Interview: Gautam Sashittal
Where do you identify the key demand drivers for commercial real estate in Saudi Arabia?
GAUTAM SASHITTAL: The economic growth that the country is experiencing acts as a magnet for international and regional businesses to set up a presence in Riyadh. In fact, Riyadh aims to be among the top-10 city economies in the world by 2030. This, together with projections that its population will double over this period, gives a clear idea of the potential growth opportunities ahead. To meet the demands of a growing population and its economic expansion target, an adequate amount of grade-A real estate needs to be made available in the commercial, residential and hospitality segments.
Therefore, demand for commercial real estate in Saudi Arabia, particularly in Riyadh, is mainly driven by the ripple effect of government spending on infrastructure development projects. The country’s large-scale projects will catalyse investment in entertainment options, lifestyle outlets, health care centres and educational institutions, which are essential to creating an attractive ecosystem for businesses.
How can public-private collaboration accelerate development in the real estate sector?
SASHITTAL: Saudi Arabia is the largest economy in the region, and the local government entities have deployable capital. Moreover, state-owned entities are keen to grow in markets abroad, creating the right environment for foreign businesses to collaborate with them. For instance, we are seeing more international contractors participating in large-scale national infrastructure and real estate development projects, ensuring global quality and project delivery standards are applied.
The government’s Programme HQ aims to attract global companies to establish their regional headquarters in Saudi Arabia. This undoubtedly will create market opportunities to expand the country’s real estate options and simultaneously stimulate investment in more lifestyle, education and health care options. These developments will make Saudi Arabia a vibrant business and lifestyle destination going forward, helping to meet the goals of Vision 2030.
What more can be done to achieve sustainable water and energy use in real estate projects?
SASHITTAL: Saudia Arabia aims to reduce its consumption of water from 260 litres per capita per day to 150 litres per capita as part of Vision 2030. To achieve this target, water sustainability needs be taken into consideration in real estate projects and by companies involved. We are doing our part, and KAFD has set a target of 135 litres per capita per day. We are also looking at projects to recycle groundwater for irrigation and a waste management facility to gather all the waste at a central location and transport it to a recycling plant.
Efforts are also being made to raise awareness and educate the population on how to use water and energy sustainably. This change in attitude is also penetrating real estate businesses and many entities are including sustainability in their decision-making process.
To what extent can new urban district developments help to generate business opportunities?
SASHITTAL: Riyadh in particular will attract much more regional and international passenger traffic in the future. High-quality tourist, leisure and entertainment attractions are being built throughout the city, which makes it much more appealing for visitors. Related businesses such as airlines and hotels are also improving their services. Similarly, other destinations in eastern and western Saudi Arabia are being developed for tourism, creating further opportunities for real estate development firms.
The relationship between real estate and tourism and hospitality, including the retail and entertainment segment, is mutually beneficial. We expect many business opportunities to emerge in the near future as a result of new urban district developments in the country.