- 40% of entertainment plans to be funded by private sector.
- 16 entertainment complexes and three additional leisure hubs to be delivered by 2030.
- Tourism figures expected to reach 26 million inbound visitors by 2023.
18 December 2018: Saudi Arabia’s real estate market is expected to experience exponential growth as the Kingdom focuses on advancing its entertainment and tourism sectors – according to a new whitepaper released by leading global real estate advisor CBRE.
CBRE, which began operations in Saudi Arabia earlier this year, shared its key insights on the Kingdom’s fledgling entertainment and tourism sectors as part of its whitepaper titled Entertainment in Saudi Arabia: The Game Changer. The report predicts that, fueled by public and private investments and as part of its efforts to reduce reliance on oil, the entertainment sector is expected to make important contributions to economic growth in 2019, and will generate 300,000 jobs by 2020. The report states that Public Investment Fund (PIF) will be driving growth in the sector, however 40% of entertainment plans are forecast to be funded by the private sector.
Planned reforms to the country’s laws including those on Public Private Partnerships (PPPs) as well as those that greatly reduce the time it takes to source business visas, will be instrumental in further growing the entertainment sector, according to the paper. The lifting of the ban on cinemas will also be a key driver for growth. The whitepaper acknowledges that tailoring projects to accommodate the requirements of operators with the aim of differentiating their projects will be key to ensuring consistent footfall across retail centres and large-scale entertainment destinations. Furthermore, differentiation will prove crucial as more than 350 cinemas and 2,500 screens are forecast to open across KSA by 2030.
The demographic make-up of the country will play a significant role in transforming the Kingdom’s entertainment landscape. The report suggests that with more than 60% of the country’s population under 35, there is a great opportunity to target the younger generation that have previously travelled abroad for leisure purposes. Once thriving entertainment hubs have been established, CBRE predicts that there will be an increase in domestic spending, especially in related sectors including F&B, retail and hospitality.
Tourism is another sector that is likely to reap the benefits of the nation’s entertainment reforms. Currently, Saudi Arabia’s tourism industry is heavily reliant on those travelling to perform Hajj and Umrah. Due to new government legislation, including the introduction of tourist visas and key developments to the nation’s infrastructure in line with Vision 2030, visitor figures are expected to reach 26 million (inbound) by 2023. Tourism’s contributions to GDP is expected to stabilise at an average of 7% for the next five years, reaching SAR 138 billion by 2023.
Retail will also represent an important driver for growth. According to CBRE, many mall owners will attempt to captalise on entertainment reforms by refurbishing or repositioning their centres to accommodate cinemas and attract complimentary tenants moving forward. In line with population, household income and expenditure have a significant impact on retail sales – and consequently demand for retail space. Figures by Oxford Economics and the General Authority for Statistics (GAS), which are included in CBRE’s whitepaper, reveal that 46% of the average KSA household expenditure is spent on retail. Of this retail spend, almost half goes to food and beverage, highlighting the continued importance of F&B within retail space.
Simon Townsend, General Manager (KSA) and Head of Strategic Advisory, CBRE MENAT, said: “The Saudi market is set for growth, with key projects including 16 entertainment complexes, an aquatic centre and three additional leisure hubs scheduled for completion by 2030. The entertainment sector is a game changer for the Kingdom. Previously untapped, it presents an abundance of opportunities for foreign investors who are eager to enter the Saudi market. These impressive plans highlight the ambitious vision of the Saudi Government, and CBRE is committed to supporting this growth in any way it can.”
“We are dedicated to continuing to expand our presence in the country and to working with our clients to attract local and international investors, as well as to cultivate partnerships with international entertainment corporations, all which will be essential in supporting the growth of this extremely important sector.”
Nicholas Maclean, Managing Director, CBRE Middle East, said: “Saudi Arabia is increasingly important to our global corporate clients and for our consulting teams as the 2030 Vision provides an extraordinary opportunity to work closely with various components of the Saudi Arabian government. As well as expanding our Riyadh based team we will establish a presence in Jeddah early next year. The transformative ambition demonstrated by Saudi Arabia will have an important impact on the economies of the whole region.”