Saudi Arabia’s real estate industry continues to be well-positioned to benefit from the growth of the Kingdom’s entertainment industry and new major entertainment-led projects. These and other initiatives are aimed at positioning the country as a global hub for leisure, tourism and entertainment according to the latest whitepaper by leading global real estate advisor CBRE.
The report titled ‘Saudi Arabia Entertainment: The Game Changer 2020’ reveals that the Kingdom’s GDP is expected to grow at a CAGR of 6.5% between 2019 and 2024, to reach just above SAR 4.0 trillion by the end of the forecast period. With the country’s efforts to diversify its economy, the entertainment sector is expected to be one of the key non-oil sectors continuing to contribute to wider GDP growth within the Kingdom.
Aside from entertainment-led developments and mixed-use masterplans with entertainment components, key infrastructure projects coupled with government initiatives are expected to boost Saudi Arabia’s entertainment sector. Projects, such as Qiddiya Entertainment City, The Red Sea Project, AMAALA, Al Ula, King Salman Park and Riyadh Sport Boulevard, are expected to be completed in 2030, which are in line with the Kingdom’s National Transformation Program as part of Vision 2030.
Music, sports and social events will also play a key role in expanding the Kingdom’s wider entertainment offering and capitalizing on the strong demand for a differentiated entertainment experience among the Saudi population. Based on the latest figures from 2018, a total of 5,000 events were held across the Kingdom, more than double the figure from the previous year. 2019 followed along the same upward trend, following the launch of Saudi Seasons, an events program initiative by the Saudi Commission Tourism & National Heritage (SCTH) and the General Entertainment Authority (GEA) in March 2019. Held in multiple locations across the Kingdom and featuring a wide variety of entertainment and cultural experiences, Saudi Seasons is a year-round nationwide event that consists of 11 festival periods taking place in a different province each period. The Kingdom-wide festival has delivered more than 3,000 events and activities and has welcomed more than 30 million visitors as of September 2019 from within KSA and overseas.
The report also highlights the importance of Family Entertainment Centres (FEC) and edutainment in helping to bolster the growing entertainment sector. With an additional 45 cinemas expected to enter the market by 2020, the Kingdom will reap the benefits of enhanced footfall in the coming years.
Simon Townsend, General Manager (KSA) and Head of Strategic Advisory, CBRE MENAT, said: “The growth of the entertainment sector has had a significant impact on the real estate market, with effects witnessed most directly within the retail and hospitality sectors across the Kingdom’s cities. As the Kingdom’s entertainment industry expands, these sectors are expected to follow, through the introduction of community and neighbourhood malls as well as stronger hotel occupancies. Entertainment-led projects and developments are instrumental in shaping an integrated market of leisure, hospitality and tourism for Saudi Arabia, positioning the Kingdom as a global destination of choice.”
Retail developers in Riyadh are seeking to capitalise on these growing segments of the retail landscape, with total retail space in the capital expected to reach 3.5 million sqm GLA by 2024. By 2024, Jeddah’s retail market is expected to witness considerable supply growth, reaching over 2 million sqm GLA. As competitiveness in the market increases, those developers which are able to differentiate their offering by attracting new brands and providing diverse F&B concepts are expected to outperform their competitors.
During Riyadh Season 2019, Riyadh’s hospitality sector recorded the highest November occupancy rate since 2007, with strong occupancies during the last three months of the year. Meanwhile, during Jeddah Season and Eid Season 2019, a number of hotels along the Corniche and within the Al Shatee district recorded occupancy rates of 85% to 95%, driven by the high number of visitors.
Although Saudi Arabia’s oil industry has remained the largest contributor to GDP, the report also shows the impact of the tourism sector on the Kingdom’s overall economic growth. As of 2019, the Kingdom received close to 59 million tourist trips and these figures are expected to continue to increase to 100 million tourist trips by 2024, as supported by the wider government reforms and aims to expand the tourism sector and its offering across the country. 447 heritage sites are expected to be completed by the end of 2020, up from 241 sites in 2017, highlighting the country’s commitment to enhancing its tourism profile. The issuing of a new e-visa program has also been identified as a key driver for growth in the number of people visiting the country.
Nicholas Maclean, Managing Director, CBRE MENAT said: “It is clear that Saudi Arabia remains one of the game changers in the entertainment sectors globally. The continuous stream of paradigm shifts, from new visa implementation, female empowerment initiatives to the introduction of robust entertainment offerings, it is evident that the Kingdom has much more to offer. CBRE is looking forward to witnessing how the country sets the foundations for a world class entertainment sector. And, this is even more exciting as we consider 2030 Vision and the extraordinary opportunities it provides us to work closely with various components of the Saudi Arabian government and the private sector respectively.”