The current levels of activity and energy in the Saudi capital dispel the idea of a post-covid slump. There is no doubt that social-distancing measures are being taken very seriously by both public and private sectors, but on a recent visit it was clear that the pandemic has not put the brakes on the Kingdom's ambition. Traffic levels, retail and hospitality footfall and businesses all appear to be close to pre-covid levels. Feedback from senior representatives of the mega-projects is that everything is proceeding on existing timelines and milestones have not changed. As further evidence of this The Ministry of Investment for Saudi Arabia (MISA) & Invest Saudi are currently driving a campaign to persuade international businesses to relocate their regional headquarters to Riyadh.
It's core objectives are not short of aspiration. By 2030 the aim is to have 300 Multi-National Corporations (MNCs) base their regional HQ in the capital, attract 30m visitors a year and double the size of the city's economy by 2030. At this point it is not easy to find data on how many firms already have made the move, but it is safe to assume that it is not yet at a significant level. So what are the key facts potential arrivals need to know and does Riyadh have the credentials to lure them away from established hubs like Dubai, Abu Dhabi and Bahrain?
According to a recently released Invest Saudi presentation, Riyadh is the 18th Global city for PPP-adjusted GDP, accounts for 50% of non-oil GDP in the Kingdom, has a well-educated and predominantly young population of 7 million and is within 7 hours flight-time to 80% of the world's population. Digitalisation of government services is at an advanced stage. Internet connectivity is at 95% of the city's inhabitants whilst 5G coverage is already at 47%. Business incorporation processes have been radically accelerated and 100% foreign ownership permitted, with only a few exceptions.
Significant public-transport infrastructure such as the Riyadh metro are close to completion. 176km of track will connect 6 lines and 85 stations across the city in 2021, relieving pressure on the busy road system and making commuting viable. Connecting all the major hubs including King Fahd International Airport, the network will have a projected capacity of 3.6m passengers per day. Supporting the metro will be a new bus network due to launch in Q2 2021. Featuring over 100 main routes, 60 feeder routes
and over 3000 drivers the new service will be hoping to reduce car dependence in the city. The airport currently serves over 40 airlines and is targeting 70m passengers (domestic & international) and 200 cities served by 2030.
Economic free-zones are being launched across the country, with the King Abdullah Financial District taking the lead in opening its doors to foreign companies and investors. Incentives such as a zero corporation-tax rate for 50 years, reduced Saudization requirements (for key sectors), an opt-in/out legal structure and preferential government procurement opportunities are designed to compete with zones such as DIFC in Dubai. A mega-industrial zone is also planned for the city, focused on advanced technology such as renewables and automation, and biotechnology and aquaponics. The plan is designed to transform Riyadh into an economic, social and cultural hub for the region whilst doubling the city's population to 15 million.
From a liveability perspective, the government has launched over 12 mega-projects designed to improve Riyadh's general attractiveness as a place to live and work. For decades the country has had to pay the "Saudi premium" to attract skilled expat talent and offset the restrictive living conditions. Projects such as King Salman Park, Diriyah Gate, Sports Boulevard, Qiddiya and others will put wellness, entertainment and culture at the heart of the city's new positioning. 7 million trees are being planted as part of the 'Green Riyadh' initiative. The first phases of the projects are slated to open around 2023 and will likely improve Riyadh's competitive status as a regional hub.
Equally important are the reforms of laws relating to female rights. The Kingdom's previous ultra-conservative restrictions of women's rights have been incompatible with MNC's cultures and values. In parallel with the more visible reforms such as driving, dress codes and the ability to travel, many other laws that impact female expats' lives are also being rapidly updated to underpin the foreign direct investment campaigns and make sure that the country can be equally attractive to both genders.
Villa compounds have traditionally been the mainstay of residential expat life in Riyadh. The physical separation from the local population allowed a more western-centric way of life inside the walls. Whilst there is significant short term pressure on the current, limited stock of units, the plan for the city includes major residential developments on a par with those seen in the UAE and other gulf states. Mega-projects such as Diriyah Gate will feature large residential components when they open.
Clearly there is no shortage of ambition and most of the projects referenced here are making significant physical progress already. That the government is serious about its goals is not in question but that does not takeaway from the size of the challenge it has to catch up and compete with cities such as Dubai. Expect to see more incentives being rolled out over the next 12-24 months to turn heads towards Riyadh.