Is KSA the land of opportunity?

The US $50 billion King Abdullah Economic City is under-construction 100km from Jeddah.
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With a series of five year development plans fuelled by huge petrochemical investments, is the time right for the construction industry to begin focusing on Saudi Arabia?

In the Kingdom of Saudi Arabia, it is no less about the “O” word today, than it has been since the discovery of its vast oil reserves 60 years ago – the “O” word being opportunity.

So in the midst of a worldwide recession, what is it about Saudi Arabia that allows opportunity to flourish despite the financial gloom elsewhere?

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Bahrain-based Arcapita investment director and Victory Heights general manager Yasser Abdulla is familiar with the concept of opportunity.

Through Arcapita he has embarked on a number of ventures across the GCC establishing one-off JVs to develop specific real estate projects. Abdulla told Construction Week that Saudi Arabia is the place to be.

“We see much potential for growth in Saudi Arabia, where the demographic creates a good demand for real estate,” Abdulla said. “It’s a natural market that will be there for the long term.”

Demographics
Cityscape Saudi Arabia event director Deep Marwaha said last week that the market for residential development will design, plan and build more than a million homes over the next five years across the country to meet the needs of its populace.

“With a population of 25 million people growing at 2.5% a year, Saudi Arabia is set to double its population in 28 years,” he said. “Forty per cent of Saudi nationals are under the age of 20 and 70% under 30, and 65% of families currently don’t own a home.”

This growing population is a product of the booming wealth of the country, which is fuelled by petrochemical exports. According to US state department Bureau of Public Affairs, oil accounts for “more than 90% of the country’s exports and nearly 75% of government revenues.” Further, the bureau states, “proven reserves are estimated to about one quarter of world reserves.”

As a result of petrodollars and high per-capita GDP the population of Saudi Arabia began to boom in the 70s, which has resulted in today’s youthful demographic, most of whom will one day require a home, hence the construction potential.

Education
Opportunities also abound due to the developmental policies of the government of Saudi Arabia. A series of five year plans have been in place since 1970. The current plan, which covers 2005-2010, has a focus on economic diversification, education and the inclusion of women in society.