Riyadh, Saudi Arabia’s capital city, is projected to be among the top 15 growth hubs in the world by 2033.
According to the Savills Growth Hubs Index, Riyadh is the only city outside Asia in the top 15 fastest-growing major cities in the world. Riyadh’s potential is related to its population growth and the Saudi government increased spending on infrastructure development.
Great Potential
The report linked Riyadh’s potential to an expected 26% growth in population, from 5.9 million to 9.2 million in 10 years. This increase in population aligns with Saudi Arabia’s economic goals under Vision 2030, which aims to transform Riyadh into a residential and business hub as well as diversifying the economy away from oil.
It is also projected to lead to continued government spending on mega infrastructure projects, in addition to improving services and amenities to the growing population demands.
Richard Paul, Head of Professional Services & Consultancy at Savills Middle East, said that the growing population bolsters the Kingdom’s position. “Saudi Arabia boasts a population of around 36 million people and, astonishingly, 67% are under the age of 35. The employment potential and ultimate spending power of this segment of the population over the next decade is enormous,” he noted.
Riyadh Office Market
The Savills report pointed out that the increased demand for regional headquarters drives the office market in Riyadh. At the same time, tourism growth has caused a surge in demand for retail near popular tourist destinations.
According to Arab News, more than 120 international companies have relocated their regional headquarters to Saudi Arabia in the first quarter of the year, accounting for a 477% year-on-year increase.
Saudi Arabia has launched Regional Headquarters Program as part of its Vision 2030. The Program aims to encourage multinational companies to set up their regional headquarters in the Kingdom, particularly in Riyadh, through introducing multiple incentives.
Attractive Incentives
The incentives provided under the Regional Headquarters Program include a 30-year exemption on corporate income tax and withholding tax related to headquarters activities. It also offers discounts and support services.
In the light of this, Ramzi Darwish, head of Savills in Saudi Arabia, pointed to the regional headquarters surge as a key factor in Riyadh’s projected growth. He said: “The 30-year tax relief for regional headquarters, expanding market, and promising prospects are attracting international companies and reinforcing Riyadh’s position as a vital regional hub for leading businesses across diverse industries.”
Investments Growth
According to the Saudi General Authority of Statistics (GASTAT), foreign direct investment (FDI) into the Kingdom surged by 5.6% in the first quarter of 2024, to reach $2.5bn (SAR 9.5bn), compared to the same period in 2023.
In this regard, Darwish said: “Riyadh is experiencing a remarkable surge in corporate interest, with over 180 foreign companies establishing their regional headquarters in the city in 2023, surpassing the initial target of 160. This growing confidence reflects the robust potential of the Saudi capital.”
Savills Report
The Savills Growth Hubs Index forecasts the economic aspects of 230 cities through to 2033 to determine the fastest growing cities based on their economy, population and wealth.
The UK-based real estate consultancy firm noted that Asian cities dominate the rankings, owing to their increased emphasis on tech-driven growth, planned infrastructure investment and strategies to improve connectivity and business competitiveness.
China and India have the biggest share in the Growth Hubs Index, with 5 cities for each, followed by Vietnam, with 2 cities. The Philippines, Bangladesh, and Saudi Arabia came with one city for each.
