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Mazaya Monthly Real Estate Report -
Week 1 - September 2016
It is noteworthy that according to
previous statistics, the number of
foreign companies in Saudi Arabia has
reached 13,000 buildings. Meanwhile,
the value of construction projects
has reached 1.2 trillion dollars,
representing one of the largest markets
for the construction sector. Al Mazaya’s
Report indicates that the contracting
companies showed further indicators
of weakness and insolvency during the
first half of the current year, which may
lead to high rates of unemployment
and interruption in the development
projects, particularly after the rise
in default projects reached a 40%
of the total number of development
projects. The developments of the
Saudi economy may lead to the
postponement of the entry of foreign
investment companies until the
macroeconomic indicators stabilize.
Furthermore, Al
Mazaya's
Report
pointed out that a big number of foreign
companies, particularly the construction
companies, have headed towards the
Qatari market several years ago, owing to
the high number of mega and development
projects, as well as the short period set
for completion. This gives the priority to
foreign companies, due to their superior
capabilities and more qualified staff, as
compared to the local companies that
are striving to improve their capabilities
to maintain their position in the market
against the competition imposed by
foreign companies. The report also states
that the Qatari market is attractive for
investment and business in different
fields as it is a growing market that is
developing rapidly. As a result, foreign
companies are interested in entering
the Qatari market to benefit from the
reported growth and achieve huge gains
of profits, reputation and expansion.
Al Mazaya's Report also touched upon the
state of investment growth reported in the
investment markets in the KSA, in light
of the new movement to open the way
for foreign companies, particularly in the
wholesale and retail sector. The Kingdom
considered new amendments to the
current foreign ownership percentage, as
set forth by the World Trade Organization
(WTO), potentially reaching 100% foreign
ownership. The report alsopointedout that
the foreign and mixed companies, which
have been granted business licenses by
the Saudi market were 10 companies in
total. While the capital of these companies
exceeds 66 million USD, these were
mainly concentrated in the sectors of
pharmaceutical, medical and aircrafts
parts industries, inaddition to thebusiness
licenses granted in the commercial
and construction sectors, which are
heading towards more mixed companies.