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RIYADH: The Saudi capital is expected to be among the 15 fastest-growing cities by 2033, helped by a 26 percent population increase and steady government spending on infrastructure.

According to the Savills Growth Hubs index, Riyadh is the only non-Asian city on the list, with its population set to rise from 5.9 million to 9.2 million over the next 10 years, necessitating improvements to amenities and services.

This is in line with Saudi Arabia’s Vision 2030 programme, which aims to develop Riyadh as a residential and business centre while diversifying its economy and reducing its dependence on oil.

Richard Paul, head of professional services and advisory at Savills Middle East, said: “Saudi Arabia boasts a population of around 36 million people, and a staggering 67 per cent of them are under the age of 35. The employment potential and ultimate purchasing power of this segment of the population over the next decade is enormous.”

The Savills report notes that Riyadh’s office market is supported by demand from regional headquarters, while growth in tourism is driving retail demand near popular tourist destinations.

In the first quarter, the city’s business development sector saw more than 120 international companies relocate their regional headquarters to Saudi Arabia, a 477 percent increase compared to a year earlier.

Through the Regional Headquarters Programme, Saudi Arabia has introduced new incentives for international companies relocating their regional headquarters to the Kingdom.

These incentives include a 30-year exemption from corporate income tax and withholding tax related to head office operations, as well as discounts and support services.

Notable companies that have opened their regional headquarters in the Kingdom include Northern Trust, Bechtel and Pepsico, as well as IHG Hotels and Resorts, PwC and Deloitte.

In June, PayerMax, a global payment solutions provider, expanded its presence in the Kingdom by opening its regional headquarters in Riyadh.

“We are excited to be establishing our headquarters in Saudi Arabia. This is a strategic step to strengthen our presence in the region and demonstrate our long-term commitment to Saudi Arabia and the surrounding areas,” said Wang Hu, co-founder of PayerMax.

That same month, international professional services firm EY decided to open its regional headquarters in Riyadh, joining a growing group of international firms operating in the city.

Abdulaziz Al-Sowailim, Chairman and CEO of EY MENA, said: “EY is proud to be a part of innovative and cutting-edge strategies that are elevating Saudi Arabia as a pioneer both in the region and globally.”

Ramzi Darwish, head of Savills in Saudi Arabia, cited the need for a regional headquarters as a key reason for the city’s anticipated growth.

“The 30-year tax break for regional headquarters, the growing market and promising prospects attract international companies and strengthen Riyadh’s position as an important regional hub for leading companies from various industries,” he said.

Citing government data released earlier this month, the British real estate consultancy said foreign direct investment in the Kingdom rose 5.6 percent in the first quarter of this year to 9.5 billion Saudi riyals ($2.53 billion) compared with the same period in 2023.

“Riyadh is experiencing a remarkable surge in corporate interest, with over 180 foreign companies setting up their regional headquarters in the city by 2023, surpassing the initial target of 160. This growing confidence reflects the strong potential of the Saudi capital,” Darwish added.

In May, an S&P Global analysis found that the opening of free economic zones and a regional headquarters programme could boost foreign direct investment flows into the Kingdom.

Earlier this year, Saudi Arabia’s General Authority for Small and Medium Enterprises also highlighted that the programme 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 underlines 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 center for business, tourism and innovation.

In addition, a Henley & Partners report published in June predicts 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, measures economic strength and forecasts trends to 2033, identifying cities experiencing high wealth growth and economic expansion.

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

The indicator takes into account projected gross domestic product to 2033, future country-level credit ratings, wealth levels, population growth and migration trends.

According to the report, Indian cities like Bengaluru, Delhi, Hyderabad, Mumbai and Kolkata were among the top 15 fastest growing cities.

The list includes Chinese cities: Shenzhen, Guangzhou, Suzhou and Wuhan.

The capital of the Philippines, Manila, also earned its place.

“In terms of economy, cities in India and Bangladesh are set to see average GDP growth of 68 per cent between 2023 and 2033, followed by cities in Southeast Asia, including Vietnam and the Philippines, with growth of 60 per cent,” said Paul Tostevin, director and head of global research at Savills.

He added: “As global growth shifts further from west to east, the real estate implications for cities multiply. New innovation hubs will become magnets for growing and scaling businesses, and this will boost demand for offices, manufacturing and logistics space, and homes.”

Tostevin also stressed that the growth in citizens’ wealth and disposable income will stimulate the development of new retail and entertainment facilities in these growing cities.

Savills highlighted that the reason for the dominance of cities from this region in the ranking is the economic transformation of Asia, including the increasing emphasis on technology-driven development.

Tostevin also stressed that sustainable development, education and employment growth are key factors that will shape the future development of cities.

“Today’s global growth hubs will not automatically become tomorrow’s Resilient Cities. To do so, they will need to consider their own paths to more environmentally sustainable development and improve education and workforce participation. They will also need to facilitate stable, transparent and liquid real estate markets,” he added.

The report also notes that much of Asia’s cities will see a dynamic growth of the middle class as the wealth of citizens across the region increases significantly.

The study added that the traditional competitiveness of Asian manufacturing industries will continue to drive the growth of cities in the region.

“You don’t want to miss the traditional drivers of manufacturing. They are still significant, particularly where traditionally cheap land and labour markets are becoming more expensive, forcing industries to consider moving to other areas,” said Simon Smith, senior director of research and advisory at Savills, based in Hong Kong.

Savills conducted the study using city and metropolitan area data from Oxford Economics, looking in particular at cities with a GDP of over $50 billion.

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