Saudi Arabia's Retail Real Estate Sales Projected To Reach $183Bn By 2027, Says Deloitte Report

Saudi Arabia's retail real estate sales are projected to increase from 24 percent in 4 to 2.7 percent by 2027, reaching $183.2 billion. This growth is driven by modernization and urban development efforts.

The Deloitte report highlighted that the construction industry's to the nation's GDP is expected to reach $37.4 billion this year, up from $35.2 billion last year. This indicates a robust growth trajectory for the sector, according to Arab News report.

According to Deloitte's latest Saudi Arabia Real Estate Predictions release, retail sales reached $142.7 billion in 2022, as cited from the Economist Intelligence Unit. The Kingdom's post-pandemic economic recovery has gained momentum due to eased travel restrictions and improved visa processing.

The Kingdom's rise to third place in the 2023 Global Retail Development Index, a biannual survey by US consulting firm Kearney, was notable. This improvement was attributed to an increase in non-cash transactions from 16 percent in 2016 to 62 percent in 2022.

In 2023, the residential real estate market experienced a decline in transaction volumes, even though sales prices for villas and apartments increased. Deloitte's review suggests that despite reduced transaction activity, higher prices reflect sustained demand for residential properties in key urban areas.

This trend indicates potential challenges for affordability but also signals confidence in the real estate market's long-term prospects. "Residential preferences are shifting toward homes that accommodate remote work by incorporating wellness-centric features," the report noted.

The hospitality sector has benefited from streamlined online visa applications, enhancing tourist access and fueling a resurgence in travel and tourism. The office sector has also seen growth due to an expansion in financial and business services employment by 4 percent year on year in 2023, according to Oxford Economics.

"In the post-COVID real estate landscape, key trends include sustainability and technological integration," stated the report. "The demand for flexible workspace is rising, leading developers to innovate office designs tailored for hybrid work models."

The industrial and logistics sectors are poised for substantial growth due to the introduction of four Special Economic Zones (SEZs) in 2023. These zones include King Abdullah Economic City, Jazan, Ras Al-Khair, and Cloud Computing in King Abdulaziz City for Science and Technology.

These SEZs aim to create opportunities for sustainable business development, attract foreign investments, and enhance Saudi Arabia's position as a logistics hub. They are expected to stimulate economic activity and contribute significantly to the Kingdom's diversification strategy.

Saudi Arabia is advancing its real estate sector through several strategic initiatives like NEOM, a $500 billion smart city project, and the Red Sea Project aimed at transforming tourism.

Deloitte emphasized that retail and hospitality sectors are adapting to changing consumer behaviors with a focus on e-commerce and experiential spaces.

The report concluded that Saudi Arabia’s real estate market is evolving with trends such as sustainability and technological integration becoming more prominent across various sectors.