The business case for Riyadh is a no-brainer
Which should business executives prioritize when making a strategic decision about office location: Potential for doing business or quality of lifestyle?
It’s a tricky question, because as we all know a happy and contented executive, with a lifestyle that goes with the high-flying status, is going to be motivated and focused on his or her main task — doing business.
But, especially in the era of coronavirus disease when lifestyles everywhere have been fundamentally transformed and livelihood has been prioritized over lifestyle, now more than ever it will become essential for executives to make office location a hard-nosed business proposition.
Saudi Arabia knows this very well, which is why it is launching a drive to attract the big-name multinationals to set up their regional headquarters in Riyadh rather than other hubs in the Gulf that project a “lifestyle destination” image.
One effect of the pandemic has been to shorten supply lines and value chains of their businesses, allowing them to get closer to where their end-users are, whether they happen to be direct consumers or value-adders in the manufacturing process.
For the Gulf region, that necessarily involves being closer to Saudi Arabia. The economic and demographic data makes it a no-brainer. The Kingdom’s economy is as big as all the other GCC states combined, while its population is 50 percent larger than the total for the rest of the Gulf countries.
In the world of finance, the rationale is just as compelling. The Tadawul is by far the biggest and most liquid of the region’s stock markets, with the most advanced products and regulatory regime in the Middle East, and with the track record of staging the biggest IPO in history under its belt.
The sheer size and scale of Saudi Arabia in comparison to its neighbors is, on its own, a persuasive argument to be closer to the Kingdom.
The transformation underway through the Vision 2030 strategy to reduce oil dependency amply reinforces the argument. Saudi consumers are spending more, on a wider variety of goods and services, than at any time in their history as a wave of pent-up demand is unleashed.
Riyadh has a solid business case to lure the big global organizations. It ranks number 40 worldwide in terms of population, and 18 in terms of size of metropolitan economy.
This will not be news to anybody who has been to Riyadh, Jeddah or Al-Khobar recently. The retailing, hotel and restaurant facilities are at least as good as anywhere else in the Gulf, as the increasing spend and number of consumers makes clear.
Riyadh, in particular, has a solid business case to lure the big global organizations. It ranks number 40 worldwide in terms of population, and 18 in terms of size of metropolitan economy. The Saudi capital accounts for nearly half of all Saudi non-oil economic activity.
It also has a range of new and planned facilities that will only enhance the case for business efficiency. The city-wide Metro system is on the verge of formal opening, and the King Abdullah Financial District — a financial hub to rival any established center in the region — is open and signing up tenants at an increasing rate.
The Saudi capital already ranks high in global surveys for ease of digital access, and the needs of business during the pandemic lockdowns gave this sector a shot in the arm, accelerating the online transformation in a range of government and private-sector activities.
Meanwhile, for those for whom lifestyle is a big priority, the Saudi capital is in the midst of a renaissance, as part of the grand project to double its population by the end of the decade. There are green urban projects that will add to the livability of the city as well as music, entertainment, sports activities and festivals to fill the non-working hours.
The attractions of the Kingdom, and the capital in particular, will be showcased at next week’s Future Investment Initiative gathering, where it is likely several new initiatives will be unveiled to add to the allure.
The business case for Riyadh is already compelling. The lifestyle rationale is catching up fast.
• Frank Kane is an award-winning business journalist based in Dubai.