Report assessed the Kingdom’s real estate market in 2023 and projected trends for 2024 across various sectors Deloitte report said contribution of construction industry to GDP expected to reach $37.4 billion this year RIYADH: Saudi Arabia’s retail real estate sales are set to grow from 2.4 percent in 2024 to 2.7 percent by 2027, reaching $183.2 billion, driven by modernization and urban development. In its latest Saudi Arabia Real Estate Predictions release, global consultancy firm Deloitte, citing the Economist Intelligence Unit, revealed that retail sales reached $142.7 billion in 2022. The 10th annual predictions report, which assessed the Kingdom’s real estate market in 2023 and projected trends for 2024 across various sectors, said that Saudi Arabia’s post-pandemic economic recovery gained momentum, driven by eased travel restrictions and improved visa processing. The changes have boosted the hospitality sector, with streamlined online visa applications enhancing tourist access and fueling a resurgence in travel and tourism. This comes as the Kingdom rose to third place in the 2023 edition of the Global Retail Development Index, a biannual survey by US consulting firm Kearney, due to an increase in non-cash transactions from 16 percent in 2016 to 62 percent in 2022. Saudi Arabia is actively advancing its real estate sector through several strategic initiatives. The Kingdom is focused on developing mega-projects such as NEOM, a $500 billion smart city, and the Red Sea Project, which aims to transform the tourism landscape. The Deloitte report said that the contribution of the construction industry to the nation’s gross domestic product is expected to reach $37.4 billion this year, an increase from $35.2 billion last year. In 2023, the residential real estate market saw a decrease in transaction volumes, even as sales prices for villas and apartments rose. Deloitte’s review suggests that despite the slowdown in transaction activity, the increased prices reflect a sustained demand for residential properties in key urban areas. This trend poses potential challenges for affordability but also signals confidence in the real estate market’s long-term prospects. “Residential preferences are shifting toward homes that accommodate remote work by incorporating wellness-centric features,” the report said, adding: “Simultaneously, the retail and hospitality sectors are adapting to changing consumer behaviors, with a focus on e-commerce and experiential spaces.” Deloitte further highlighted that the office sector in Saudi Arabia has benefited from growth in financial and business services, with employment in these segments expanding by 4 percent year on year in 2023, according to UK-based independent economic advisory firm Oxford Economics. “In the post-COVID real estate landscape, key trends include sustainability and technological integration. The demand for flexible workspace is rising, leading developers to innovate office designs tailored for hybrid work models,” the report said. The industrial and logistics sectors are poised for substantial growth, fueled by the introduction of four Special Economic Zones in 2023, the report said. These include King Abdullah Economic City, Jazan, Ras Al-Khair, and Cloud Computing in the King Abdulaziz City for Science and Technology. These zones are designed to create opportunities for sustainable business development, attract foreign investments, and enhance Saudi Arabia’s position as a logistics hub. The SEZs are expected to stimulate economic activity and contribute to the Kingdom’s diversification strategy.