The Strategist

Saudi Arabia bets on industrial real estate

03/26/2019 - 16:30

The kingdom’s spending on development of logistics, mining and energy sectors amount to 100 billion riyals. As a result, it is assumed that in Saudi Arabia will increase demand for industrial real estate in the kingdom, states CBRE report.

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There are several projects in the country that will attract investors and users. These include Tharwat Logistics City north of Riyadh, and Asfan Smart Industrial City 2 with an area of 5 million square meters in Jeddah. The report also refers to the Riyadh Integrated Logistics Bonded Zone near the King’s Khalid International Airport, as well as the King Salman Energy Park, which should help the kingdom become a global energy center.

"Saudi Arabia has everything to become a world-class logistics center," said Simon Townsend, KSA general manager and head of strategic consulting at CBRE. The kingdom is helped by a favorable geographic location among the Persian Gulf countries. In addition, it is located on the Asia-Europe trade route, which creates excellent opportunities for foreign investors who want to enter the Saudi market."

In January, Saudi Arabia announced its National Industrial Development and Logistics Program (NIDLP). This large-scale strategy aims to spend 100 billion riyals and help the country reduce its dependence on oil revenues in 2019 and 2020.

The program involves implementation of 42 initiatives aimed at stimulating development in the field of mining, logistics and energy. As part of these actions, it is planned to create 1.6 million jobs and attract investments of up to 1.6 trillion riyals by 2030. All of this is part of the Vision-2030 economic diversification program. The CBRE report says that numerous government initiatives within the framework of the NIDLP, including creation of logistics zones with investment opportunities in the amount of 7 billion riyals, "will support demand for industrial and logistics real estate in the kingdom."

At the same time, the need for alternative industrial products will grow against the background of the growth of regional e-commerce. And new technologies, such as cars with automatic control, robotics, automation and artificial intelligence, will form new needs among the population.

According to the CBRE report, the area of key industrial zones in Riyadh reaches 70 million square meters. These include the Riyadh Industrial City 2, the As Sulay Industrial Area and the Al Mishal Industrial Area. The areas of Jeddah and Damman are 65 million square meters and 28 million square meters, respectively.


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