Construction starting on Saudi Arabia’s NEOM in 2020

Saudi Arabia is starting construction on NEOM, its city of the future, in 2020. The giga-project has had an investment of $500 billion from the Public Investment Fund (PIF).

According to NEOM CEO Nadhmi al-Nasr, construction will begin this year (via The Arab Weekly). NEOM, which means ‘new future’, was announced in 2017.

Saudi officials describe NEOM as ‘the world’s most ambitious project’. It will be built in the Tabuk region of northwestern Saudi Arabia on the Red Sea.

The futuristic mega-city is billed as ‘the land of the future’. It will be 33 times the size of New York City and nearly the size of Belgium. More than 1 million people will work and reside at NEOM.

Overlooking the Red Sea and the Gulf of Aqaba, NEOM occupies an area of 26,500 square kilometres, along with a 468-kilometre waterfront.

The project is expected to be a cross between Silicon Valley, Dubai and the Seychelles. It will include towns, ports, and research centres, as well as entertainment and tourist destinations.

Crown Prince Mohammed bin Salman bin Abdulaziz said NEOM “will drive the future of human civilisation, energy and water, mobility, biotech, food, technological and digital sciences, advanced manufacturing, media and entertainment”.

However, $500 billion will not be enough to complete NEOM, and Saudi officials are looking for the rest of the funding through foreign investment.

Saudi Arabia is creating a host of attractions and giga-projects as part of Vision 2030, which aims to diversify the economy in order to reduce the country’s reliance on oil.

The giga-projects, which currently include Amaala, NEOM, the Red Sea Project and Qiddiya, are designed to stimulate the economy as integrated economic ecosystems.


KSA governorate curbs construction waste with 3,000-tonne project

The Minister of Municipal and Rural Affairs in Saudi Arabia, HE Dr Majid Al-Qasabi has launched the first investment station for sorting and recycling construction waste at the kingdom level.

The station, which is located in the Al-Ahsa Governorate, lies on an area of ​​100,000m2, and has an estimated capacity of 3,000 tonnes per day, state-run Saudi Press Agency reported.

The project intends to sort waste from buildings under construction, infrastructure projects and road projects, and work on reusing the infrastructure.

In addition, the project will employ latest equipment, modern technology concepts, and is considered an investment of 15 years in terms of construction, operation, and maintenance.

The facility will eliminate the random disposal of construction waste, marking a significant step towards preserving the environment. The move is also in line with the kingdom’s Vision 2030 to boost service development in the municipal sector.


Saudi and Egyptian firms sign $450 million hotel deal

CAIRO: Egypt’s Tharawat International Investment Corp. has signed a $450 million deal with the Saudi Hospitality Development Group (HDG) to manage Swiss International.

HDG owns and represents the Swiss hotel and resort brand with its three brands: Swiss Spirit, Swiss International and Royal Swiss.

“Many of our investors are interested in investing in Egypt and we have started tourist projects mainly in Hurghada, Sharm El-Shiekh and Cairo,” Jamal Al-Hamed, chief development officer of Swiss International Hotels and Resorts, told Arab News.

Ahmed Awad, who is chairman of the board at Tharawat, said the company aimed to build eight hotels for the Swiss chain in two years with investments worth $450 million in Cairo, Hurghada, Sharm El-Sheikh and Marsa Alam on the northern coast, as well as Luxor and Aswan.

Awad said the company intended to invest in the management and operation of hotels in the administrative capital and the new city of El-Alamein.

Swiss International Group CEO, Nagy Al-Shiha, confirmed that the group aimed to reach 30 hotels by the end of 2020.

Al-Shiha said the group planned to build and manage 20 hotels in Egypt in addition to tourist resorts during the next five years.

“We started our long-term strategy to expand in Arab countries which includes Jordan and Egypt,” Al-Hamed said. “We are already present in all Gulf countries and, in the next period, our focus will be on north African countries. We aim for Tunisia, Algeria and Morocco but we will start first with Egypt.”

Economic and commercial relations between Egypt and Saudi Arabia have experienced continuous growth since the 1980s. Saudi investments in Egypt rank first among Arab countries and second globally.

Total Saudi investments in Egypt have reached $54 billion, including $44 billion in investments for Saudi companies or their Saudi partners in Egypt and $10 billion in investments from the Saudi government through the public investment fund.

According to the vice-chairman of the Saudi-Egyptian Business Council, Abdullah bin Mahfouz, the top sectors for Saudi investments are services, followed by industry, construction, real estate development, agriculture, communications, IT, tourism and banking.


Damac Properties GM reveals plans for Saudi expansion

Dubai-based property developer Damac Properties is looking to expand into Saudi Arabia.

Ali Sajwani, general manager of operations, who has a strategic overview of the UAE and international businesses, revealed in an interview with Saudi publication Arab News, that the kingdom is very much part of the company’s future plans.

The 28-year-old said: “Over the next five years, under [Crown Prince] Mohammed bin Salman, it (Saudi) has all the right ingredients – a visionary leader pushing the country and opening it up to foreign investors.”

He added: “We’re speaking to people all the time in Saudi Arabia – developers, the authorities and landowners. We’re actively exploring that market and visit there regularly.”

Sajwani also said the company is looking to continue investing in the UK, while other international projects include developing three lagoons in the Maldives, projects for Oman and Lebanon and a joint venture in Toronto, Canada, Damac’s first foray into the North American real estate market.

Earlier this month, Damac Properties reported its first annual loss in a decade as sales and revenue fell significantly in 2019 compared to the previous year.

While Sajwani conceded that there remained oversupply issues, coupled with weak demand, the former economics student remained positive.

He said: “I think we’re at the bottom now in Dubai and we’ll see some slight improvement with Expo 2020. The hotel and retail sector will do well out of Expo, and there should be a big inflow of tourists. Hopefully some of them will decide to stay, and that could help drive property prices higher.”


$500 billion NEOM megacity a catalyst in driving investments in Saudi Arabia’s PropTech sector

RIYADH — Saudi Arabia’s $500 billion NEOM megacity will play a catalyst role in driving investments in the Kingdom’s emerging property technology (PropTech) sector, Ebrahim Baeshan, Office Managing Partner in Jeddah, at KPMG Al Fozan & Partners, said in an interview.

“PropTech will play a pivotal role in the development of the futuristic megacity, which is the centerpiece of the Vision 2030 plan, to grow and diversify the economy as well as position the country to play a leading role in global development,” he added.

The global PropTech industry has grown from $20 million in 2008 to more than $12 billion in 2017, creating successful unicorn firms such as Airbnb and WeWork.

Excerpts of the interview follow:

• What new technological developments do you consider particularly relevant for the real estate sector in Saudi Arabia?

Technology is transforming every walk of life, and its influence is pervasive across all business sectors. The real estate sector is no exception. Today, the property sector dynamics globally is being shaped by the latest trends in technology, including blockchain and Artificial Intelligence (AI).

The real estate industry in Saudi Arabia continues to make progress in its digital transformation. Challenges remain, however, with full-scale adoption of digital technology still some way off.

We are starting to see practical applications of PropTech in the Kingdom, which is helping to enrich the tenant and resident experience, improve response times, and remove a lot of the friction caused by the various stakeholders involved in managing and running a property.

The top technologies that are and will continue to disrupt the realty sector are blockchain, AI, Virtual Reality (VR), Augmented Reality (AR), drones, Internet of Things (IoT), robotics and 3D printing.

As more and more developers and construction companies are beginning to integrate technology into their business process or operation, it offers an exciting time for tech firms and start-ups. While the construction industry has been traditionally slow at adopting the latest technology compared with other sectors, digital technology has ignited a change in attitude in the industry.

Among these, virtual reality (VR), blockchain, chatbots, big data and analytics, and drones are making the entire property buying, leasing, marketing, selling, and management process more efficient and exciting.

Over the coming 5 years, we will see a significant technological change in the real estate industry. Buildings will become more human with IoT and other technological improvements connecting individuals to assets.

• How do you assess the current level of digitalization of companies in real estate investment and real estate asset management within KSA?

GCC nations and Saudi Arabia, in particular, are now rapidly adopting new technologies to construct and maintain real estate more effectively. The Kingdom is building its own smart city called “NEOM” as part of the Vision 2030 program that aims to lower the country’s dependence on oil, diversify its economy, and build public service sectors. NEOM will incorporate various smart city technologies in addition to being a tourist destination.

The traditional real estate buying and selling process are being disrupted and one can see not just real estate platforms but also the adoption of technologies like cloud computing, blockchain, virtual reality, IoT and 3D tours and drones. PropTech space in the Kingdom is shaped by entrepreneurs trying to innovate for local problems, garnering renewed interest and funding from Silicon Valley and other markets. Although the market is still at infancy, there are a lot of tech-innovations happening to make the real estate market in the Kingdom lucrative.

• How will the proptech investment landscape in KSA look like in 2020 and beyond?

The global PropTech industry has grown from $20 million in 2008 to more than $12 billion in 2017 and has produced successful unicorns such as Airbnb and WeWork.

As part of Vision 2030, the government is planning to reduce its economic dependence on oil and is increasingly investing in technology and real estate development.

Investment is PropTech in Saudi Arabia is expected to be driven by the development of NEOM, a futuristic mega-city, with the government pledging $500 billion towards it. The smart city is planned under the Vision 2030 and is expected to be completed by 2025. PropTech is likely to play a key role in the development of this smart city.

Apart from this, the PropTech industry is gaining momentum with the development and funding of several startups in the space, such as:

Seed funding of $2 million in home maintenance services startup B8ak by Riyad Taqnia Fund and Darwa Emaar Development and Investment Company in 2018

Ajeer, a Riyadh-based home services marketplace raising $0.5 million in seed funding from two angel investors in 2018

• How did proptech startups perform in KSA in 2019 and earlier years?

Currently, there are very few PropTech companies operating in the Kingdom, which are focusing on providing home maintenance services while keeping up with current trends and finding continuous areas of innovative approaches and improvements, use of drones to visualize and control, provides access to the right technician in an on-demand model. The startups have been successfully raising funds as well from venture capital (VC) funds and investors showing the growth opportunities in the PropTech space.

• Do you think PropTech startups are disrupting the real estate market in Saudi Arabia?

PropTech startups have successfully disrupted the traditional real estate market driven by the increasing mobile phone usage, which reached 99%, as per the statistics by the General Authority for Statistics (GASTAT). The Kingdom and the GCC nations are now adopting new technology to construct and maintain real estate effectively. The conventional real estate buying and selling processes are being replaced with not just real estate platforms but also with technologies such as cloud computing, blockchain, virtual reality, IoT, 3D tours and drones.

• How did PropTech startups benefit consumers in KSA?

Consumers have benefited in the following way:

Simplification of the property market for landlords and consumers alike

Streamlining of age-old processes of:

o renting or purchasing real estate

o managing and maintaining buildings

o cutting out middle-parties

o connect the tenants with the perfect property – be it home or a co-working space

Online real estate agents allow consumers to find a new home or place to work without having to start the search on the ground

PropTech is helping to plan and build new infrastructure for growing populations in metropolises

Efficient and quick turnaround of transactions

Increased transparency of all transactions

Tracking the development pattern of a location to help potential buyers understand how the location is evolving, provide valuation of the property and identify historical price trends

Introduction of a sharing economy that helps reduce the cost of ownership

• Should PropTech startups cooperate with established real estate companies? If yes, how could the cooperation look like?

In today’s world of the gig economy and asset-light business models, PropTech startups should tap the opportunity to cooperate with real estate companies. They can engage in the following ways to deliver higher value:

Outsourcing – Outsourcing operations or processes to the PropTech companies which can add greater value and provide better results.

Acquisitions or stake – Companies investing in PropTech need to get more comfortable with enhancing their risk appetite and look at a more mature, long-term partnership than just a strategic investment.

Real estate-as-a-service – he current operating model in real estate space of creating an inventory of physical space and selling it across will no longer be relevant. Players will be required to create augmented and memorable experiences by using physical space. Using technology, in terms of, analytical and predictive capabilities to identify changing tenant demands and catering to emerging trends will become important for the players to succeed.

• What can established companies learn from PropTech startups in the real estate industry?

Efficiency of operations – Companies need to become efficient in their daily operations and bring customer satisfaction. They can plan to outsource or acquire PropTech companies to handle their operations better

Strengthening data analytics – Real estate companies should focus on improving their data analytics and predictive capabilities to identify changing tenant demands and adapt their offerings accordingly

Adopting technology – Companies need to adopt latest technology offerings and integrate them in their business. This is expected to help them to better engage with their customers, optimize their business and identify the most profitable transactions.

Property management through software – Property management software should be implemented to monitor performance and downtime of building equipment, which can be used by maintenance teams to carry out day-to-day tasks

Smart Homes and cities – Focus on building energy-efficient and sustainable buildings using technology which can help reduce the overall cost for the buyers and reduce maintenance hazards

Use Blockchain technology and IoT to reduce intermediaries involved and streamlining processes for investors purchasing commercial real estate

Use of unmanned drones, 3D printers and robots during the construction phase can help reduce manpower cost and reduce safety issues associated with accidents on construction sites

Companies can now visualize any space using Virtual Reality tools with various customized design elements, thereby helping the interior design process

Use chatbots on their websites/portals to ensure 24X7 availability to help customers with their queries and enquiries

Using Big Data and Cloud technology to maintain records to manage their workflows and customer relationships as well as use it for predictive capabilities to meet future demands and foresee emerging trends.

Asset or property management is the stage of the property life cycle most likely to have received IT investment in the past two years as well as PropTech support. It is, hence, a priority for future IT investment with the highest investment directed towards the development of PropTech solutions or digital innovation.

2019 KPMG Global PropTech Survey key findings:

58 percent of real estate companies have a digital strategy in place, up from 52 percent in both 2018 and 2019.

95 percent of real estate companies have someone responsible for leading digital transformation and innovation. In 62 percent of cases, this is a senior employee; however, in 65 percent of cases, it isn’t a digital or technology specialist.

40 percent of digital leaders come from a real estate, construction or finance background.

Only 25 percent of respondents have a well-established data strategy that enables the capture and analysis of the right datasets.

64 percent of real estate companies have some form of property-as-a-service across their portfolio with a further 13 percent considering it. — SG


Saudi construction sector to grow 6% between 2019-2024: report

More than 5,200 construction projects are currently ongoing in Saudi Arabia at a value of $819 billion, and the Kingdom’s construction market is expected to register a compound annual growth rate (CAGR) of 6% between 2019 and 2024, said a new report by

The Saudi Arabian construction market is expected to witness significant growth and offer lucrative potential, due to its Vision 2030, NTP 2020, and several ongoing reforms to diversify away from oil.

The Vision 2030, NTP 2020 and private sector investment boost, and the ongoing reforms are likely to be the growth drivers for the Saudi construction market in 2018 and beyond.

“Currently, the country’s economy is entering a post-oil era in which the kingdom’s mega-cities, which are under construction, will provide the country’s future growth,” the report maintained.

Saudi Arabia’s Vision 2030, along with a significant investment in housing and infrastructure development promoted across the country by local authorities, are revitalizing the construction industry and generating interest in a growing number of international players.

According to the report, the urban construction sector is the largest contributor to the construction sector expansion, with 3,727 active projects valued at $386.4 billion.

The utility sector is the second largest contributor with 733 projects worth $95.6 billion, followed by transportation with 500 projects valued at $156.2 billion.

Some of the major urban construction projects in Saudi Arabia include the King Abdullah Security Compounds (Phase 5), and the Grand Mosque (Holy Haram Mosque expansion), each valued at $21.3 billion, the report added.


Saudi Arabia’s $1.6trn construction projects largest in GCC region

JEDDAH — According to leading cost and project management consultancy, Linesight, which has a GCC pipeline worth over $10 billion, activity in the construction sector throughout the GCC countries will begin to recover steadily from the beginning of 2020, after a challenging period of subdued performance.

Long-term positive factors such as economic diversification, social reform, especially in Saudi Arabia, and general demographic demand, combined with renewed government ambition, will be the key drivers.

Saudi Arabia currently holds the greatest potential for the construction sector within the GCC, with more than 5,000 capital projects worth well over $1.6 trillion in the pre-execution stage.

That includes over 150 development projects worth $3.27 billion, for Tabuk region that were announced by Custodian of the Two Holy Mosques King Salman Bin Abdulaziz in November last year. The King also launched more than 600 projects in Qassim, 400km northwest of Riyadh, worth $4.36 billion and around another 200 new projects in Hail, also in the northwest of the Kingdom, valued at $1.14 billion.

However, the centerpiece of its ambitious Vision 2030 initiative is the $500 billion, 26,500 square km, Neom project, situated along 468 km of Red Sea coast close to Egypt and Jordan. The first phase of Neom is due for completion in 2025.

“Naturally many regional industry professionals are now upbeat about the prospects for Saudi Arabia,” said Damien Gallogly, Regional Director for the Middle East at Linesight, which has offices in Riyadh, Dubai and Bahrain.

“Saudi Arabia is also actively seeking to improve its rail, airport, port and other transport-related infrastructure, as well as increase residential supply, healthcare, leisure and tourism facilities. Without doubt, the Kingdom remains the most active construction market in the region, signaling exciting times ahead,” added Gallogly.

“To underpin social demand, the Saudi government has overseen a major cultural and social transition since 2017, which has allowed mixed audiences at cinemas and concerts and brought an end to restrictions on women travelling alone,” said Gallogly.

The project developments in Linesight’s own GCC pipeline are currently worth in excess of $10 billion, with average annual revenue growth of over 6%. Some of the more prominent developments in Saudi Arabia include the $4 billion Thakher City mixed-use project in Makkah and the Al Faisaliah District redevelopment project in Riyadh, which involves upgrading the Al Khozama, retail, hospitality and commercial complex

Saudi’s General Sports Authority (GSA) has also launched the world’s richest horse race, with prize money totaling $20 million and it is also making concerted efforts to bring Formula One to the Kingdom, after the successful running of the inaugural Formula E in Riyadh last year.

The GSA has also confirmed that Saudi will host the world heavyweight title boxing rematch between Andy Ruiz and Anthony Joshua, in Riyadh later this year, following recent debuts for the European Golf tour and WWE wrestling.

Doubts have been cast whether Saudi will be able to fund the realization of Vision 2030. And with US shale oil extraction at a record 12.32 million barrels per day on average, the US–China trade tensions dragging on and the slowing global economy, on the surface, the task looks challenging.

However, Saudi Arabia’s budget for 2019 is $295 billion, a 7% increase over 2018. The economic and social reforms are clearly designed to attract more foreign direct investment, which stood at $3.5 billion in 2018, already double that in 2017.

Saudi still has certain state assets which the government aims to generate over $10 billion through its privatization program, notwithstanding the aborted Saudi Aramco IPO. Last but by no means least, there is the Saudi sovereign wealth fund which should surpass $600 billion by next year.

“Saudi Arabia is committed to completing these projects and is confident that it will be find the appropriate finance to do so. It is this strategic intent that in my opinion, makes the Kingdom the most dynamic construction market in the Middle East,” said Gallogly. — SG



Saudi Arabia’s Qiddiya picks Abdul Ali Al Ajmi Co for site preparation

CEO Michael Reininger says, QIC began with the “mass grading and site preparation” of the Resort Core and the City Centre

In its first construction contract of 2020, Saudi Arabia’s HRH Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud-chaired Qiddiya Investment Company (QIC) has awarded a 12-month site preparation contract to Riyadh-based Abdul Ali Al Ajmi Company.

Chief executive officer of QIC, Michael Reininger said, QIC — which is developing the 334km2 Qiddiya gigaproject — has begun with “the mass grading and site preparation” of its two anchor development nodes: the Resort Core and the City Centre.

“This is the first of many announcements for 2020,” Reininger added.

Abdul Ali Al Ajmi Company will landscape seven million cubic metres of earth to prepare the site with a combined area of more than 4km2. For the site preparation work, the company will deploy more than 500 pieces of major earthmoving equipment to grade and develop the plots.

The contractor will also use 3628.7 tonnes (t) of steel and 30,000m2 of concrete for storm water management to prepare the area for the next stage of development.

Speaking about the project, chairman of the Abdul Ali Al Ajmi Company, Ali Abdul Ali Al-Ajmi, said that the company will use its expertise in excavation, material transport, site preparation, and development works for the entertainment project.

In December 2019, the team from Qiddiya mobilised to its two site offices — built by Dubox, a part of Amana Group — that were completed by Qiddiya Development Company (QDC).

Phase 1 of the 334km2 gigaproject, which includes Six Flags Qiddiya theme park, will open in 2023.



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