Property investment in Saudi Arabia: navigating for success

The real estate asset class has had a turbulent 24 months due to the impact of rising inflation and the quick pace of interest rate hikes in the US and other major markets. While some sectors were negatively affected by the ramifications of the COVID era and the rising interest rate environment, we at GFH Partners have  focused on resilient, recession-resistant real estate segments that are supported by strong fundamentals and positive demographic trends. Some of these segments include logistics, healthcare and life sciences, and the living sector.

GFH Partners is also in the process of diversifying its geographic footprint as part of its efforts to capture a broad spread of opportunities and mitigate risk. This has included launching its logistics platform in the GCC with a focus on Saudi Arabia.

Fuelled by the Kingdom’s economic diversification under Vision 2030, Saudi Arabia is transforming into one of the world’s most exciting and promising commercial real estate markets and global logistics hub.

The Kingdom’s real estate market is expected to grow to US$94.19 billion by 2028, at a CAGR of 7.89%. With government-led giga-projects, an emerging tourism industry, a growing number of international healthcare companies, an expanding education sector, as well as a rapidly expanding logistics sector, Saudi Arabia’s real estate market is firmly set on a positive trajectory.

Specifically, the country’s position as a global logistics hub presents significant opportunities in warehousing. Major, cutting-edge logistics zones are being developed in strategic locations, such as Dammam, to support global trade flowing through the Middle East.

Similarly, the commercial and residential property markets in Saudi Arabia are growing with  demand for office space is particularly strong as many international companies are establishing hubs in Riyadh and  demographic growth continues in step.

Real estate transactions grew 6% YoY to nearly US$59.5 billion in 2022, with land sales accounting for 87% of all real estate deals in 2022. Aside from logistics, both healthcare and education are also booming in the Kingdom with the government investing US$36 billion in healthcare in 2022, and the country set to require around 900,000 new seats in the higher education sector by 2030.

We, as such,  believe that Saudi Arabia presents attractive opportunities for creating value and generating returns. GFH Partners is well-placed to help investors navigate the opportunities and challenges in the Kingdom’s real estate sector.

One of the main reasons is our parent group GFH Financial Group’s track record in both emerging and mature markets. Its global reach is a result of a robust strategic approach, as well as a team of experts with comprehensive experience and on-the-ground presence.

This approach has already been successful in markets including the US and Europe, where GFH Partners and its affiliates manage more than US$6 billion of real estate assets. Our affiliates include Roebuck, which has GBP c. 1 billion in total assets under management and 90 total assets covering 30 million sq ft, Big Sky Asset Management, which currently manages US$ c.1 billion worth of  medical facilities spanning 2 million sq ft, and SQ Asset Management, the 6th largest buyer in the US student housing market with a total transaction value in excess of US$2.4 billion.

Each of these real estate segments aligns with GFH Partners’ investment playbook, which focuses on defensive sectors. GFH Partners is also thematically focused and active in the same verticals in Saudi Arabia. Most recently, we announced our acquisition of a US$150 million portfolio of mission-critical logistics assets in Saudi Arabia and the UAE, marking our first major step towards realizing our aim to rapidly grow our GCC logistics real estate platform to SAR 1 billion (US$250 million) – with a primary focus on KSA. We are confident this model, which has so far proved successful in the UK and US markets, will enable us to tap into the emerging growth opportunities presented by the Kingdom’s real estate sector.

These opportunities will be put forward at FII, where we will connect our investor base with our partners and various portfolios. Drawing on our global network, including teams from the GCC, the US, the UK and Europe, we will leverage FII’s position as a platform – not only to introduce opportunities, but also to engage in conversations that will help our community navigate the complex real estate trends emerging over the next 12 months.

We warmly invite investors and prospective partners interested in discovering real estate opportunities in Saudi Arabia and beyond to visit us at the GFH Financial Group’s booth at the #FII7 Pavilion.