Indonesia turns focus to energy security and renewables amid pandemic

Oil palm farmers in Central Kalimantan’s Kapuas regency harvest crops to be transported to a nearby processing plant. (Photo courtesy: Ismira Lutfia Tisnadibrata)
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Updated 24 November 2020

Indonesia turns focus to energy security and renewables amid pandemic

  • Govt. aims to use of opportunity presented by COVID-19 outbreak to make transition

JAKARTA: The fallout from the coronavirus pandemic has presented Indonesia with the opportunity to work toward energy security and switch from conventional to renewable sources, officials have said.

“Indonesia has made various breakthroughs such as making use of biodiesel B30,” Foreign Minister Retno Marsudi said during an online press conference on Sunday, quoting President Joko Widodo’s address during the G20 Summit.

“(We) will be conducting tests on green diesel D100 from palm oil – which will absorb 1 million tons of palm oil produced by farmers – and also install rooftop solar power plants in hundreds of thousands of households,” he added.

Widodo also made a reference to data from the World Economic Forum on the massive potential of the green economy, which could generate up to $10.1 trillion and create 395 million new jobs by 2030.

Earlier this month on Nov. 4, energy and mineral resources minister Arifin Tasrif said that the current difficulties posed by the pandemic had spurred Indonesia to accelerate the energy transition, by developing renewable energy, ensure efficiency and work toward maintaining energy security for lasting energy independence.

Energy security and its steady supply were some of the top concerns voiced by Tasrif during the G20 energy ministers’ meeting in September.

“COVID-19 has created an economic crisis and shrunk energy demands. All G20 members must work together to ensure that the energy market is stabilized and maintain supply affordability. These are a top priority for Indonesia,” Tasrif said at the meeting.

He also lauded Saudi Arabia, the summit host, for pushing ahead with the 4Rs issue – Reduce, Reuse, Recycle, Remove – in the circular carbon economy (CCE) concept, which was endorsed by the energy ministers after their meetings.

Tasrif said the issue was an “important part of reintroducing the role of biofuel and hydrogen in the CCE platform,” and in line with Indonesia’s adoption of the mandatory use of biodiesel – containing 30 percent palm oil and known as B30 – from January this year, specifically in the transport, power plant, industrial and commercial sectors.

Indonesia, the world’s largest palm oil producer, has set a target to use 23 percent of renewable energy by 2025 and 50 percent by 2050, as part of its national energy mix plan.

The government has listed provisions for renewable energy and its conservation among its seven priority programs for next year and allocated 16.7 billion rupiahs ($1.2 million) for environmental preservation efforts in the 2021 budget.

“Our state budget is very much pro-green ... The government is already on the right track with the implementation of energy transition policy,” Arif Budimanta, a special presidential staff on economic affairs, said during an online discussion recently.

He added that President Joko Widodo had been very “hands-on” with the implementation of the energy transition policy and was directly supervising the progress of the policy.

Government officials claimed that the adoption of B30’s mandatory use – the first in the world – has been successful.

However, its target this year had reduced from the initial 9.5 million kilolitres to 8.3 million kilolitres, with 6 million kilolitres realized so far.

Mandatory use is expected to reduce carbon dioxide emissions by 16.9 million tons.

“The switch to a biodiesel program, which has been in place since 2015, has been able to replace almost 25 million liters of imported fossil fuel by June this year, and we have been able to save foreign exchange spending by roughly equivalent of 127 trillion rupiahs,” Eddy Abdurrachman, head of the Palm Oil Plantation Fund Management Agency said during a recent webinar.

Static tests on diesel engines for 1,000 hours of use of the biodiesel blend are underway at the Energy and Mineral Resources Ministry’s research and development lab.

The head of the research and development agency, Dadan Kusdiana, said on Aug. 26 that scientists had managed to conduct studies on the lab’s engine test bench after the COVID-19 outbreak restricted them from testing on the roads.

“We expect to wrap up the tests by the end of the year,” Kusdiana said.


Central bank rejects claim capping dollar price caused $3 billion losses in exports, remittances

Updated 29 January 2023

Central bank rejects claim capping dollar price caused $3 billion losses in exports, remittances

  • State Bank of Pakistan (SBP) says rising inflation, global economic slowdown behind dwindling remittances, exports
  • SBP says devastating floods last year and ensuing supply disruptions also contributed to decline in Pakistan's exports

ISLAMABAD: The State Bank of Pakistan (SBP) on Sunday rejected media reports which stated that capping the price of the US dollar caused the country losses worth $3 billion in exports and remittances, saying that a decline in both was due to "exogenous factors."

In a major sign that it was willing to swallow the bitter pill and agree to the International Monetary Fund's (IMF) tough conditionalities, Pakistan's foreign exchange companies last week removed the cap on the US dollar. The price of the rupee, as a result, fell to a 24-year-low against the greenback, compounding problems for the South Asian country. 

Local media reports had claimed that capping the price of the US dollar had dealt Pakistan losses of $3 billion in exports and remittances as people preferred to send remittances to Pakistan via illegal channels, which offered a better rate. 

In a press release, the SBP rejected the reports, describing them as "incorrect." It added that Pakistan's exports were facing headwinds due to moderating demand in international markets as the country's trading partners go through a period of monetary tightening. 

"For instance, US Federal Funds rate has surged from 0.25 percent in March 2022 to 4.5 percent to date; suggesting a noticeable global monetary tightening," the SBP said. 

The central bank said inflation has been "significantly higher" in developed countries, eroding people's purchasing power. The SBP also said that devastating floods last year and ensuing supply disruptions are also to blame for Pakistan's dwindling exports. 

"In this backdrop, linking decline in exports to relatively stable exchange rate is not appropriate," it added. 

It said workers' remittances were gradually "tapering off" from the all-time high figure of $3.1 billion in April 2022 due to Eid-related flows.  

"This decline is primarily attributed to global economic slowdown as higher inflation in developed countries has led to higher cost of living abroad, thus reducing the surplus funds that could be sent back to homeland as remittances," the central bank added.

Pakistan's foreign reserves have dipped to an alarming eight-year low of $3.6 billion, barely enough to cover three weeks of imports. Islamabad hopes the resumption of the IMF's stalled loan program would help unlock inflows from allies and multilateral organizations.


Pakistan has to abide by tough IMF conditions out of ‘compulsion’ — defense minister

Updated 29 January 2023

Pakistan has to abide by tough IMF conditions out of ‘compulsion’ — defense minister

  • IMF wants Pakistan to reestablish market-based mechanism to determine Pakistani rupee's value
  • Defense Minister Khawaja Asif says government would try not to burden citizens under IMF’s conditions

ISLAMABAD: As Pakistan increased petrol prices by Rs35 per liter, Defense Minister Khawaja Muhammad Asif said on Sunday that the country had to agree to “very tough” conditions imposed by the International Monetary Fund (IMF) out of “compulsion” to address its economic woes.

The IMF’s mission is scheduled to visit Pakistan on January 31 to discuss the resumption of its $7 billion loan program, as Islamabad desperately seeks another loan tranche to shore up its foreign exchange reserves. Pakistan's forex reserves have declined to a staggering $3.6 billion, not even enough to cover a month of imports.

Earlier today, Finance Minister Ishaq Dar announced jacking up prices of petroleum products in the country by as much as Rs35 per liter. The minister said the decision was taken due to the Pakistani rupee's recent devaluation and up to an 11 percent increase in global fuel prices.

The hike in prices of petroleum products is part of the IMF's conditionalities to revive the stalled loan program, which requires Pakistan to do away with expensive energy subsidies. The price hike is expected to further increase decades-high inflation in the South Asian country. 

The global lender also wants Pakistan to reestablish a market-based mechanism to determine the value of the Pakistani rupee, which fell to a record low of 269.60 against the dollar in the open market this week. Such a mechanism is a key prior action for the country to receive IMF support.

“The IMF program, which we had to re-enter because of the [current] circumstances and out of compulsion, has set very strict and tough conditions for Pakistan,” Asif said on Sunday, speaking to reporters.

He added the government would undertake efforts to ensure the common man would not have to bear the economic burden of IMF’s conditions.

“We will try that only those belonging to the [upper] socioeconomic class will have to bear the economic burden of this crisis,” he said.

Answering a question related to the acute dearth of forex reserves in the country and the ensuing depreciation of the rupee against the dollar, the defense minister said people who have a foreign currency account in the country would still be able to withdraw “some” of their money in dollars.

“If someone here has a dollar account and wants to withdraw money from their banks, they can do so but in small amounts. For instance, if someone wants to take out money to pay for their children’s school fees, they can do so,” he clarified.

Asif also said the country’s imports, which had to be halted due to the dwindling reserves, were “gradually being relaxed.”

“Our exports are gradually being relaxed, so we will hopefully recover from the economic [turmoil] soon,” he said. “Slowly and gradually, things are being streamlined.”

Pakistan secured a $6 billion IMF bailout in 2019, which was topped up with another $1 billion last year. However, the lender then stalled disbursements in November due to Pakistan’s failure to make more progress on fiscal consolidation and economic reforms.


Italy, Libya sign $8-billion gas deal as PM Meloni visits Tripoli

Updated 29 January 2023

Italy, Libya sign $8-billion gas deal as PM Meloni visits Tripoli

  • Meloni is the highest European official to visit oil-rich Libya since the country failed to hold presidential and parliamentary elections in December 2021.

CAIRO: Italy’s prime minister held talks in Libya on Saturday with officials from the country’s west-based government focusing on energy and migration, top issues for Italy and the European Union. During the visit, the two countries’ oil companies signed a gas deal worth $8 billion — the largest single investment in Libya’s energy sector in more than two decades.
Libya is the second North African country that Premier Giorgia Meloni, three months in office, visited this week. She is seeking to secure new supplies of natural gas to replace Russian energy amid Moscow’s war on Ukraine. She previously visited Algeria, Italy’s main supplier of natural gas, where she signed several memorandums.
Meloni landed at the Mitiga airport, the only functioning airport in Libya’s capital, Tripoli, amid tight security, accompanied by Italian Foreign Minister Antonio Tajani and Interior Minister Matteo Piantedosi, her office said. She met with Abdel Hamid Dbeibah, who heads one of Libya’s rival administrations, and held talks with Mohamed Younis Menfi, who chairs Libya’s ceremonial presidential council.
At a round-table with Dbeibah, Meloni repeated her remarks from Algeria, saying that while Italy wants to increase its profile in the region, it doesn’t seek a “predatory” role but wants to help African nations “grow and become richer.”
During the visit, Claudio Descalzi, the CEO of Italy’s state-run energy company, ENI, signed an $8 billion deal with Libya’s National Oil Corporation to develop two Libyan offshore gas fields. NOC’s chairman Farhat Bengdara also signed.
The agreement involves developing two offshore fields in Block NC-41, north of Libya and ENI said they would start pumping gas in 2026, and estimated to reach 750 million cubic feet per day, the Italian firm said in a statement.
Meloni, who attended the signing ceremony, called the deal “significant and historic” and said it will help Europe securing energy sources.
“Libya is clearly for us a strategic economic partner,″ Meloni said.
Saturday’s deal is likely to deepen the rift between the rival Libyan administrations in the east and west, similar to previous oil and military deals between Tripoli and Ankara. It has already exposed fractions within the Dbeibah’s government.
Oil Minister Mohamed Aoun, who did not attend the signing, criticized the deal on a local TV, saying it was “illegal” and claiming that NOC did not consult with his ministry.
Bengdara did not address Aoun’s criticism during his conference but said those who reject the deal could challenge it in court.
ENI has continued to operate in Libya despite ongoing security issues, producing gas mostly for the domestic market. Last year, Libya delivered just 2.63 billion cubic meters to Italy through the Greenstream pipeline — well below the annual levels of 8 billion cubic meters before Libya’s decline in 2011.
Instability, increased domestic demand and underinvestment has hampered Libya’s gas deliveries abroad, according to Matteo Villa of the Milan-based ISPI think tank. New deals “are important in terms of image,” Villa said.
Also, because of Moscow’s war on Ukraine, Italy has moved to reduce dependence on Russian natural gas. Last year, Italy reduced imports by two-thirds, to 11 billion cubic meters.
Meloni is the top European official to visit oil-rich Libya since the country failed to hold presidential and parliamentary elections in December 2021. That prompted Libya’s east-based parliament to appoint a rival government after Dbeibah refused to step down.
Libya has for most of the past decade been ruled by rival governments — one based in the country’s east, and the other in Tripoli, in the west. The country descended into chaos following the 2011 NATO-backed uprising turned civil war that toppled and later killed longtime autocratic ruler Muammar Qaddafi.
Piantedosi’s presence during the visit signaled that migration is a top concern in Meloni’s trip. The interior minister has been spearheading the government’s crackdown on charity rescue boats operating off Libya, initially denying access to ports and more recently, assigning ports in northern Italy, requiring days of navigation.
At a joint news conference with Meloni later Saturday, Dbeibah said that Italy would provide five “fully equipped” boats to Libya’s coast guard to help stem the flow of migrants to the European shores.
Alarm Phone, an activist network that helps bring rescuers to distressed migrants at sea, criticized Italy’s move to provide the patrol boats.
“While this is nothing new, it is worrying,” the group said in an email to The Associated Press. “This will inevitably lead to more people being abducted at sea and forced to return to places they had sought to escape from.”
Jalel Harchaoui, a Libya expert and an associate fellow at the Royal United Services Institute, said that Meloni needs to show “some kind of a step-up, compared to her predecessor in terms of migration and energy policy in Libya.”
But “it will be difficult to improve upon Rome’s existing western Libya tactics, which have been chugging along,” he said.
The North African nation has also become a hub for African and Middle Eastern migrants seeking to travel to Europe, with Italy receiving tens of thousands every year.
Successive Italian governments and the European Union have supported the Libyan coast guard and militias loyal to Tripoli in hopes of curbing such perilous sea crossings.
The United Nations and rights groups, however, say those European policies leave migrants at the mercy of armed groups or confined in squalid detention centers rife with abuse.


One-stop shop helping revolutionize Mideast’s healthcare sector

Updated 28 January 2023

One-stop shop helping revolutionize Mideast’s healthcare sector

  • Abdul Latif Jameel Health to offer underserved populations transformative products, says CEO

RIYADH: In a short span of two years, Abdul Latif Jameel Health has successfully accelerated modern innovation to provide cutting-edge healthcare solutions to people who would otherwise not have access to it.

According to its CEO, the digitally enabled company is now focused on building a commercial platform to offer underserved populations products that are both impactful and transformative.

“Since most of the innovations happen far away in the US, Japan, or in Europe, which are the hubs of medical innovation, small companies would not initially come to our parts of the world,” Akram Bouchenaki told Arab News in an exclusive interview.

“However we, at Abdul Latif Jameel Health, are giving them a chance to very quickly broaden their footprint and immediately become a global organization with the benefit of having us as that one-stop shop organization that takes care of everything for them.”

He added: “We take the product, we register it with the local regulatory authorities, we do all the promotion, medical education to physicians and we also take care of pharmacovigilance and all the regulatory requirements. That’s really the model where we’re building with several companies.”

Innovative products

Illustrating his point of bringing innovative healthcare products to the market, Bouchenaki cites the example of a new handheld, ultrasound device from a company called Butterfly that they have introduced to the market.

It is the world’s only single probe, whole-body handheld ultrasound solution that connects to a cellphone, iPhone or Android, and then gives access to ultrasound imaging to users anytime, anywhere, and at a very affordable cost.

Healthcare providers can collect advanced imaging, perform rapid assessments, and guide critical procedures no matter where they are, and share those images seamlessly with doctors across the globe to help with reading and interpreting scans.

Fusing semiconductors, artificial intelligence, and cloud technology, the product is designed to dramatically expand the capabilities of practitioners working within and outside of hospitals in developed, underdeveloped, and remote areas. 

The company has plans to steadily grow its presence in the Kingdom, the region’s largest healthcare market. (Shutterstock)

“This is a revolutionary type of device that we introduced in India and in several markets in the Middle East including Saudi Arabia, the UAE, Qatar, Kuwait, Oman, and Turkiye and now we are expanding to Egypt, Morocco, and other markets. It will transform the way people are diagnosed,” he said.

Bouchenaki added: “It is our mission to collaborate with sector disruptors, who question how healthcare services have always been delivered, and how billions of people in underserved communities can be served better.”

He then went on to give another example of a product that his company is getting ready to introduce with EQRx, a new type of pharmaceutical company based in Boston. “EQRx has developed innovative technologies and treatments at a fraction of the cost of what current cancer therapies cost,” Bouchenaki revealed. “Their approach is really to make innovation in oncology highly affordable.”

Abdul Latif Jameel Health has entered into a strategic collaboration with EQRx for the commercialization of two affordable novel lung cancer therapeutics to people across the Middle East, Africa and Turkiye.

These therapies will offer treatment to patients with advanced non-small cell lung cancer at a fraction of the cost of existing and traditional approaches.

“This agreement comes as we forge ahead in our mission to source, collaborate with, and fund innovators within the medical world that are re-examining how to improve the current healthcare landscape by disrupting existing methods,” said Bouchenaki.

Care medicine

Abdul Latif Jameel Health is keen on the development of care medicine, whereby the company is taking care to the patient as opposed to having a patient come to the hospital or the clinic.

“These interventions can have a high impact in large countries where there are remote locations,” Bouchenaki said.

He went on to cite the example of a device from a Japanese company called Melody International that will help in the maternal-fetal area to illustrate his point. 

We’re looking at growth in terms of technology because we are really building this company as a digitally enabled company from the beginning.

Akram Bouchenaki, Abdul Latif Jameel Health CEO

“We are going to introduce this device that would be able to monitor fetus health in utero while they are in the mother’s belly and the mother’s uterine health remotely,” he said. The cloud-based mobile wireless fetal monitor platform will soon be introduced across selected markets in Asia, the Middle East, and Africa.

It is a convenient, smart, and highly portable remote mobile fetal monitoring device to assist in problematic or high-risk situations, enabling safer and more secure births for mothers.

Their integrated platform comprises a fetal heart monitor; a uterine contraction monitor; and a smart tablet device to see data in real time and connect to the internet.

Its effectiveness has been proven in a variety of clinical cases, including as a partial alternative to periodic medical checkups for pregnant women living in remote or isolated areas.

Key markets

Talking about Saudi Arabia, Bouchenaki said that it was critical for Abdul Latif Jameel Health to have a strong presence in the Kingdom as it is the largest healthcare market in the region by far.

“We have a team that is established in Saudi Arabia and we have an initial portfolio of products that we have brought to the Kingdom that we have registered and we’re getting ready to launch,” he explained.

He added: “We also have Japanese innovations that are already in the market like one for heart valve repair and another for post-stroke or post-trauma rehabilitation.”

Since Saudi Arabia is a key market for Abdul Latif Jameel Health, the company has plans to steadily grow its presence in the Kingdom.

Egypt, Bouchenaki said, is another very important market. “Like Saudi Arabia and Turkiye, we are also focusing on Egypt as we are looking at expanding in countries that have taken a very deliberate and proactive approach to the handling of public health issues,” he said.

“I’ve had a really good experience working in Egypt on their hepatitis C elimination program,” Bouchenaki continued. “It’s probably one of the first countries with such a high impact of hepatitis C and we’ll be able to eliminate the disease thanks to a very strong political commitment to fight this viral infection.”

With regard to the company’s outlook for the future, Bouchenaki said he saw Abdul Latif Jameel Health’s growth along three dimensions. “We see our growth in opening new territories and new markets,” he informed.

“We also see our growth in the expansion of our portfolio in terms of new disease areas — we’re looking at a number of spaces like rehab diseases, innovative surgical technologies, etc.”

“Lastly, we’re looking at growth in terms of technology because we are really building this company as a digitally enabled company from the beginning,” he added.

“The good news,” Bouchenaki concluded, “is that we don’t have a long history, so it allows us to leverage all the technology that is at our disposal today to have the fastest and most positive impact on the market.”

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Saudi Arabia’s real estate plans leading the world in innovation

Updated 28 January 2023

Saudi Arabia’s real estate plans leading the world in innovation

  • In line with the Vision 2030 agenda, the real estate sector is booming in Saudi Arabia

RIYADH: Setting the tone for the shape of things to come, 2023 began on a high note for the real estate industry with deals worth more than SR10 billion ($2.66 billion) signed on the opening day of the Real Estate Future Forum, which was held in Riyadh from Jan. 23-25.

The strong start to the year comes in the wake of a report published by PwC Middle East in December which noted the Kingdom has made remarkable progress in transforming its housing sector in the past decade.

The government’s robust policies and initiatives, including the activation of numerous finance products, is propelling the sector forward, addressing the key challenges faced by the housing market, and making home ownership a possibility for new generations of Saudis, it said.

The positivity was echoed by Faisal Durrani, head of Middle East research, at global real estate consultancy Knight Frank.

“We are tracking nearly 555,000 residential units that are due to be delivered around the Kingdom by 2030, with Riyadh alone set to see an additional 200,000 homes as the Saudi capital gears up for a 127 percent rise in its population to 17 million by the end of the decade,” he told Arab News.

He did, however, add a note of caution, saying: “Despite the volume of new homes planned, we forecast a national deficit of almost 1.5 million units. The caveat, of course, is around building suitable stock to satisfy the exceptional levels of current and future demand.”

With such expansion on the horizon, It is hardly surprising then that there is keen interest from investors, who are looking to capitalize on the strong outlook for the real estate sector in the Kingdom.

Bahrain-based Investcorp, for instance, announced earlier in January that it would invest as much as $1 billion in Saudi real estate over the next five years.

“Saudi Arabia’s real estate market has been undergoing a rapid transformation as the Kingdom’s appetite for megaprojects and economic prosperity grow under the Vision 2030 agenda,” Yusef Al Yusef, head of private wealth in the GCC for Investcorp, told Arab News.

Changing face of Saudi Arabia

A report from S&P Global published in December last year set out Saudi Arabia’s real estate ambitions as part of its Vision 2030 program for economic diversification.

According to the report, the Kingdom has $1 trillion slated for real estate and infrastructure projects, with at least eight new cities planned predominantly along the coast of the Red Sea, with more than 1.3 million new homes by end-2030.

Predictably, Saudi Arabia has remained the largest construction market in the Middle East region, with a share of $31 billion out total $87 billion worth of awarded projects during the first 10 months of 2022, according to Rani Majzoub, head of real estate advisory at KPMG Professional Services.

“While having undisputed leadership in the region in terms of market size, Saudi Arabia is also becoming one of the leading countries in terms of real estate innovation at a global scale,” he told Arab News.

“The Kingdom is set to shape its construction and development at an unprecedented pace – with the share of construction targeted to reach 8.8 percent of nominal gross domestic product as per Vision 2030. Currently, the share of construction is estimated at 6.4 percent of GDP which equates to an annual spend of SR197 billion,” Majzoub added. 

According to KPMG’s estimates, the share of construction is expected to reach SR382 billion by 2030, owing both to GDP growth and increase in GDP contribution by the construction sector.

What differentiates Saudi Arabia, according to Majzoub, is the large number of megaprojects that are set to be developed in the next decade, which will contribute to the digital transformation of the cities with heritage and culture at their core.

A few examples include Jeddah Central Development, Makkah Heritage District, Diriyah Gate Development, Qiddiya, King Salman Park, Riyadh Sport Boulevard, NEOM, Red Sea Project and Soudah Development.

Most of the megaprojects, which are set to come to fruition in the next decade, will change not only the Kingdom’s landscape but, in many cases, the day-to-day lives of residents, too.

“The Iskan program, which aims to increase home ownership for Saudi families to 70 percent by 2030, is tasked with providing the necessary infrastructure for housing and encouraging landlords to develop real estate projects throughout Makkah, Jeddah and Dammam,” said Sapna Jagtiani, director, S&P Global Rating.

“Although the white land tax (on undeveloped land) has been in effect for a few years with some success, the government has launched the second phase of its Idle Land Program to ensure fair competition and a balance between supply and demand for modern estates,” added Ilya Tafintsev, associate, S&P Global Ratings.

“The Kingdom is currently undergoing a major transformation, with Vision 2030 as an ambitious yet achievable mission,” Mohammed Al-Otaibi, CEO of Ajdan Real Estate Development, told Arab News.  

“We believe that the development projects will be instrumental in positioning Saudi Arabia as a leading tourism, entertainment, and real estate destination to rival the likes of Dubai. At Ajdan, we are partnering with some of the world’s leading designers, architects, brands and operators to really elevate the offering in Saudi Arabia.”

“As Saudi Arabia continues its ongoing economic growth, the demand for residential properties will also increase,” Imad Shahouri, PwC’s Middle East consulting real estate cluster leader, told Arab News. 

Saudi Arabia has remained the largest construction market in the Middle East region, with a share of $31 billion out of a total $87 billion worth of awarded projects during the first 10 months of 2022.

Rani Majzoub, head of real estate advisory at KPMG Professional Services

“The Kingdom has put forward large-scale national programs as part of the Saudi Vision 2030, including The Housing Program, which aims to provide housing solutions enabling Saudi nationals to own and benefit from suitable houses. The expanding project has set a mission to improve housing conditions and quantity for current and future generations.”

“In alignment with Vision 2030, the Housing Program will provide housing units for Saudi families, with an expected 70 percent homeownership among Saudis by the end of 2030,” Shahouri added.

“The residential sector’s demand is driven by Vision 2030’s target of increasing home ownership to 70 percent by end of the decade and, as of mid-2022, the Saudi Real Estate Refinance Co. estimates home ownership to have reached 60 percent,” Junaid Ansari, head of investment strategy and research at Kamco Invest, informed Arab News.

“On a broader level, we feel that there is a wait-and-see approach being adopted in some cases, where many potential buyers are waiting the delivery of new major developments,” Pedro Ribeiro, general manager of CBRE Saudi Arabia, told Arab News.

“Many of these developments will help provide much-needed supply to market but also, more importantly, the required quality and property configuration at affordable price points. This trend is not limited just to Riyadh but also to the likes of Jeddah, where we have seen a number of notable masterplans being launched.”

All eyes on Riyadh

While numerous projects are slated for existing main cities the big question is whether the government can meet its ambitious target to make Riyadh one of the 10th largest economies in the world by 2030, with its population projected to exceed 15 million by 2030.

“We are optimistic that Riyadh will continue to grow at an impressive rate – the demand is there and there is no shortage of industry professionals well equipped to meet the demand,” said Al-Otaibi.

“At Ajdan alone, we are involved in a number of new residential projects in Riyadh that will contribute significantly to the city’s economy, not to mention many other developers both in the private and public sector that will be delivering mega-scale projects in and around Riyadh, so we are confident that the government will reach its goal.”  

“As ambitious as it sounds, this aim requires significant effort on the economic, regulatory and development fronts. So far, the government has not only shown determination but has also made the required effort and implemented innovative ideas to accomplish the challenge,” Majzoub said.

He added: “The government is focused on increasing the participation of the private sector from 40 percent to 65 percent and raising the contribution of small and medium enterprises to the gross domestic product.

“Regulatory steps such as reducing the requirements of bank guarantees for developers, the relocation of international company regional headquarters to Riyadh, and expansion of the industrial areas are some of the key measures taken by the government to drive the requisite growth.”

“Megaprojects like the Metro will enhance mobility and allow the city to expand and create more developments on the outskirts like Diriyah,” Majzoub explained. “On the other hand, lifestyle projects like Diriyah, King Salman Park, Qiddiyah, etc. are set to become a reflection of futuristic living which will attract expats and locals from other parts of the country.”

“The current growth trajectory, announced mega projects, government plans and regulations, and the response of the private sector all show positive signs and increase the likelihood of achieving the ambitions for Riyadh,” he concluded.

“This transformational change in infrastructure and cross-cultural engagement, while focused in Riyadh, is not exclusive to it,” summed up Shahouri. “Other major cities like Jeddah are also getting a makeover in a large-scale redevelopment effort. For instance, the Kingdom will invest $20 billion to revamp and revitalize about 5.7 million sq. m. of picturesque waterfront in the Jeddah Central Project. Similar initiatives are underway in Madinah as well.”

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