Saudi arabia profile_and_market_report


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Saudi arabia profile_and_market_report

  1. 1. Market ReportThe Kingdom of Saudi Arabia 1_____________________________________
  2. 2. Market ReportContentsCountry Profile - Saudi Arabia_________________M.I.C.E. Arabia for Exhibitions and ConferencesJeddah, KSAP.O. Box: 6437 Jeddah 21442Tel: +966 2 6673211Fax: +966 2 6673211 ext.  Location, Demography , Background 3 /4  Economic overview 5  Tourism overview 6/8  Construction and real estate overview 9 / 11  Infrastructure overview 12  Conclusions 13  Why Jeddah 14 / 16  Exhibition Facilities 17 2_____________________________________
  3. 3. Location:Saudi Arabia is located in the southwest corner of Asia, occupying almost 80 percent of the Arabian Peninsula. It issurrounded by the Red Sea on the West, by Yemen and Oman on the South, the Arabian Gulf and the United ArabEmirates and Qatar on the East, and Jordan, Iraq and Kuwait on the North. Desert covers more than half the total area ofSaudi Arabia. A narrow coastal plain runs through the Kingdom’s western coast while a range of mountains run parallel tothe coastal plain along the Red Sea. Along the Arabian Gulf in the east is a low–lying region called Al–Hasa. The easternregion has the richest reservoirs of oil in the world.Capital:RiyadhSecond Largest City:JeddahThird Largest City:MakkahLanguage:Arabic is the official language.Other Languages:EnglishCurrency:Saudi Riyal (SAR)Land Size:2,250,000 square kilometersClimate:The climate in Saudi Arabia differs greatly between the country’s two distinct regions: the coast and the interior. Highhumidity coupled with more moderate temperatures is prevalent along the coast, whereas aridity and extreme temperaturescharacterize the interior.Natural Resources:Saudi Arabia has vast oil resources. The country also has large natural gas reserves, as well as deposits of bauxite, coal,copper, gold, iron, phosphates, platinum, silver, tungsten, uranium, and zinc. Non–mineral resources include limestone,glass–sand, and stone.Working week days – Saturdays to ThursdaysTime Difference – GMT+3 3_____________________________________
  4. 4. DemographyPopulation:Total - 26,810,000Population - Capital City:Riyadh: 5,835,618Population - Second Largest City:Jeddah: 3,262,697Population - Third Largest City:Makkah: 2,000,000Age Structure:Age 0-14 – 38.2% of populationAge 15-64 – 59.4% of populationAge 65+ – 2.4% of populationPopulation Growth Rate:2.24% per annumBackgroundIntroductionSaudi Arabia also known as Kingdom of Saudi Arabia (KSA) was formed in 1932 by King Abdul–Aziz al–Saud.Saudi Arabia is the worlds leading oil exporter, and has the greatest proven crude oil reserves—sufficient for almost 90years extraction at current rates. The wealth of the oil sector which was nationalized in 1975, has transformed the countryseconomy.Saudi Arabia is the centre of Islam and keeper of the Islamic holy cities of Makkah and Medina, visited by millions of pilgrimseach year during the Hajj period. Saudi Arabia is also a major aid donor, active in the World Bank and IMF as well assupporting humanitarian and development programmes through the Saudi Red Crescent, the Saudi Development Fund andother agencies.Saudi Arabia is a member of the Gulf Cooperation Council (GCC), a member of the Arab League, the Organization of theIslamic Conference and the United Nations.Accordingly, the Kingdom of Saudi Arabia means different things to different people. For millions of followers of Islamacross the world it is the ultimate Holy Land and pilgrimage destination. For a large number of expatriates from Asia, Europeand the United States, it is a land of opportunities. For the rest of the world, Saudi Arabia means oil – the lifeline of presentand future economies. Saudi Arabia has so far lived up to all these definitions, and is now entering a new phase of itsdevelopment. 4_____________________________________
  5. 5. EconomicEconomic OverviewThe economy of the Kingdom of Saudi Arabia is the largest in the Middle East and accounts for 50% of the GDP of the GulfCooperation Council (GCC). With one-quarter of global oil reserves, it is the world’s largest crude oil producer and exporter,accounting for one-third of OPEC’s oil production and some 12% of the world’s total supply. While hydrocarbons willcontinue to form the backbone of the economy, the government is also embarking on a broad programme of economicliberalization and diversification.The years-long bull-run on oil has been kind to the kingdom – between 2003 and 2008 the economy expanded by 120% innominal terms, from SR796.6bn to an all-time high of SR1.76trn – including a 22% jump in 2008.Saudi Arabia is far better-placed to face a downturn now than it has been in the past. While its economy is expected tocontract this year by 1% - the first contraction since 1999 – strong fundamentals underpin an expected rebound to 3.3%GDP growth in 2010. A conservative monetary policy has allowed public debt (as a proportion of GDP) to decrease from120% in 1999 to 13% in 2008. It has also cultivated an excellent business environment. The country has ranked first in theArab world for four consecutive years and 16th globally on the World Bank’s latest ‘Doing Business’ Report. In 2005 thegovernment set a goal of being among the top 10 most competitive economies in the world by 2010 (known as the 10x10plan).The government has answered the global financial crisis with the largest budget in the country’s history, with plannedexpenditure increasing 16% over the 2008 budget to SR475bn ($126.7bn). The focus is on capital expenditure whichincreased by 36% to SR225bn ($60bn) and is targeted at new and existing development projectsNon-oil development is focused on telecommunications, finance, construction and transportation, all of which continue tobenefit from government-led infrastructure projects. According to the MEP, between 2004 and 2008 the non-oil sector grewby an average of 4.7% per annum from SR508.8bn to SR610.8bn. The government has pledged to spend $400bn oncapital investment construction projects over the next five years, which will directly benefit the burgeoning non-oil economy. 5_____________________________________
  6. 6. Sustainable TourismSome of 325 hotels equating to 92,026 rooms are currently under construction or planned in the Middle East, with themajority expected to enter the market in 2009 and 2010, representing 10% and 12% growth respectively on the last year.US$ 19.9 billion are projected to be spent on hotels construction in the GCC region in 2009 and US$ 140.4 billion in terms oftotal project budget. Saudi Arabia is in a unique position- being poised to benefit form the forecast growth in the religioustourism. This, coupled with an increase in business travel, has led to a shortage in quantity hotel room supply, and thisprovides huge opportunities for the construction and interior sectors, in addition to the hospitality sector with 51 new hotels.While Saudi Arabia is pursuing a tourism strategy aimed primarily at domestic and Gulf Cooperation Council (GCC) visitors, thegovernment is also looking to develop a sustainable base from which the industry can grow.With an estimated 5m Saudis traveling abroad annually and SR6.8bn being spent on outbound tourism, it is understandablewhy the government is keen on expanding the number of domestic tourism trips from the current 29.6m. The SupremeCommission for Tourism and Antiquities (SCTA) target is to have 128m internal tourists by 2020, generating someSR101bn in revenue.Tourism is already a valuable component of the Saudi economy. While religious tourism plays a significant part, thegovernment has been trying to buoy the broader sector to optimize revenue and employment opportunities. To this end, thecouncil of ministers has approved a $38bn tourism programme aimed at boosting infrastructure.The hotel industry is also set for growth. International hospitality brands are preparing to take advantage of the Kingdomsgrowing focus on tourism Overall, The SCTA plans to create 50.000 new hotel rooms and housing units in the next threeyears and has decided to turn several historic buildings across the country into state-owned heritage hotels.As part of continued efforts to spread awareness of the benefits of tourism to all corners of the country, and in particular tothe west coast of the country, the government has selected 19 areas to be developed into resorts around Jeddah andMadinah.Despite the current focus on domestic and religious tourism, other segments of the market are set to grow. Conferences andworkshops, for example, are beginning to take a higher profile and already account for 17% of tourism spending in theKingdom.While the current strategy focuses on domestic tourism, not foreign visitors, traveling to Saudi Arabia has become easier,and more and more people are coming. Gradually, selected groups of leisure tourists are being allowed into the country.The governments willingness to increase the number of inbound visitors is a sign that Saudi Arabia is aware of the revenueand employment opportunities underlying a robust tourism sector. 6_____________________________________
  7. 7. Religious TourismIslam’s holiest site, Makkah, is the scene of a major regeneration scheme, designed to capitalize on the religion’sgrowing global popularity and some of the world’s most expensive real estate. It started in 2005, whenthe Makkah Development Authority approved the master plan for the expansion of Islam’s holiest city. The 23-year planaims to accommodate three million Saudi nationals and expatriates, and eight million pilgrims.Following the announcement, and buoyed by previous record-high oil prices ensuring a healthy budget surplus, theKingdom of Saudi Arabia has embarked on a range of major expansion projects designed to capitalize on some of theworld’s most expensive real estate, and focusing on increasing the number of religious tourists visiting the country for theannual Hajj as well as Umrah pilgrimages. Major residential and mixed-use projects are now underway and are set tochange the face of Makkah for ever.One of the largest of all planned developments in the city, and certainly the most advanced, is Abraj al-Bait, a seven-towercomplex currently under construction and due for completion in 2010. One of the seven towers is expected to reach 595metres in height, which will make it the tallest building in the Kingdom upon completion. If all seven towers are groupedtogether, the structure will have the largest floor area of any structure in the world, covering 1.5 million square metres.As well as comprising a prayer room which can accommodate four thousand worshippers, there will also be a five-star hotel,four-storey shopping mall and a car park which can hold eight hundred cars. A number of towers will be dedicated toaccommodating an incredible 65,000 residents, with units available for purchase on a timeshare basis. Three purpose-builtbridges will connect Abraj al-Bait with the Masjid al-Haram to avoid traffic congestion during the Hajj season.The investment opportunities are not restricted to those properties in the shadow of the Masjid al-Haram. Related projects,designed to tie-in with the broader Makkah redevelopment plan are also underway. Tareeq al-Mawazee is a one-million-square-metre urban regeneration project which will encompass a critically-needed three kilometre-long, four-lane road toenhance connectivity and reduce traffic congestion in Makkah. Moreover, it will also feature mixed-use real estatedevelopments consisting of residential, commercial, retail and hospitality components which will improve facilities forresidents and pilgrims. It is expected to be completed in 2018 and will be jointly developed by Dallah al-Baraka and theSaudi Binladin Group. Riyadh-based Dallah al-Baraka plans to raise US$5.6 billion for the scheme by selling shares in anew project company. It is currently awaiting approval from the Makkah authorities to set up the company, which it isexpecting to receive in the first half of 2009.Among the other key projects planned for the city is the Al-Shamiyah redevelopment. The US$13.5 billion project is a 1.5-square-kilometre urban regeneration scheme running from the Grand Mosque to beyond the second ring road to the north ofthe city, and from Holy Mosque street in the east to Jabal al-Qaaba road in the west. Developed by a consortium led by thelocal Al-Oula Group, Al-Shamiyah is the one remaining area in Makkah’s central district that has not been subject toredevelopment efforts by the public or private sectors. It is due to be completed in 10 years and will feature a series ofhotels, along with residential and commercial buildings.With some of the world’s most expensive real estate, and a guaranteed influx of pilgrims in their millions – and growingevery year – it is little surprise that Saudi Arabia is undertaking such exciting projects. What is key is that the governmentensures the future prosperity of Makkah while adhering to the tenets of Islam at every level. 7_____________________________________
  8. 8. International tourismInternational tourism arrivals in Saudi Arabia have increased by more than 150% over the past decade, and reached 11.5min 2007, representing 34% growth over the previous year. Religious visitors make up over half of all arrivals, with the secondbiggest segment being business tourism. Leisure tourists account for just 5% of the total.The government is aiming to revolutionize the sector in the coming years, however, and greatly increase the share of leisuretourism, with a focus on domestic tourism. In November of 2008 the Kingdom launched Vision 2020 – a framework thatstresses cooperation with the private sector and increased regulation to encourage domestic tourism amongst Saudis.The international market is also being targeted. The Saudi Commission for Tourism announced in early 2009 that it isseeking to attract 88m tourists and SR101bn in receipts by 2020. Currently tourism accounts for about 6% of the country’snon-oil GDP and the government is looking for at least 5% growth per annum to reach a share of 16% by 2020. The statehas already earmarked several locations on the Red Sea as focal points for development, with more details expected laterin the year.Liberalized visa regulations should encourage greater tourism and longer stays. GCC nationals no longer require a visa tovisit and business travelers are now permitted to apply for a one-year, multiple-entry visa. Haj and Umrah pilgrims andreligious tourists can also extend their visa for up to three months, in a government bid to encourage greater per capitatourism spend. Starting in January 2008, women are allowed to stay unaccompanied in Saudi hotels.In 2008 Deloitte reports that room rates and Rev Par averaged $244 and $175, respectively, in Riyadh – some of thestrongest figures in the world. Growth has continued in the first quarter of 2009, with room rates going up 18%, thoughoccupancy declined more than 15% to average 69% for the quarter. Occupancy rates are slightly lower in Jeddah – at 67% -while room rates average $174 and Rev Par increased 30% in Q1 to reach $116. Makkah had the second highest Rev Pargrowth rate in the Middle East – at nearly 33% - in the first quarter and room rates averaged $170, while occupancy waslow, at 45%.According to the Proleads database 17 new hotel projects are under development in Saudi Arabia, including the 10,000room, nine-hotel Jabal al-Kaaba complex in Makkah and 1900 additional rooms in Riyadh. Deloitte expects 2300 rooms tocome online this year in Makkah, followed by 220 the next year. Provincial Saudi Arabia should see the addition of some1,250 new rooms on 2009, with a further 800 additional rooms in 2010. In June the Park Hyatt Jeddah – the first Hyattfranchise in Saudi Arabia – opened, adding 142 rooms to current supply. Weighted against the consistent growth inoccupancy rates, the coming injection of new supply could potentially result in a marginal short term decline in occupancybefore the market again stabilises. 8_____________________________________
  9. 9. Construction & Real Estate OverviewThe building and construction sector is the third largest sector of the Saudi economy after oil and ICT and it hasexperienced rapid growth in recent years. The three main areas for construction in Saudi Arabia are Jeddah, Riyadh, Al-Khobar,Yanbu and Hail.Government is spending on infrastructure such as roads, ports, airports and rail to support its commitment of being the largesteconomy in the Gulf region.The positive outlook of private-sector developers who are constructing a raft of high-rise commercial and mixed use buildings,shopping malls, hotels and tourist resorts and low-rise residential complexes to support the rapidly growing population, eg. 140shopping malls are under construction in the city of Jeddah alone.The Saudi Government continues to promote capital development projects in the areas of power, roads, railways, andeconomic cities, including industrial manufacturing zones. Those developments represent opportunities for international firms.Private sector projects such as commercial buildings, malls, and hotels also represent significant opportunities being in line withthe drive to develop infrastructure in the business and leisure sector.High liquidity, combined with domestic demand dynamics have helped to shield Saudi Arabian real estate from the worst ofthe global downturn. The sector continues to grow on the back of robust demand and an extremely young population keenon future homeownership.As the Kingdom’s banks are in healthy shape compared to others in the Gulf and have managed the downturn well so far.There is certainly significant room for growth. It is widely acknowledged that the home ownership market has beenconstrained by the delay in authorizing the new mortgage law. Currently the housing finance industry is virtually non-existentwith housing finance to GDP ratio less than 1%. Less than half of the population is a homeowner; a recent report fromNational Commercial Bank (NCB) predicts that upon the approval of the law, the mortgage market will grow five-fold toreach SR86.5bn ($23bn) by 2012.At SR58.8bn ($15.7bn) the construction sector accounted for 9.6% of nominal non-oil GDP. From 2003 to 2008 the sectorhas been growing at 5.25% on a CAGR basis. The finance, insurance and real estate sector, meanwhile, has grown bynearly 30% over the same period.High government spend has been a major factor in construction growth. According to Proleads Global – a market researchfirm – active construction projects in the Kingdom totaled over $430bn as of mid-2009. The firm also said that the majority ofthe activity would be generated by the housing segment, followed by commercial office space units and retail.According to a report by the Council of Saudi Chambers of Commerce, the real estate industry will achieve 6.7% growthover the next five years owing to commercial and residential projects, in addition to demand for land and housing. Realestate demand is based primarily on population growth and economic diversification associated with such large-scaleprojects as the King Abdullah Economic City (KAEC) amongst others. These are backed by high levels of liquiditystemming from generous oil revenues in recent years, a continued preference for investing in the local market, low interestrates and a gradual increase in the availability of bank credit.Of the five planned economic cities to be developed, four are at an advanced stage of planning or already underconstruction. The most advanced is the King Abdullah Economic City (KAEC), located at Rabigh, north of Jeddah on theRed Sea coast; then there is Jizan Economic City (JEC), in the south toward the Yemeni border; Knowledge EconomicCity (KEC), is located near the Holy City of Medina; and finally, the Prince Abdulaziz bin Mousaed Economic City(PABMEC) at Hail, to the north. Each city will have a distinct identity and will contain a combination of commercial,residential and industrial businesses, which together are expected to contribute some $150bn to the GDP of Saudi Arabia,house 4.5m people, provide jobs for 1.3m and help boost GDP per capita by almost 200% in 2020. They are beingspearheaded by the Saudi Arabian General Investment Authority (SAGIA) and all focus on the government’sunderstandable ambition to spread wealth outside of the main cities. 9_____________________________________
  10. 10. The King Abdullah Economic City (KAEC) - Value: US$92 billion The King Abdullah Economic City (KAEC), located in Rabigh, near Jeddah, is the largest of the five new cities. The project calls for building an integrated city covering a development area of 168 million square metres (sq. m.) along the Red Sea between Jeddah and Rabigh. The development includes the following components: 1. Seaport: 14 million square metres (sq. m.) area with 300,000 pilgrim capacity. 2. Industrial district: 63 million square metres (sq. m.) area. Phase 1: 6.24 million square metres (sq. m.). 3. Financial Island: 3.8 million square metres (sq. m.) area 4. Resorts: 3.5 million square metres (sq. m.) area 5. Residential: 51 million square metres (sq. m.) area which will include 150,000 apartments. 6. Educational Zone including multi-university campus accommodates 18,000 students. The city has the potential to create one million jobs and become home to two million residents. The cities will generate huge construction activity benefiting contractors and building material manufacturers alike. Jizan Economic City - Value: US$30 billion The project calls for the construction of a 117 square kilometres (sq. km.) integrated economic and industrial city, 50 kilometres (km.) north of Jizan city in southern Saudi Arabia. Jizan is close to the Yemen border and 725 kilometres (km.) south of Jeddah. The industrial zone will have a port, aluminum smelter, steel processing plant, copper processing plant, oil refinery, fish processing facility and other industries. The non-industrial zone will have a business district, residential areas, a marina, educational and hospitality facilities. The development will have a common infrastructure and utilities including 2 power and desalination plants. Jizan has rich deposit of limestone, dolomite, marble, basalt, gypsum and silica. Prince Abdulaziz Bin Mousaed Economic City in Hail - Value: US$53 billion The development is divided into: 1) Logistic Centre for 75,000 tons per annum (tpa) of cargo 2) Airport on 8,740,000 square meters (sq. m.) for 3.1 million passengers and 130,000 tons of cargo in 10 years operation 3) Dry Port on 210,000 square meters (sq. m.) for 1.5 million tons of cargo in 10 years operation 4) Passenger Station for 3.2 million passengers in 10 years operation 5) Agricultural Centre 6) Entertainment Zone for 700,000 tourists per annum 7) Mining City 8) Petrochemical Zone 9) Business Centre 10) Educational Zone on more than 10 square kilometres (sq. km.) for 40,000 students in 4 years operation 11) Residential Zone of 3,000 commercial units and 30,000 residential units for 80,000 residents 12) Infrastructure: power, water, drainage and 3,300 kilometres (km) roadsSudair City Development - $40 billion9T 9 TSudair City is a mixed use development that includes residential, commercial, entertainment and educational facilities.Sudair City will span an area of 258 million m2 north of Riyadh.Medina Knowledge Economic City (KEC) - Value: US$7 billion The project calls for the design and construction of Taiba Technological and Economic Information Centre, an interactive museum on the Prophet’s life, a centre for studies of Islamic civilization and another centre for medical studies, biosciences and integrated medical services. The project will also include hotels and housing buildings accommodating 200,000 people as well as commercial centres. The new city will create more than 20,000 new jobs. This makes Saudi Arabia a market that no construction supplier can afford to ignore, even in these challenging economic times. We are presenting projects that every supplier should know about. The projects are not in order of the most valuable in the country, but those that are vital to the country’s development. According to estimates, total new real estate construction activity will reach $130bn in value by the end of 2010. Research in 2008 by SABB, the Saudi British Bank, shows that real estate remained the preferred investment within the Kingdom, with 50% of locals investing in real estate at the beginning of 2008, compared to 41% who expected to invest in equities. Under the Kingdom’s strategy of five-year development plans, the eighth development plan envisages the construction of 1mn housing units over a period of five years. This would provide an increase of more than 300% in built housing stock in comparison to the 2000-04 periods. According to the housing demand allocation of the eighth development plan, forecasts project that Riyadh and Makkah alone will be home to almost 50% of the total units constructed, with up to 10% of the total consisting of commercial units. 10_____________________________________
  11. 11. Demand for office space, especially that for A-grade offices, is heating up due to the number of newly establishedcompanies and the continuing expansion of existing ones. This is expected to remain the case as the economy continues toopen up and the ongoing review of investment laws lure greater numbers of foreign investments.Retail is also high and getting higher. Saudi Arabia is the largest retail market in the GCC and has witnessed acommensurate increase in the numbers of foreign investors entering the market. Over the next six years, available retailspace will nearly double, and much of it will move out of Riyadh and Jeddah, and into smaller cities and outlying regions.OBG estimates that by 2010, Saudi Arabia will have around 650,000 sq m retail supply, close to 40% of total grossleasable area (GLA) in the GCC.Saudi Arabia has coped well with the financial crisis as compared to some of its GCC neighbors. While the private sector isstill cautious, the depth of the Kingdom’s internal demand from a growing population cannot be ignored. The government isdeveloping a structured plan of ongoing economic diversification, a major part of which being the creation of large-scalecities to provide employment and encourage growth. Pent-up demand for housing and private ownership is expected to geta new lease of life with the introduction of a mortgage law. Perhaps most significantly though, it is the country’s immensereserves that should allow development to progress unhindered as much of the rest of the world slowly picks itself up fromthe recession.(KAEC) 11_____________________________________
  12. 12. Infrastructure developmentSaudi Arabia has 27 airports and around 60,000km of highways. Jeddah port is ranked among the largest ports in the world withstate of the art equipment and very large unloading facilities. Another industrial port is being constructed in Ras Al Zour (EasternProvince and dedicated to the aluminum complex and mine deposits).Airport expansions are planned in order to cope with the increased demand. Jeddah airport would have a capacity of 56 millionpassengers a year after completing the third phase and would accommodate three main dedicated gates.Around 5,000km of rail projects have been awarded or announced. The North South Railway (2,400km of rail project) and theLand bridge rail project (1,100km of rail project) tender results would be announced during the next few months, and wouldserve in linking Jeddah to RiyadhIn total, current infrastructure and public sector building programs are valued at some $35 billion. Plans include building600 new factories, schools, doubling desalination capacity, increasing electrical generation and distribution. Some 600,000new homes are to be built in the next four years with many more planned.Other social requirements such as new hospitals and clinics, as well as education and residential are big items on thegovernment agenda.- Princess Noura bint Abdulrahman University for Women in Riyadh- $11.5 billionThe project calls for construction of a new university for women. The university is expected to cover 8 millions m2 and willbe located on King Khalid International Airport Road north of Riyadh. The total built up area is around 3 million m2.Thecapacity of the university is around 26,000 students.- Land bridge Project- $10 billionThe Land bridge is a 1100km railway network. The railway will connect Jeddah on the Red Sea with Dammam city in theArabian Gulf. The project will also include a 115km railway to connect King Fahad Industrial Port with Jubail Industrial City.- Shamieh Project – $9.3 billionThis Makkah project is in design to include residential apartments, commercial centres, hotels, schools, mosques, hospitalsand related facilities, car parks and transport corridors to carry pilgrims. The development is located north of the Harammosque in Makkah.- Al Zahira City - $4 billionDesign for this development on Palestine Road east Jeddah includes 20,000 housing units and 150,000 square metres ofsurrounding gardens.- North-South Railway- $3.5 billionNorth-South Railway is a 2400km-long railway project. The primary objective of the railway will be to connect bauxite andphosphate mines at Az Zubairah and Al Jalamid to processing facilities located at Ras Azur port.- Haramain High Speed Rail Project- $1.9 billionHaramain High Speed Rail Project (HHR) is a rail link project connecting Makkah and Madina via Jeddah. The railway will bea high speed electrified passenger double line between Makkah, Jeddah and Madina. 12_____________________________________
  13. 13. ConclusionsSaudi Arabia and its neighboring countries are riding the wave of a new era in the Middle East. Construction anddevelopment projects are flourishing at a breakneck pace, creating an immediate need for a full range of building supplies,technologies and services. Now is the time to seize market opportunities in this corner of the world.According to professional estimates, $1 trillion worth of construction development and infrastructure projects is earmarked bythe GCC states and other Middle Eastern governments and the private sector in the region. There is almost $40 billion worth ofongoing and planned projects in Syria, $60 billion in Iraq, $30 billion in Jordan, $ 25 billion in Lebanon.Above all other markets Saudi Arabia continues to attract developers and investors. With a sizeable youthful population,residential, retail, hospitality and commercial demand are steadily increasing in key cities. Development activity in Riyadhand Jeddah is expected to lead to short term declines in demand, without this being expected to be sustained. Jeddah isproving particularly attractive with developers in 2008 - 9, with linked to King Abdullah Economic City expected to ultimatelyrebound to the benefit of the city rather than proving competitive.Competitive environment there are four main projects cost of 30 Billion SR and around 150 shopping malls under constructionin Jeddah only and five mega-cities across Saudi Arabia of various sizes and specializations. Initially, products and skillsdemanded in the market were not available locally, which meant that over 80 per cent of construction material and equipmentwere imported. Large major contracts are being awarded to foreign companies (in partnership with Saudi companies).The major American and European services providers are well established in the Saudi market. Manufacturing industries are inneed of increasing their range of products manufactured in Saudi Arabia. High oil prices are feeding the Saudi constructionbooming industry. Accordingly, the combination of these factors makes the Saudi construction industry very competitive andprice conscious. Sector 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e Residential (No. of Units) 4,390,000 4,520,295 4,654,458 4,792,602 4,934,846 5,081,313 5,232,126 5,374,411 5,520,919 Office (GLA m2) 829,284 870,748 914,286 960,000 1,008,000 1,133,680 1,275,030 1,434,005 1,612,800 Retail (GLA m2) 2,033,407 3,396,641 4,507,313 4,869,530 5,094,870 5,336,030 5,987,946 6,063,946 6,188,946 Hospitality (4&5 Star 45,074 47,135 50,856 55,431 59,865 62,858 64,116 n.a. n.a. Rooms) MACRO-ECONOMIC 2003 2004 2005 2006 2007 2008 2009e 2010f 2011f 2012f INDICATORS GDP (US$ Million at Current 214,859 250,673 315,758 356,630 381,938 481,631 373,995 423,841 486,701 512,527 Prices) Real GDP Growth Rate 7.7 5.3 5.6 3.0 3.5 4.6 -0.9 2.9 4.4 4.9 GDP per Capita (US$ at PPP) 18,457 19,487 21,236 22,033 22,852 23,834 23,255 23,448 24,020 24,833 Inflation (%) 0.6 0.4 0.6 2.3 4.1 9.9 5.5 4.5 4.0 3.5 Interest Rates (Deposit) 1.6 1.7 3.8 5.0 4.8 2.9 1.8 1.3 2.1 3.9 Interest Rates (Lending) 5.6 5.7 7.8 9.0 8.8 6.9 5.8 5.0 5.8 7.6 Exchange Rate vs. Dollar 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 3.75 Average Household Size 5.8 5.8 5.7 5.7 5.6 5.6 5.5 5.5 5.4 5.4 Labour Force (Million) 5.9 5.4 6.1 6.4 6.6 6.7 6.9 7.1 7.3 7.5 Unemployment Rate (%) 25.0 25.0 13.0 13.0 13.0 13.0 n.a. n.a. n.a. n.a. Stock Market Index 4,437.6 8,206.2 16,712.6 7,933.3 11,039.0 4,803.0 n.a. n.a. n.a. n.a. FDI (US$ Million) 800 1,900 12,100 18,300 24,318 16,536 9,922 10,120 10,525 11,367 Current Account (US$ Million) 28,085 52,097 90,596 99,632 95,762 139,041 -6,802 19,172 41,870 62,664 Current Account (% of GDP) 13.1 20.8 28.7 27.9 25.1 28.9 -1.8 4.5 8.6 12.2 Trade Balance (US$ Million) 59,400 84,900 126,100 147,400 151,547 201,525 86,939 114,709 106,286 144,694 Trade Balance (% of GDP) 27.6 33.9 39.9 41.3 39.7 41.8 23.2 27.1 21.8 28.2 Government Debt (US$ Million) 188,000 174,000 140,000 110,540 95,122 89,059 90,605 79,304 84,337 89,236 Government Debt (% of GDP) 87.5 69.4 44.3 31.0 24.9 18.5 24.2 18.7 17.3 17.4 13_____________________________________
  14. 14. Why JeddahMakkah Province (Makkah, Jeddah, Taif, Madeenah, Baha) is the most populous province of Saudi Arabia, located in the westof the country, with an extended coastline. It has an area of 164,000 km² and a population of 6.5 million. Its capital is the sacredcity of Mecca, but its largest city is Jeddah.Jeddah is a Saudi Arabian city located on the coast of the Red Sea and is the major urban center of western Saudi Arabia. It isthe largest city in Makkah Province, the largest sea port on the Red Sea, and the second largest city in Saudi Arabia after thecapital city, Riyadh. The population of the city currently stands at over 3.5 million. It is considered the second commercial capitalof Saudi Arabia. In addition, the citys geographical location places it at the heart of the region covered by the Middle East and North Africa, withall their capitals within two hours flying distance, defining Jeddah as the second commercial center of the Middle East afterRiyadh.Also, Jeddah industrial district is the fourth largest industrial cities in Saudi Arabia after Riyadh, Jubail and Yanbu.The city has several global and major organizations such as: • Saudi Geological Survey • Saudi Arabian Airlines • Organization of the Islamic Conference • Islamic Development Bank • Jeddah Economic Forum • Saudi Arabias Human Rights Organization • Jeddah Chamber of Commerce & Industry • Jeddah Marketing Board • International Association of Islamic Banks • Islamic Ship owners Association • Islamic States Broadcasting Organization • The National Commercial BankTransportAirportJeddah is served by King Abdulaziz International Airport which is one of the worlds busiest airports. The airport has fourpassenger terminals. One is the Hajj Terminal, a special outdoor terminal covered by very huge tents, which wasconstructed to handle the more than 2 million pilgrims who pass through the airport during the Hajj season yearly. TheSouthern Terminal is used for Saudi Airlines flights with the Northern Terminal for foreign and other national airlines.SeaportMoreover, the Jeddah Seaport which is the 32nd busiest seaport in the world (2007) handles the majority of Saudi Arabiascommercial movement.Roads and railsJeddah does not have any rapid transit system but a current plan to connect the city to the capital, Riyadh, via a train. It isnow under construction. The Haramain High Speed Rail Project will provide a high speed rail connection to Mecca andMedina.Modern streets connect the city parts to each other. In Jeddah the main highways run parallel to each other with an eightlane road. 14_____________________________________
  15. 15. JEDDAH new vision which we call Jeddah 1450, was prepared with the support of international experts, focuses on thedevelopment of urban areas, optimum use of land, boosting local economy, protecting the environment, improving socialservices, expanding tourism and transport facilities, and developing infrastructure, seafront, recreational centers, housingfacilities and underdeveloped areas.The strategic plan gives a futuristic vision for Jeddah; its main objective is to ensure a high living standard for the residentsand visitors of Jeddah.So Jeddah, with its unique and historical role, as the gateway to Makkah and Madinah, as a major destination for arrivingpilgrims, a hub of Islamic culture and a tourist and trading center, is bound to grow and be a modern city that can competewith international cities, providing a high standard of living and protecting environment.As Saudi Arabia has the “Best Investment Environment” in the Middle East and Arab World and the 13th rank among 183countries surveyed by a World Bank affiliate and is planning nearly £450bn of development, a strategic plan for thedevelopment of Jeddah over the next 20 years has been prepared by listing over than 100 projects for execution.Changing times, however, some people say that Saudi Arabia has changed considerably in the past decade and isbecoming more relaxed, especially Jaddeh city in comparison with other Saudi Arabia cities.Accordingly there are plenty of reasons to work in Jeddah Saudi Arabia.Location:1- Jeddah is located on the coast of the Red sea, and is considered the commercial center of the Saudi Arabia and is thesecond largest city in the kingdom after Riyadh, the capital.2- The city’s geographical location places it at the heart of the region covered by the Middle East and North Africa, with alltheir capitals within two hours flying distance.Life & Entertainment:1- Jeddah is known for its culture, people and heritage and is the most open city in Saudi Arabia.2- Jeddah is a cosmopolitan city; it has people coming form all over the world, who shares their cultures.3- Jeddah has beautiful beaches to relax and unwind.4- It has many popular resorts many of which are renowned for their preserved red sea marine life and offshore coral reefs.Economy:1- Jeddah is among the most modern cities in the kingdom.2- The cost of living here is lowest among all gulf cities.3- The salaries earned here are tax-free.4- It has over a thousand years of trading history.5- It is home to some of the world’s most successful merchants and business people.6- Jeddah is served by king Abdulaziz international airport, one the world’s busiest airports. 15_____________________________________
  16. 16. Discover JeddahThe most cosmopolitan city in the Kingdom, Jeddah’s myriad attractions showcase, Both the traditional and modern face of thecountry, and offer both first time and Returning visitors plenty to do, see and experience.Jeddah Corniche: The 35-kilometre-long Jeddah Corniche is a cultural landmark for the city. The popular promenade wasrecently refurbished at a cost of more than seven hundred million riyals, and took a total of five years to complete. Theboardwalk is lined with an open exhibition of impressive monuments and artistic sculptures by internationally-renownedaward-winning sculptors and artists including Varselli, Henry Moore, and the French artist César, as well as a number ofprominent Saudi Arabian artists.Al-Balad (Old Town): The city wall that once encased Al-Balad, or the old town, has long since been torn down, but thegates still mark the place where it once proudly stood. Inside the complex, traditional souks and ancient houses, built ofcoral, and now a crumbling reminder of a former time, can be explored.These coral houses line both sides of the main market street, known as Souq al-Alawi. The old town is best viewed in theafternoon, after payer time, when the numerous stores open to display their wares - a great spot to pick up an unusual gift.Naseef House: Situated along Souq al-Alawi is Naseef House. One of the city’s most renowned sights, the residencebelonged to the Naseef family. The Naseefs were one of Jeddah’s foremost merchant families and heavily involved in thebusiness of trading in and around this port city.The founder of present-day Saudi Arabia, King Abdul Aziz Al Saud, often stayed in this house when he visited Jeddah. Thehouse was restored in the 1990s and now houses a cultural centre.Typical features of the buildings are rectangular mud bricks or cut stones, walls with latticed wooden poles placedhorizontally, and latticed and carved woodwork windows.King Fahd’s Fountain: Jeddah has the tallest fountain in the world, with its arching water spout reaching phenomenalheights of up to 312 metres. Each of the three massive pumps deliver a staggering 625 litres of water per second which arepropelled into the air at an incredible speed of 375 kilometres per hour. A visual marvel, King Fahd’s Fountain is definitelyworth capturing on camera either by day or night.Souqs: In Al-Balad there are several marketplaces. The glittering appeal of the popular Souq Al Nada lies in its showcaseof gold and silver ornaments, while Souq Al Jamia is the city’s primary textile market. Souq Al Alawi, which cuts right acrossthe old town district from east to west, is a treasure trove of various retail delights, and the Gabel Street Souq is a magnetfor shoppers searching for anything and everything, from spices, electronics and perfumes to dates, honey and householditems.These traditional souqs provide a glimpse of life in Saudi Arabia that has remained unchanged over the centuries. Here,local residents barter hard with traders to secure the best price for their daily purchases and special occasion gifts. Andvisitors invariably get caught up in the action as well, with good-humoured haggling over that special souvenir, part andparcel of the experience.Scuba diving: If business schedules permit, Jeddah’s underwater world also holds its own unique attraction, and the cityoffers scuba divers some of the best experiences in the world, with a spectacular selection of marine life and unrivalledvisibility. 16_____________________________________
  17. 17. Exhibition facilities:To take a general view on the exhibition facilities of KSA, we will take a tour from the east to the west:Eastern province:Eastern Province Chamber of Commerce and Industry: Located on the Al-Khobar, Dammam Highway, had built aconference hall that that has more than 500 chairs, each fully equipped.Dhahran International Exhibition Centre is located in the eastern province in the Kingdom of Saudi Arabia –Dammam. At an hours drive from Kuwait, Bahrain, Qatar and 30 - 45 minuets travel from U. A. E. via airplane.Above all, DIEC enjoys a unique location in the Kingdom of Saudi Arabia, which provides an open gate to all GCCCountries enabling you to expand and promote your business in the entire Middle East and GCC market. DIEC has a closedexhibition area of 7,200 m2 and an opened area that could reach 15,000 m2, with a parking space for more than 2,000 cars.Center province (Riyadh):Riyadh International Exhibition Center: Consists of several modules such as Showroom closed with an area of 15thousand square meters, either the external supply is adjacent to galleries and is divided into two parts, each an area of fivethousand square meters.The Center includes a dedicated area for support services, located in the building adjacent to the exhibition halls west andconsists of four units separated by three independent corridors used emergency slides each of the showrooms. The servicebuilding contains VIP lounge reception area of 1600 meters, and the auditorium and consists of two floors and seatingcapacity of 1200 people, and administrative offices consist of two floors on an area of 1200 square meters for each floor.It consists service units of exhibitors and visitors from many offices uses during the period of events and exhibitions, andspecialized offices for the organization, a Center for the business services and banking services, travel agencies andtourism and the headquarters for medical services and ambulatory, post offices, car rental and hotel service characteristics,and an equipped information center, Internet services and rooms for meetings multiple spaces, in addition to therestaurants, a total area of 1600 square meters for the ground and 660 m 2 of the role of the upper and consists of arestaurant and a major units to provide snacks that can accommodate more than 650 people, in addition to the storage areaand benefits.The parking spaces can accommodate about 2790 cars.Western province:Jeddah International Exhibition & Convention Centre: Established, developed and owned by the Jeddah Chamber ofCommerce and Industry, the purpose of building Jeddah International Exhibition & Convention Centre is to offer services tothe highest international standards. This modern exhibition complex conveniently is located just minutes from Jeddahs mainBusiness Centre, banks, government offices, shopping malls and major hotels and the airport.Venue facilities of Jeddah International Exhibition & Convention Centre includes 40,000m² of total area with easyaccess to major roads, 10,000m² of air conditioned exhibition space, Cafeterias and rest rooms, Conference hall, mediacenter, V.I.P. lounge, V.I.P. restaurant, and parking for over 2,000 cars. 17_____________________________________