifestyle hub (USD16 billion), Jeddah Tower (USD1.2 billion), Haramain High Speed Railway (USD16 billion), King Abdulaziz Airport Expansion (USD3.8 billion), Grand Mosque – Holy Haram Mosque Expansion (USD21.3 billion), Dahiyat Al Fursan New City (USD20 billion) and Marjan & Berri Oil Field (USD18 billion).
So where do you start? It can be a bit overwhelming as the scale of everything in Saudi, from the number of opportunities to the size of the Kingdom, not to mention the 35 million population, is so much greater than other markets in the Gulf.
Here are four key tips to entering or expanding in the Saudi market:
- The ‘fly-in / fly-out’ days are over, and you may well need to register an entity in Saudi. To complete registration, you’ll need an office and to employ at least one Saudi National.
- Take care if you opt to appoint a partner for Saudi; engaging on the right terms with clearly defined roles, responsibilities and your termination / exit rights is crucial.
- The regulatory environment is not a ‘cut and paste’ from other jurisdictions, you must understand your local liabilities and obligations.
- Embrace ‘Saudi-isation’ and the drive to employ Saudi nationals.
- Above all seeking local, informed advice from experts on the ground is the key to success in Saudi.