Major commercial property firms including CBRE, JLL are looking to build up their presence in Saudi Arabia as low oil prices force a shift in the country’s economy away from its traditional focus on energy exports.
CBRE has gotten preliminary approval to do consulting work in the Gulf nation, and is in talks with a prospective partner on the ground, looking to set up brokerage, valuation and property management services, the Wall Street Journal reported.
JLL has an “aggressive expansion plan” for the kingdom, having doubled its headcount in the country over the last two years, Jamil Ghaznawi, who heads the firm’s Saudi office, told the Journal.
One major reason for the companies’ push is persistently low oil prices, which have prompted Saudi Arabian officials to propose sweeping changes in the country’s economy.
“The oil prices shock is almost forcing a rebirth and creating a whole new economy, which is attracting the interest of global businesses,” Faisal Durrani, head researcher at Cluttons, a London-based property consultation, told the Journal.
Revenues from oil exports make up about 55 percent of Saudi Arabia’s GDP, and as much as 90 percent of its federal budget. With crude oil prices hovering around $30 a barrel, the Saudi government is pushing the economy’s privatization and diversification, including into real estate.
“Some of the reforms that are being proposed will bring a level of modernization to Saudi Arabia, especially the real-estate sector,” CBRE’s Nicholas Maclean, “We feel the opportunity is bigger than ever now.” [WSJ] – Ariel Stulberg