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Looking for a silver lining in this mess we euphemistically call an economic slowdown?
Try Saudi Arabia. If there ever was a country that can survive the global crisis without so much as a bruise or paper cut, the Land of the Two Holy Mosques can pull it off.
A couple of weeks ago the real estate investment and advisory firm Jones Lang LaSalle came out with a report that is hardly surprising to anyone in the construction industry.
In its report, “The Gulf’s Powerhouse – Saudi Arabia’s Real Estate Market,” Saudi Arabia was identified as perhaps the best country in the Middle East for investors to plant money in hotels, commercial space and residential projects.
Describing the Kingdom as a “powerhouse” in times of a weakening global economy, Saudi Arabia has positioned itself to become the primary driver in the region.
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Part of the reason is demographics. An estimated 45% of the Saudi population is under the age of 20 with an increasing desire to live in an urban environment. The late 1970s witnessed a tremendous migration of people from the rural areas to Jeddah, Dammam and Riyadh. The surge of young people seeking an urban lifestyle has rivalled the previous generation’s migration if not exceeding it. Now, more than ever, there is a demand for quality infrastructure and housing.
The other, and equally important, aspect of Saudi Arabia’s stature in the region (other than oil revenues) is King Abdullah’s desire to leave a legacy that firmly plants the Kingdom as a major international player, not only in developing the region, but also in science and technology.
There were some early predictions that the current financial crisis would threaten the Saudi government’s six planned economic cities and the King Abdullah University of Science and Technology campus.
Contrary to those early gloomy reports, Saudi Arabia is moving along on schedule. For the first time in its existence, the country is committing major financial resources to infrastructure, which has long been its major failing in the urban areas.
A few years ago, Saudi Arabia made tentative steps to develop a tourism industry, but focused its energies on drawing Muslims worldwide and creating a domestic tourism programme to encourage Saudis to travel in their own country. But in the past year, the Saudi government recognised the wisdom that foreign tourism dollars in the regions of Asir, Makkah, Riaydh, Jizan and Najran – not typically tourist destinations – could build local economies without being dependent on oil revenues. And much of that tourism cash will come from non-Muslim Europeans and Americans. Just last week, nearly 40 American tourists visited Jeddah on tourist visas, travel documents which were unavailable to most of the world’s population just a year ago.
The country’s leaders are ready, and certainly financially able, to rid the shackles of its perceived Third World status. Given the fact that investors still have money to invest it might be that Saudi Arabia is the country that will keep the region afloat during these difficult times.
There is no such thing as a sure thing. But Saudi Arabia may be the closet thing to it.
Rob Wagner is the editor of Construction Week
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