Saudi Arabia's Spark to drive office real estate demand in Dammam
JLL: Aramco project launched in Dec 2018 by Crown Prince to buoy industrial, office property in Dammam Metropolitan Area
The industrial and office market of Saudi Arabia’s Dammam Metropolitan Area (DMA) will note significant growth on the back of the December 2018 launch of King Salman Energy Park (Spark), which Saudi Aramco is backing.
Spark will function as a hub for companies in the general manufacturing, liquids and chemicals, metal formation, and industrial sectors. Phase 1 of Spark is due to complete in 2021.
Under its Vision 2030 economic diversification mandate, Saudi Arabia plans create new revenue streams to reduce its reliance on oil revenues. Spark is expected to contribute $6bn (SAR22bn) to the GCC country's GDP by 2035.
DMA developments are expected to bolster foreign investment in Saudi Arabia, which stood at $3.5bn (SAR13bn) in 2018 – a figure that was 110% higher than corresponding 2017 numbers, according to a Reuters report from December 2018.
Saudi Arabia’s unemployment rate hit 12.9% last year, according to the Reuters article, and the country expects to bring down the number by creating more job opportunities for locals through its Saudisation programme.
Spark, which was unveiled by Saudi Arabia's Crown Prince HRH Mohammed Bin Salman on 10 December, 2018, will create 100,000 direct and indirect jobs in the kingdom.
Commenting on the impact that Spark and similar megaprojects will have on Saudi Arabia's real estate market, JLL Mena associate, Dana Salbak, said: “Megaprojects of this scale are shaping the future performance of Saudi Arabia’s overall real estate market, driving non-oil economic growth as part of Vision 2030.
"The development of the new energy park is a major step towards increasing economic contribution from different sectors in the industrial and logistics hub of the kingdom.”
According to JLL’s The KSA Real Estate Market: A Year in Review 2018 report, the country's rental market will face pressure over the next two years as units spanning a gross leasable area of 80,000m2 are delivered during the period.
However, as Salbak pointed out, the commercial real estate sector would continue to benefit from the "large-scale investments" being made within DMA.
She added: "While rents remained under pressure in 2018 because of limited occupier demand, this is expected to change in the long-term on the back of Vision 2030 and the government’s commitment to expanding key industrial sectors.”