Saudi Arabia: Foreign Companies Influx Raises Office Rental Prices

Saudi Arabia issued more than 1,600 foreign investment licenses in the first quarter of 2023. (Asharq Al-Awsat)
Saudi Arabia issued more than 1,600 foreign investment licenses in the first quarter of 2023. (Asharq Al-Awsat)
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Saudi Arabia: Foreign Companies Influx Raises Office Rental Prices

Saudi Arabia issued more than 1,600 foreign investment licenses in the first quarter of 2023. (Asharq Al-Awsat)
Saudi Arabia issued more than 1,600 foreign investment licenses in the first quarter of 2023. (Asharq Al-Awsat)

The influx of foreign companies to the Saudi local market, along with several other factors, has led to an increase in office space rental prices by 20 percent.

Saudi Arabia issued more than 1,600 foreign investment licenses in the first quarter of 2023, with an average of 25 per day, according to the latest official report by the Ministry of Investment.

Experts told Asharq Al-Awsat that the high demand was due to the establishment of new government and private bodies and entities, and the increased entry of foreign companies into the local market.

The specialists revealed that the occupancy rate in category A office space has increased to 97 percent.

The director of real estate and property at Olaya Company, Mohammad Al-Omari, told Asharq Al-Awsat that office rental prices increased by 15 percent during the last 12 months.

CEO of Menassat Khaled Al-Mobid told Asharq Al-Awsat that demand for offices would increase in the coming period, due to the entry of foreign companies and the growth of commercial sectors, given the scarcity of supply that led to a 20 percent rise in the rental value.

A recent report issued by Invest in Saudi Arabia, one of the initiatives of Vision 2030, showed that more than 1,600 foreign investment licenses were granted in the first quarter of this year, compared to 1,300 in the last period of 2022, marking an increase of 2.3 percent.

The report expected the building and construction sector to continue to provide great opportunities for investors with the launch of mega and huge projects within the Kingdom’s development plans in the tourism and housing sectors.

The Saudi government completed 104 investment deals during the first quarter of 2023, compared to around 101 during the same period last year, recording an increase of about 3 percent.



IMF Sees Steady Global Growth

FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa
FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa
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IMF Sees Steady Global Growth

FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa
FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa

The International Monetary Fund expects the world economy to grow a little faster and inflation to keep falling this year. But it warned that the outlook is clouded by President-elect Donald Trump’s promises to slash US taxes, impose tariffs on foreign goods, ease regulations on businesses and deport millions of immigrants working illegally in the United States.

The Washington-based lending agency expects the world economy to grow 3.3% this year and next, up from 3.2% in 2024. The growth is steady but unimpressive: From 2000 to 2019, the world economy grew faster – an average of 3.7% a year. The sluggish growth reflects the lingering effects of big global shocks, including the COVID-19 pandemic and Russia's invasion of Ukraine.

The IMF is a 191-nation lending organization that works to promote economic growth and financial stability and to reduce global poverty.

Global inflation, which had surged after the COVID-19 pandemic disrupted global supply chains and caused shortages and higher prices, is forecast to fall from 5.7% in 2024 to 4.2% this year and 3.5% in 2026.

But in a blog post that accompanied the release of the IMF’s latest World Economic Outlook report, the fund’s chief economist, Pierre-Olivier Gourinchas, wrote that the policies Trump has promised to introduce “are likely to push inflation higher in the near term,” The Associated Press reported.

Big tax cuts could overheat the US economy and inflation. Likewise, hefty tariffs on foreign products could at least temporarily push up prices and hurt exporting countries around the world. And mass deportations could cause restaurants, construction companies and other businesses to run short of workers, pushing up their costs and weighing on economic growth.

Gourinchas also wrote that Trump’s plans to slash regulations on business could “boost potential growth in the medium term if they remove red tape and stimulate innovation.’’ But he warned that “excessive deregulation could also weaken financial safeguards and increase financial vulnerabilities, putting the US economy on a dangerous boom-bust path.’’

Trump inherits a strong US economy. The IMF expects US growth to come in at 2.7% this year, a hefty half percentage point upgrade from the 2.2% it had forecast in October.

The American economy — the world's biggest — is proving resilient in the face of high interest rates, engineered by the Federal Reserve to fight inflation. The US is benefiting from a strong job market that gives consumers the confidence and financial wherewithal to keep spending, from strong gains in productivity and from an influx of immigrants that has eased labor shortages.

The US economy’s unexpectedly strong performance stands in sharp contrast to the advanced economies across the Atlantic Ocean. The IMF expects the 20 countries that share the euro currency to collectively grow just 1% this year, up from 0.8% in 2024 but down from the 1.2% it was expecting in October. “Headwinds,” Gourinchas wrote, “include weak momentum, especially in manufacturing, low consumer confidence, and the persistence of a negative energy price shock’’ caused by Russia’s invasion of Ukraine.

The Chinese economy, No. 2 in the world, is forecast to decelerate – from 4.8% last year to 4.6% in 2025 and 4.5% in 2026. A collapse in the Chinese housing market has undermined consumer confidence. If government doesn’t do enough to stimulate the economy with lower interest rates, stepped-up spending or tax cuts, China “is at risk of a debt-deflation stagnation trap,’’ Gourinchas warned, in which falling prices discourage consumers from spending (because they have an incentive to wait to get still better bargains) and make it more expensive for borrowers to repay loans.

The IMF forecasts came out a day after its sister agency, the World Bank, predicted global growth of 2.7% in 2025 and 2026, same as last year and 2023.

The bank, which makes loans and grants to poor countries, warned that the growth wasn’t sufficient to reduce poverty in low-income countries. The IMF’s global growth estimates tend to be higher than the World Bank’s because they give more weight to faster-growing developing countries.