The demand for Riyadh real estate is heating up — and Sheikh Abdullatif Al Shelash says Saudi Arabia is demonstrating that it is the fastest-growing economy in the world. Property consultancy Knight Frank reports to Al Arabiya that Saudi Arabia’s real estate and infrastructure projects have exceeded $1.1 trillion since 2016.
Within the next eight years, Frank Knight estimates that 555,000 new residential units, more than 275,000 hotel rooms, 4.3 million square meters of retail space, and 6.1 million square meters of office space are expected to be constructed throughout the Kingdom. If the residential expansions that’s happening in Riyadh is any indication of what’s next, Saudi Arabia’s real estate scene is about to explode.
“It’s a growing country,” Sheikh Abdullatif Al Shelash says. “And [it’s] also rising in the economy.”
The property expert advises that as the population is growing, so is the need for residential and commercial real estate. “Middle incomes [are] growing,” Abdullatif Al Shelash says. “Certain changes took place in the last three years, [and] have increased household income almost to double. Female[s] entering the workforce have increased families’ income to a great level. We’re seeing some exits of certain expats. Females who were four or five years ago [staying at home] right now, they’re entering the workforce.”
Al Arabiya reports that in Riyadh, the Saudi capital, real estate projects worth $104 billion have been announced over the past six years and that number is slated to increase. In an Arab News article, global real estate company Jones Lang LaSalle states that Saudi Arabia’s retail sector experienced a surge in the need for retail space after the weakening of COVID-19 restrictions during the first half of 2022.
According to worlddata.info, from 1960 to 2021, the population of Saudi Arabia increased from 4.09 million to 35.34 million, which reflects a growth of 764.8% in 61 years. With the majority of the Kingdom of Saudi Arabia’s population residing in larger cities such as Riyadh, expansion there remains inevitable. CBRE, a commercial real estate service and investment firm, says Saudi Arabia’s GDP is estimated to have grown by 11.8% in the year to Q2 2022 and Saudi Arabia’s GDP is forecast to jump by 7.5% by the end of this year. There has been a dash for commercial warehouse space in Riyadh, with the website The National News reporting that warehouse rents in Riyadh and Jeddah bumped up 22% annually in Q3.
“Government-led incentives to boost domestic production of goods [are] attracting local and international investors, as well as boosting overall activity in this sub-sector,” Faisal Durrani, who is head of Middle East Research at Knight Frank, told thenationalnews.com. “The manufacturing sector is fast emerging as a key pillar in the government’s industrial strategy, now accounting for 8.3% of GDP.”
The Surprising Role Women Are Playing in Saudi Real Estate
Women are also contributing to Saudi Arabia’s real estate boom, thanks to a 2018 reform that has allowed women in Saudi Arabia to drive cars, live alone, work outside the home, and travel without the permission of a male guardian. In another groundbreaking move for Saudi Arabia, more than 73,000 women are now homeowners, due to a government-subsidized real estate fund.
“We’re seeing real estate go through another phase of increases right now,” Abdullatif Al Shelash says.
Abdullatif Al Shelash, who sits on the board of Saudi Home Loans, also says home loans are currently a major commodity.
“Banks are becoming more understanding of the real estate markets,” Abdullatif Al Shelash says. “Previously, if you wanted to purchase or get a mortgage on a home, they will take the assets or the home of no value, when considering the mortgage applications.”
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However, mortgages are still a fairly new financing tool in Saudi Arabia. Mortgages were not legal in Saudi Arabia until 2012 and during that time, bloomberg.com indicated that around $500 billion was being spent to build infrastructure and industry in the kingdom.
As a partner in Alaqtar Real Estate Development Company, Abdullatif Al Shelash is on the front lines of real estate development in Saudi Arabia.
Abdullatif Al Shelash says Alaqtar worked on the Alaqtar Towers, which according to alaqtar.com, will feature “residential areas that exceed 2,000 housing units of various sizes, and the commercial centers that exceed 100 pieces to meet the needs of the family, in addition to the green spaces, government facilities, and mosques to give you this exceptional community a comfortable, quiet, and modern life.”
Abdullatif Al Shelash assisted in developing a high-end, family-oriented community, Parisiana Living, in Riyadh and he has more projects in the works.
“What sets us apart from other emerging companies is that our board members and executive team have over 35 years of combined experience in real estate,” alaqtar.com states.
He says he also played a vital part in making mortgages a reality. “I was one of the first people there [who] actually started the draft of the laws for mortgage laws in Saudi,” Abdullatif Al Shelash says. “There is tremendous opportunity for a hundred companies like Saudi Home Loans.”
Abdullatif Al Shelash says he estimates mortgages in any major city worldwide hovers around 85%, but Saudi Arabia still has a long way to go to reach that point. “In Saudi, I don’t think that it has reached more than 5% and 10%,” he explains.
