_NEOM - the USD 500 billion mega-city in Saudi Arabia

Following Saudi Arabia’s rapid population growth which has increased from 27.6 million in 2010 to 32.7 million, urban centres across the kingdom have seen corresponding expansion.

With this rate of expansion comes the need for cities to adapt to changing market dynamics and occupier demands. Recently introduced strategic reforms aimed at creating a favourable environment for investment and strengthening the non-oil sector have placed a focus on real estate which is forecast to double its contribution to economic output throughout the period to 2030. 

The emerging picture is one of real estate repositioning itself to match best in class in real estate initiated by technological advances and the needs of an increasingly youthful population.

As the main urban areas of Saudi Arabia continue to develop, suitable and sustainable zoning will become a key factor in responding to the needs of the market.  

One such example of large scale urban regeneration is the recently announced Jeddah Downtown development, spearheaded by the Public Investment Fund (PIF).

 This development looks set to create a thriving down town within a high quality mixed use urban fabric which will support Jeddah’s ambition of becoming one of the world’s top 100 global cities. 

A key theme to emerge from the Knight Frank Global Cities 2018 report is the importance of attracting and retaining talent in an economic environment that is rapidly changing as technology looks to redefine how populations live, work and relax. Flexibility, adopting new technologies and maintaining global standards will be important considerations for cities that wish to stay at the forefront over the next decade.  

Indeed, cities which can adapt to the changing landscape of commerce will be able to outperform competitors: since 2007 the GDP of Berlin has expanded by 19% on the back of a thriving technology scene whereas the finance-oriented Frankfurt has seen GDP growth of 5.9% according to Oxford Economics.  

Saudi Arabia’s future cities 

Turning to Saudi Arabia, Crown Prince Mohammed bin Salman recently announced at the inaugural Future Investment Initiative (FII) in Riyadh, the development of a USD 500 billion mega-city called NEOM that will be powered by renewable energy.  

Located in the north-western corner of the kingdom over an area of 26,500 sq. km with 469 km of shoreline overlooking the Red Sea and the Gulf of Aqaba, the city has been conceived as a project that will be unencumbered by existing development constraints, embracing drones and driverless cars, clean energy and robotics whilst attracting investment from biotechnology and advanced manufacturing.    

Stefan Burch, General Manager Saudi Arabia and Partner said: ‘the announcement by the Crown Prince of NEOM looks set to challenge existing ideas around urban regeneration and traditional real estate development.

As the major cities of Saudi Arabia look to develop infrastructure provisions and adapt to new working practices and technologies, providing best in class mixed use product that responds to the demands of businesses and resident populations will be key to the success of those cities. ’

For more information on the Saudi Arabian market, contact  Stefan.Burch@me.knightfrank.com

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