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INVESTMENT


LAND OF OPPORTUNITY


A reported US$600 billion worth of investment opportunity is up for grabs in the Kingdom between now and 2020, and with the country leading the region in the World Bank ease of doing business rankings, it’s attracting increasing interest both on the home front and from abroad.


community as the country looks to attract local and foreign direct investment by offering US$600 billion worth of opportunity across virtually every asset class and province. New demand drivers such as the improvement of transportation


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systems and major infrastructure plans are creating exciting investment opportunities, and the authority is pulling out all the stops to secure long- term economic prosperity, as well as diversity, by playing on Saudi Arabia’s current status as the Gulf region’s most attractive business destination. According to the latest World Bank Ease of Doing Business Index, updated in October 2011, the Kingdom is ranked as the 12th most business-friendly destination in the world. SAGIA is also hyping the advantages of investing in this emerging Middle


East market with a raft of value-added business services and solutions for investors and business owners, including a one-stop-shop centralised services offices and its role as intermediary between new market entrants and national and regional agencies, as well as licensing capabilities under the new Foreign Investment Act, which allows for 100 per cent foreign ownership. Investment interest in the Kingdom is going global, say market pundits, with companies from China to the US keen to secure a foothold in local industries; and with the International Monetary Fund predicting that the economy will expand by four per cent in 2011, as increased public expenditure smoothes the path of sustained economic stability, real estate and the construction industry are preparing to reap the future benefits.


INVESTMENT DRIVERS At the start of 2011, the Jones Lang LaSalle (JLLS) Top Trends for 2011


report identified Government stimulus packages as the vehicle to drive the real estate market and help build sustainable communities. Te country’s relative stability and strong long term fundamentals are also helping to cement Saudi Arabia’s reputation as a strategic commercial


he Saudi Arabian General Investment Authority (SAGIA) is dangling a juicy investment carrot in front the regional and international


location for the region. New laws designed to protect public company investors have also been issued by the Capital Market Authority, and Ministry of Commerce and Industry, and the liberalisation of investment rules is benefiting all market sectors with more favourable regulations offering an advanced degree of comfort for investors. For the office sector, the JLLS report also stated that injections of


new supply will tip some markets in favour of tenants, which will require leasing strategies and frameworks that ensure occupancy, led by large multinational tenants that prefer to lease space managed by professional management firms. Te delivery of world-class assets will also shift focus from development


to operations, and to the protection of the long-term value of investment, which also opens up opportunities in the facilities management arena.


ECONOMIC CITIES While greater foreign involvement in economic development is being used to leverage potential investment, it is the much hyped and large scale initiatives such as King Abdullah Economic City (KAEC), situated directly north of Jeddah, that have been garnering most of the attention to date. As the first freehold city in Saudi Arabia, with five more to follow, KAEC


is angling for foreign investment under the new Economic Cities Act, which was issued in 2010 but is yet to come into full effect. Te law will allow foreign investors, individuals and companies to purchase property in designated areas. Under development by Emaar -Te Economic City, the US$27 billion Government-sponsored project is aiming to attract two million residents and generate one million jobs upon completion in 2025. Situated just five kilometres from Madinah, the 65-square-mile city will offer a technology park, medical centre, business district, major retail hub, residential units, a convention centre and hospitality complex. However, despite its high profile positioning, this particular mega project hasn’t come through the downturn entirely unscathed, with customer defaults and construction delays the direct result, as owners struggle to make payments g


16 I CITYSCAPE I NOVEMBER 2011


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