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US Tariffs Have Limited Impact on Saudi Real Estate Market

A real estate project in Saudi Arabia. (SPA)
A real estate project in Saudi Arabia. (SPA)
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US Tariffs Have Limited Impact on Saudi Real Estate Market

A real estate project in Saudi Arabia. (SPA)
A real estate project in Saudi Arabia. (SPA)

More than two weeks after US President Donald Trump imposed a 10% tariff on imports from Gulf Cooperation Council (GCC) countries—part of a broader global tariff initiative—questions have emerged regarding its potential impact on Saudi Arabia’s real estate sector.

As a cornerstone of the Kingdom’s economic diversification under Vision 2030, the real estate market remains a vital contributor to sustainable growth.

Real estate and economic experts predict the new tariffs will have a “moderate” and “limited” effect on Saudi Arabia’s property market. Speaking to Asharq Al-Awsat, they estimated a potential rise of 2–5% in the cost of imported construction materials used in infrastructure and development projects.

The Saudi real estate sector recorded transactions worth approximately SAR 2.5 trillion (around $666 billion) in 2024, buoyed by Vision 2030 initiatives and government incentives—reinforcing investor confidence in the sector as a stable and attractive investment hub, particularly amid global financial volatility.

Mohammed Hamdi Omar, CEO of G.World, told Asharq Al-Awsat that the new tariffs could increase the cost of importing steel, concrete, and aluminum by 3.4% to 7%, contributing to an overall rise in construction costs of up to 5% annually. This is driven by increasing demand across numerous development projects currently underway or planned across the Kingdom.

Omar noted that Saudi Arabia had previously raised tariffs on many construction materials in 2020, with duties on items like steel, aluminum, and machinery increasing from 5–12% to as much as 15%.

He added that higher input costs could add $10–$20 per ton to steel prices, which accounts for around 20% of building material inputs, while concrete prices may rise 5–10% due to energy and logistics cost hikes.

These rising costs, Omar warned, could force some developers to delay or cancel low-margin projects, potentially exacerbating the existing housing shortage in the Kingdom.

Despite global economic fluctuations, Saudi Arabia’s non-oil GDP growth and ongoing reforms continue to strengthen investor sentiment. Government incentives, such as VAT exemptions for first-time homebuyers, also contribute to the sector’s resilience.

Real estate appraiser and expert Eng. Ahmed Al-Faqih added that the Saudi market relies more on Chinese imports for construction materials, which should shield many development projects from the brunt of US tariffs.

He emphasized that, like gold, real estate remains a safe haven for capital, especially as global financial markets face disruption amid tariff wars.

Luxury real estate is expected to bear the brunt of price increases, though it continues to expand in line with Vision 2030 and growing interest from tourists and foreign investors.

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UK Budget Deficit for 2025/26 Narrows to Six-year Low

Skyscrapers in London's financial district (Reuters)
Skyscrapers in London's financial district (Reuters)
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UK Budget Deficit for 2025/26 Narrows to Six-year Low

Skyscrapers in London's financial district (Reuters)
Skyscrapers in London's financial district (Reuters)

Britain's budget deficit for the last financial year narrowed to a six-year low as a percentage of economic output although borrowing for March alone exceeded forecasts, official data showed on Thursday.

The Office for National Statistics reported 132.0 billion pounds ($178.1 billion) of public sector net borrowing in the 2025/26 financial year that ⁠ended in March.

That ⁠was 0.7 billion pounds less than the most recent forecast from the Office for Budget Responsibility and down from 151.9 billion pounds in 2024/25.

Equivalent to 4.3% of ⁠economic output - in line with the OBR prediction - the deficit was the smallest since the 2019/20 financial year, which ended just as the response to the COVID-19 pandemic caused debt to soar.

Debt interest spending in 2025/26 was 97.6 billion pounds, up from 85.4 billion pounds a year ⁠previously ⁠and marking the second-highest figure in cash terms since 2022/23, when inflation soared after Russia's invasion of Ukraine.

Last week, the International Monetary Fund cut Britain's economic growth forecasts for 2026 by more than for any other Group of Seven nation due to the country's exposure to higher energy prices with its heavy use of natural gas.

"A more stagflationary backdrop is forecast to take shape, with speculation already building about the impact of weaker growth on the Chancellor's headroom," Nabil Taleb, economist at PwC UK, said, referring to Reeves' ability to meet her borrowing target.

"Recent moves in bond markets, with gilt yields briefly touching 5% for the first time since 2008 before easing, also highlight the UK's vulnerability to uncertainty."

In March alone, the ONS reported public sector net borrowing of 12.6 billion pounds. Economists polled by Reuters had a median forecast of a 10.3 billion-pound deficit for the month.

Business

Saudi Arabia, Philippines to Join JPMorgan Emerging Market Bond Index in 2027

FILE PHOTO: Signage is seen at the JPMorgan Chase & Co. New York Head Quarters in Manhattan, New York City, US, June 30, 2022. REUTERS/Andrew Kelly/File Photo
FILE PHOTO: Signage is seen at the JPMorgan Chase & Co. New York Head Quarters in Manhattan, New York City, US, June 30, 2022. REUTERS/Andrew Kelly/File Photo
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Saudi Arabia, Philippines to Join JPMorgan Emerging Market Bond Index in 2027

FILE PHOTO: Signage is seen at the JPMorgan Chase & Co. New York Head Quarters in Manhattan, New York City, US, June 30, 2022. REUTERS/Andrew Kelly/File Photo
FILE PHOTO: Signage is seen at the JPMorgan Chase & Co. New York Head Quarters in Manhattan, New York City, US, June 30, 2022. REUTERS/Andrew Kelly/File Photo

J.P. Morgan said on Wednesday that Saudi Arabia and the Philippines will be added to its local currency emerging market debt index from January 29 next year.

The inclusion will cover Saudi riyal-denominated sovereign sukuk and Philippine peso-denominated government bonds, both entering the widely tracked GBI-EM ⁠index series.

Their weights ⁠will be introduced gradually, with Saudi Arabia expected to reach 2.52% and the Philippines 1.78% once fully phased in.

The update is part ⁠of a broader index adjustment, which will lower the "Country Cap" - the maximum weight, or share, any single country can hold in the "diversified" index - to 9% from 10%.

As a result, major markets including China, India, Mexico, Malaysia, and Indonesia will see their ⁠weight ⁠reduced to the new limit.

Based on current eligibility criteria, about eight Saudi sovereign sukuk with a combined value of roughly $69 billion could be included, JPMorgan said.

For the Philippines, nine eligible government bonds with a combined value of around $49 billion are under consideration.

Business

Oil to Fabric: Middle East Crises Reshape Global Fashion

A worker arranges spools of thread at a textile factory in Haiyan, Jiangsu province, China (Reuters)
A worker arranges spools of thread at a textile factory in Haiyan, Jiangsu province, China (Reuters)
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Oil to Fabric: Middle East Crises Reshape Global Fashion

A worker arranges spools of thread at a textile factory in Haiyan, Jiangsu province, China (Reuters)
A worker arranges spools of thread at a textile factory in Haiyan, Jiangsu province, China (Reuters)

Rising oil prices are no longer just an energy market story; they are feeding directly into the cost of clothing. From petrochemical plants to fabric mills and retail racks, a complex supply chain is passing on higher costs, pushing up the final price consumers pay.

According to the “Materials Market 2025” report by the Organization for Textile Exchange, polyester makes up about 59% of global fabric output, with roughly 88% produced from non-recycled petroleum sources, leaving the industry exposed to energy price swings.

Oil prices have surged about 32% since the start of the US-Israeli war on Iran on Feb. 28, approaching $100 per barrel.

Fabrics under oil pressure

Amal Saqr, a textile design consultant, said the sector is highly sensitive to shifts in oil prices because of its reliance on synthetic fibers.

More than 60% of fabrics used in global clothing production depend on petroleum-based materials such as polyester, nylon and acrylic, she said, adding that any rise in oil prices feeds directly into fabric costs.

She pointed to 2008, when polyester prices jumped about 30% within three months as oil hit record highs, forcing Asian spinning mills to cut output by 20% to 25%.

Disruptions in the Red Sea between 2023 and 2024 also drove shipping costs up by about 300%, raising raw material costs and straining supply chains.

Yemen’s Iran-aligned Houthis began targeting ships linked to Israel on Nov. 19, 2023, using drones and missiles.

Natural fabrics not immune

Natural fibers such as cotton and linen avoid direct reliance on oil, but are still exposed to energy costs, Saqr said, noting that farming depends on fertilizers, fuel and transport.

The global fertilizer crisis in 2021 pushed prices up about 80%, driving cotton prices higher by roughly 40%. Later disruptions in the Strait of Hormuz added another 40% increase in fertilizer costs due to shipping delays.

Global cotton production reached about 24.5 million tons in 2024, or roughly 19% of total fiber output, making it less dominant than synthetic fibers but relatively more stable in pricing, according to the Textile Exchange report.

Rising production costs

Higher energy prices are hitting every stage of production, from spinning to dyeing and drying, Saqr said.

With already thin margins, textile factories face a stark choice: raise prices or cut output, both of which ultimately hit consumers.

World Bank data shows operating costs for textile factories in several countries have risen by about 18% following recent energy price increases.

Import markets feel it fast

Import-dependent markets are quick to absorb shocks from shipping or energy disruptions, Saqr said.

Shipping costs from Asia have lifted synthetic fabric prices by 10% to 18%, while imported cotton prices have climbed by 15% to 25%.

Rerouting shipments from the Strait of Hormuz to the Cape of Good Hope has added 10 to 14 days to transit times, leading to shortages and swings in the availability of fabrics and garments.

Value chains under rethink

Burak Cakmak, chief executive of the Saudi Fashion Commission, said the impact of oil prices is not immediate, as final pricing reflects a full value chain including production, marketing and distribution.

Instead of passing costs on, many brands are rethinking how to create value, improving efficiency and working more closely with suppliers, he said.

He also pointed to a shift toward localized production, with brands operating closer to their markets and managing inventory more tightly to control costs and improve flexibility.

Sustainability gains urgency

Sustainability is no longer just an environmental concern; it is tied to efficiency and long-term economic viability, Cakmak said.

The sector is moving toward circular models, including recycling and waste reduction, practices that are becoming essential to improving operations.

Designers double down

Anna Zinola, director of Istituto Marangoni in Riyadh, said rising oil prices are reinforcing, not reshaping, designers’ shift toward more conscious material choices.

Sustainability is embedded in the curriculum as a core approach guiding every design decision, she said.

Students are trained to balance cost, sustainability and consumer demand, while exploring material innovations that combine environmental and commercial goals.

Prices set to rise

Reports by McKinsey and Euratex expect global clothing prices to rise by 8% to 12% over the next year, as supply chain pressure persists and shipping costs remain elevated.