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RIYADH: Saudi Arabia’s capital is expected to be among the top 15 fastest-growing cities by 2033, driven by a 26 percent population increase and continued government spending on infrastructure.

According to the Savills Growth Hubs index, Riyadh is the only non-Asian city on the list, with its growth linked to a population increase from 5.9 million to 9.2 million over the next 10 years, requiring improved facilities and services.

This aligns with Saudi Arabia’s Vision 2030 program, which aims to develop Riyadh as a residential and business hub while diversifying the economy and reducing dependence on oil.

Richard Paul, head of professional services and advisory at Savills Middle East, said: “Saudi Arabia has a population of approximately 36 million people and an astonishing 67% are under 35 years of age. The employment potential and ultimate spending power of this segment. population in the next decade are enormous”.

The Savills report noted that Riyadh’s office market is underpinned by regional headquarters demand, and increased tourism is boosting demand for the retail sector near popular tourist destinations.

The city’s business development sector saw more than 120 international firms relocate their regional headquarters to Saudi Arabia in the first quarter, marking a 477 percent year-on-year increase.

“The 30-year tax break for the regional headquarters, the expanding market and promising prospects are attracting international companies and strengthening Riyadh’s position as a vital regional center for leading businesses in various industries,” said Ramzi Darwish, head of Savills in Saudi Arabia.

Citing government data released earlier this month, the UK real estate consultancy pointed out that foreign direct investment in the Kingdom rose by 5.6% in the first quarter of this year to SR9.5 billion (2.53 billion USD), compared to the same period. in 2023.

“Riyadh is experiencing a remarkable increase in corporate interest, with more than 180 foreign companies setting up their regional headquarters in the city in 2023, surpassing the original target of 160. This growing confidence reflects the robust potential of the Saudi capital,” Darwish added.

In May, an analysis by S&P Global highlighted that the opening of free economic zones and the regional headquarters program could accelerate foreign direct investment flows into the Kingdom.

Earlier this year, Saudi Arabia’s General Authority for Small and Medium Enterprises also pointed out that the program had significantly boosted Riyadh’s economic growth.

In January, Saudi Minister of Economy and Planning Faisal Al-Ibrahim noted that Riyadh’s successful bid to host EXPO 2030 underscores the Kingdom’s commitment to achieving sustainable economic and social development.

He added that the international event will further strengthen the country’s position as a leading global destination for business, tourism and innovation.

Additionally, a report released by Henley & Partners in June predicted that more than 300 millionaires will move to Saudi Arabia in 2024, with Riyadh and Jeddah becoming increasingly popular with high net worth individuals.

Global perspectives

The Savills Growth Hubs Index, alongside the Resilient Cities Index, examines economic strength and forecasts trends up to 2033 to identify cities experiencing high growth in wealth and economic expansion.

Indian and Chinese cities dominate with five spots each in the top 15, followed by Vietnam with two, and the Philippines, Bangladesh and Saudi Arabia with one each.

The index takes into account projected gross domestic product through 2033, future country credit ratings, residents’ personal wealth, population growth and migration trends.

According to the report, Indian cities including Bengaluru, Delhi, Hyderabad, Mumbai and Kolkata emerged among the top 15 growing cities.

Chinese cities that made the list include Shenzhen, Guangzhou, Suzhou and Wuhan.

Manila, the capital of the Philippines, has also secured a spot.

“In economic terms, cities in India and Bangladesh will see average GDP growth of 68% between 2023 and 2033, followed by those in Southeast Asia, including Vietnam and the Philippines, at 60%,” said Paul Tostevin, director and head of the department. Savills World Research.

He added: “As global growth pivots more from west to east, the real estate implications for cities multiply. The new innovation hubs will become magnets for growing and expanding businesses and this will support demand for offices, manufacturing and logistics space and homes.”

Tostevin also pointed out that the increase in personal wealth and disposable income will generate opportunities for new retail and leisure developments in these expanding cities.

Savills pointed out that Asia’s economic transformation, with an increasing focus on technology-driven growth, underpins the dominance of the region’s cities in the rankings.

Tostevin also emphasized that sustainable development, education and labor force growth are crucial factors that will shape the future growth of cities.

“Today’s global growth nodes will not automatically transform into tomorrow’s resilient cities. To do this, they will need to consider their own paths to more environmentally sustainable development and improve education and labor force participation. They will also need to facilitate stable, transparent and liquid real estate markets,” he added.

The report also noted that many Asian cities are also set to see an expanding middle class as personal wealth rises significantly in the region.

The analysis added that Asia’s traditional manufacturing competitiveness will continue to drive the growth of the region’s cities.

“You wouldn’t want to overlook traditional production drivers. They are still significant, particularly where traditionally low-cost land and labor markets are becoming more expensive, forcing industries to consider moving to other areas,” said Simon Smith, senior director of research and consultancy at Savills, based in Hong Kong.

Savills conducted the study using metro-city data from Oxford Economics, looking specifically at cities with a GDP of more than $50 billion.

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