Details

Saudi entertainment industry set to create robust impetus to real estate sector

 

-Al Mazaya Holding’s weekly real estate report highlights future of tourism investments in Gulf countries

 

-Leisure industry accounts for largest share of unexploited investment opportunities in Arab world

 

-Saudi Arabia plans to spend SAR 260 billion on entertainment sector to create 110,000 jobs by 2030

 

-AED 70 billion in revenues created by UAE tourism sector, with 200 projects under construction

 

-Bahrain establishing 15 hotels with investments of over $ 10 billion

The entertainment industry in the Gulf region, especially in Saudi Arabia and the UAE, has become a real magnet for domestic and foreign investments and it is more responsive to the needs of local communities than other economic platforms.

Al Mazaya Holding in its weekly real estate report said that the investments in the leisure sector have not reached the stage of saturation and there are still a lot of opportunities and untapped investment, while the levels of competition at the local, regional and global levels are conducive to developing the industry and keeping it in a constant growth to maintain its appeal to tourists and visitors under all circumstances. The report stressed that the Gulf countries have a lot of potential and factors that positively affect the industry, while the plans of diversification and motivation being implemented are likely to keep the industry on the right track, as the entertainment industry is already contributing to  GDP of the countries of the region, keeping alive prospects for further development in the near future.

In reviewing the major developments in the entertainment sector, Al Mazaya’s report refers to the overall mobility and economic transformation of Saudi Arabia, as well as the amendment to existing regulations and legislation, including the opening of new entertainment sectors, and the growing investments in various economic activities to meet the needs of the large population in Saudi Arabia, taking into account that the Saudi society has been for long yearning for recreational activities of various types, specially that the society has a young-aged community, two thirds of whom are under the age of 35.

According to Al Mazaya Holding’s data, Saudi Arabia’s entertainment industry will need to spend around SAR260 billion by 2030 to develop the infrastructure in all parts of the Kingdom. Domestic consumer spending is expected to reach SAR36 billion by 2030. Besides, the sector is capable of creating 110,000 direct jobs, not to mention its contribution to improving the social life of citizens and residents alike. The report stressed that the Kingdom has been making more progress in this area since 2016 until the moment, with the coming period expecting to see more investments and focus on boosting government spending.

Al Mazaya said that the Kingdom’s tourism and leisure sector is the second largest in terms of Saudisation, with the development planning to increase the sector’s contribution to Saudisation by more than 3% by 2020. It is clear that stimulating the sector is based on diversified activities and multiple institutions, providing the sector with opportunities to attract more and multiple investments. There is a growing number of plans and programmes aimed at implementing a large number of mega projects in the tourism sector, including the announcement of the establishment of the largest recreational, sports and cultural city in the world.

The largest entertainment city in Saudi Arabia is planned to be the future entertainment capital of the Kingdom, as well as the announcement of the Red Sea project, the first phase of which is expected to be completed in 2022, along with the construction of the largest Islamic museum in the world. Popular markets will likewise enjoy a share of the rehabilitation and development plan to double foreign investments into the tourism sector. Efforts are going on in full swing as well in Saudi Arabia to issue licences for foreign companies to operate in the sector, with plans underway to increase the number of tourist facilities to 77,700 facilities and hotel apartments to 62,000 by 2020.

Al Mazaya added that the rapid movement of the entertainment industry in Saudi Arabia comes in line with the achievements and qualitative leapfrogs in the entertainment industry in the region, especially in the UAE, where the data show that the UAE tourism sector recorded revenues of AED70 billion  at the end of 2016. The sector’s revenues during the last year amounted to AED80 billion and expected to exceed AED90 billion by the end of this year. These achievements have been made thanks to the plans developed by the UAE government to raise the contribution of the tourism sector to GDP to 11% over the next 10 years.

With the launch of a large number of tourism, hospitality and entertainment projects in the past two years, the UAE has been seeking to add more tourism projects and attractions through the expansion and diversification of leisure investments, making the country the most preferred destination for visitors to spend. The UAE government is currently targeting the Russian, Chinese and South American markets. This comes at a time when facts on the ground make the UAE one of the busiest countries in terms of the construction of hotels in the Middle East and North Africa, and perhaps globally, where there are more than 200 projects under construction in the country at the moment.

Al Mazaya stressed that the size of the existing investments and those planned to enter the entertainment sector are in line with the requirements of citizens and residents. There are plans to find important investment opportunities for capital holders seeking investment. Plans are also underway to reduce spending on foreign tours locals are making when they travel outside of the region, which have no real economic return. Examples of these plans are found in Kuwait, which seeks through the entertainment sector and its investments to achieve sustainable tourism development, as a new addition to the national economy, by improving the role of the private sector in supporting the development and contributing to job creation.

Al Mazaya Holding report highlights Bahrain’s success over the last three years in increasing the contribution of the tourism sector to non-oil GDP from 3.5% to 6.9%, which is higher than its equivalent in other countries of the region. This comes on the back of the several projects including 15 hotels with the investments of over $10 billion, as well as expansion projects at the Bahrain International Airport, the expansion of Gulf Air’s fleet and flights, and the establishment of a new exhibition centre, the largest of its kind in the region, where construction begins in 2018. There are also projects to develop the coastline in Bahrain.

With these large number of upcoming projects in the entertainment sector, Al Mazaya Holding report concluded that the future of the entertainment industry looks promising across the GCC.

Al Mazaya added that the entertainment industry will form the bulk of future investment in the Gulf region and a key driver of local economies. It said that the impact of the evolution in the entertainment industry will extend to the current infrastructure and the modernisation of investment legislation to attract foreign capital to finance the mega projects in this growing and vital sector, which in turn will bring in cultural changes as a result of the entry of a series of companies operating entertainment cities and cinemas to the world.

Al Mazaya also stressed the need to diversify leisure and tourism products in the GCC markets. This requires diversifying the sources of investments while opening the way for foreign and transcontinental companies to contribute to the establishment of a new development sector that will bring in a lot of job opportunities and billions of dollars in annual tourist revenues.