2023-05-22-莱坊-KSA_Industrial_Market_Review_H1_2022_8页_4mb

Saudi Arabia Industrial Market Review: H1 2022 Summary

Policy & Vision 2030

• Government aims to reduce dependency on hydrocarbons, expanding the manufacturing and non-oil sectors.
• Non-oil activities grew by 3.7% in Q1 2022 (GSTAT).
• The manufacturing sector (excluding petroleum) grew by 4.1% YoY, contributing 8.3% to GDP.

Foreign Investment & Industrial Development

• Foreign investments represent 39% of total industrial sector investments.
• The National Industrial Development and Logistics Program (NDLP) seeks to:
  • Increase industrial contribution to GDP.
  • Stimulate foreign investment.
  • Boost non-oil exports.
  • Enhance industrial jobs.
• Total capital allocated under NDLP is SAR 650bn, including SAR 43.5bn for joint ventures.

Factory Development

• 88% of licensed factories in H1 2022 are implemented through local and foreign investment.
• Factories under construction or planned account for SAR 65bn.
• Digital transformation program aims to upgrade 4000 factories to align with Vision 2030 standards.

Logistics & Warehousing Growth

• Growth in e-commerce fuels demand for warehousing space for online fulfillment.
• Logistics centers such as those planned in NEOM (The Octagon) are pushing for fully automated facilities powered by renewable energy.
• Renewable energy initiatives are widespread in the logistics sector to meet Saudi green targets and reduce costs.

Market Figures

• Land allocation, supply, and leasable area for logistics/warehousing vary across regions, with higher concentrations in Riyadh, Jeddah, and the Dammam Metropolitan Area (DMA).
• Total warehouse stock in Riyadh is ~25 million sqm, with further development planned.

Leasing & Occupancy

• Warehouse rental rates are increasing:
  • Riyadh: SAR 158 psm (22% YoY increase).
  • Jeddah: SAR 179 psm to SAR 375 psm in select areas.
  • DMA: Rates have increased ~9% since last summer, ranging from SAR 170 psm to SAR 300 psm.
• Occupancy remains high:
  • Riyadh: 96%.
  • Jeddah: 96%.
  • DMA: 93%.

Key Future Trends

• Automation & Renewables: Warehouses moving towards full automation and renewable energy.
• Supply Growth: Expected supply growth in key regions (e.g., ~8% in Jeddah by 2025).
• Market Expansion: Short-term landlord-friendly due to limited high-quality warehouse stock.

Final Note

Saudi Arabia's industrial sector is undergoing significant transformation to meet Vision 2030 goals, driven by foreign investment, localized production, and the expansion of logistics infrastructure.