The best business opportunities in Saudi Arabia | PRO Partner Group
6 of the best business opportunities in Saudi Arabia in 2022
The Kingdom of Saudi Arabia is currently undergoing an economic transformation. Historically, much of the nation’s GDP (approximately 40%) and government revenues (about 75%) have come from the oil industry. In 2016, Crown Prince Mohammed bin Salman unveiled the Saudi Vision 2030 plan anticipated to revolutionise Saudi Arabia’s economy, reduce dependence on oil and bolster the private sector through foreign investment by the year 2030.
Performance under the plan has created tremendous growth earning Saudi Arabia the title of the fastest-growing major economy in 2022. As other nations struggled to recover from the COVID-19 pandemic, the Kingdom bounced back quickly compared to other G20 nations.
Now is the perfect opportunity for foreign investors looking to take advantage of Saudi Arabia’s thriving economy, and geographic location central to the Middle East, Asia, and Europe. Here are six of the top sectors that offer the most opportunity for growth.
1. Real Estate
The real estate market in Saudi Arabia is currently valued at $20.5 billion. With the population on track to grow by six million people by the year 2030, Saudi Arabia will need significant development in housing, infrastructure, and commercial spaces. Under Vision 2030, the government has established a goal to help its citizens reach 70% home ownership. This will require the construction of 1.2 billion square meters of real estate and 1.5 million new housing units equipped with modern technology.
The Saudi government has also introduced new departments to help support the capital needed to fund these projects including the Real Estate Development Fund (REDF) and the Saudi Real Estate Refinancing Company (SRC).
Growth in the real estate sector will enhance business opportunities for a wide range of business types including construction, facilities services, interior design, engineering and architectural firms, and home furnishings suppliers.
Saudi Arabia is currently the largest education market within the GCC (Gulf Cooperation Council) region. The Kingdom is home to more than 8.4 million students from kindergarten to university. The Human Capital Development Program (HCDP) under Vision 2030 has ambitious goals to reduce unemployment to 7%, increase SME (subject matter expert) GDP contribution to 35%, raise kindergarten enrollment to 40%, and get Saudi universities ranked among the leading global universities.
With the fastest-growing population of the G20, Saudi Arabia will need to increase spending on education by nearly $50 billion. These initiatives will help upskill the existing workforce, encourage a culture of innovation and entrepreneurship, and prepare future generations as they enter the workforce.
Since 2017, the nation has permitted 100% foreign ownership in the education sector which has encouraged investors to invest in schools and other educational entities. Businesses connected to any level of education (nurseries, K-12, universities, and technical and vocational schools) will have an advantage when it comes to establishing a presence in Saudi Arabia.
3. Environmental Services
Environmental services is one of the Kingdom’s fastest-growing sectors. Increases in population, growth in industrial output, and the rising standard of living require the nation to focus on providing more access to quality sewage, sanitation, and water infrastructure.
Because the nation is 90% desert, the Kingdom has one of the highest water consumption rates per capita in the world. This has forced the country to place a high emphasis on developing desalination technology. Currently, they are the global leader with 20% of the global capacity for desalinated water.
Under Vision 2030, Saudi Arabia is expected to spend about $67 billion on water and sanitation projects by the year 2025. This will add about 5.5 cubic meters of desalination capacity every single day. The ultimate goal is for 90% of all water to come from desalination, 90% of all water to be reused, and a network of 3,000 km of new water transmission lines to be constructed.
There is a lot of potential for any businesses that operate within the environmental services value chain, from water technology and research to waste management and distribution.
4. Renewable Energy
As the Kingdom of Saudi Arabia weans itself off oil, the demand for renewable energy sources will increase significantly. Vision 2030 has a goal of generating 50% of all energy from sources such as solar, wind, and tidal. The strategy will focus on three areas— renewable energy, conventional energy, and energy savings. This mission will be challenging since Saudi Arabia is the second-largest consumer of energy per capita in the world.
Geographically, Saudi Arabia has an advantage when it comes to renewable energy. The nation is ranked 6th in the world for solar energy potential and 13th for onshore wind potential. The government is also dedicated to retrofitting over 260,000 government buildings and 3 million street light poles to be more energy efficient.
The introduction of the Saudi Energy Efficiency Center (SEEC) will help new companies meet the requirements and standards to operate within the country. The SEEC is also equipped to facilitate investments from renewable energy companies looking to conduct business in Saudi Arabia.
5. Information and Communication Technology
Through Vision 2030, Saudi Arabia will strengthen its technology infrastructure as it works toward becoming a major ICT (Information and Communication Technology) hub, not only in the Middle East but globally. The government is prepared to invest $18 billion to modernise the nationwide network of data centres, enhance telecommunications, and build smart cities.
Companies that engage in IT-related activities in Saudi Arabia such as gaming, social media, digital media content creation, digital advertising, artificial intelligence, cloud computing, FinTech, and e-commerce will be at a significant advantage compared to working in other areas of the region.
6. Mining and Metals
Saudi Arabia is an expert when it comes to extracting valuable resources from the ground to support the oil, gas, and chemical industries. The Kingdom hopes to leverage this expertise to expand the mining and metal industries. Saudi Arabia is home to 15 commercially viable minerals that are estimated to be valued at over $1.3 trillion. The largest mineral deposits include phosphate, gold, and copper.
The nation will need these additional resources to support the ongoing investment in various industries. Also, proximity to Africa, Asia, and Europe will provide a great external marketplace. By the year 2035, Saudi Arabia hopes mining and metals will contribute over $75 billion to the GDP.
Companies that engage in mining operations, natural resource exploration, industrial machinery, electrical equipment, and automotive are expected to see massive amounts of growth and investment in the coming years.
Take Advantage of One of the World’s Best Economies
Establishing a business in one of Saudi Arabia’s growing sectors can be a smart and profitable decision. While there are many benefits, the process of setting up your company can be overwhelming, especially if you are unfamiliar with the language or government requirements. It’s always wise to have a business consultant on your side to guide you through the process. This will ensure that your business is up and running as quickly as possible with no delays.
How can PRO Partner Group help?
The application process for setting up a business in Saudi Arabia can be complicated, especially for foreigners who are not proficient in Arabic and need support communicating with the authorising agency. Missing or insufficient documentation can result in delays or a rejected application. Having an expert on your side can help you avoid these challenges and streamline the application process. Sovereign PRO Partner Group have connections with key government agencies in Saudi Arabia and can guide you through the process of business incorporation and liaise with all parties involved on your behalf.
If you need assistance with business setup in Saudi Arabia or any other company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or Saudi Arabia, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at firstname.lastname@example.org or complete the contact form below and we will be delighted to assist you.