Saudi real estate hiring drops amid giga-project review

August 2, 2024, 4:04 AM

3% drop in Saudi Arabia
9% drop across GCC
Mixed signals on giga-projects

Saudi Arabia’s review of its many giga-projects dented real estate hiring in the country in the second quarter of this year, driving a larger decline across the GCC.

The drop, revealed by Cooper Fitch’s latest Gulf Employment Index which tracks new hires, mirrors a broader slowdown in the Saudi property and construction markets.

However, it is viewed as a temporary blip as authorities reassess their development plans.

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The real estate recruitment dip in Saudi Arabia contributed to a 3 percent decrease from the previous quarter in overall job openings in the kingdom across various economic sectors.

There was a larger 9 percent drop in new real estate jobs in the GCC.

This follows an 11 percent Gulf-wide increase in the first quarter of the year. The report did not provide any further country breakdowns.

Charlie Parish, a managing partner for Mena at property and construction recruitment firm Redpath Partners, says the latest data must be understood in the context of the pace of hiring that the industry has experienced in Saudi Arabia over the past few years.

“Its market still dominates the region for opportunities within this space and while we have seen a slight dip in intensity from our key developer clients during Q1 and Q2 for valid reasons, recently approved hiring budgets will see an obvious return to levels experienced in previous years,” he says, adding that this trend is likely to continue in 2025.

“The giga-projects have also implemented more rigorous hiring processes which naturally has a knock-on effect on onboarding time.”

Saudi authorities are reprioritising development of the giga-projects as costs mount and resources become increasingly stretched ahead of the Vision 2030 deadline.

Signals have been mixed about what that means in practice for the future of Saudi Arabia’s ambitious socio-economic transformation.

In April the government said that more than 30 percent of 1,064 schemes under the Vision 2030 banner had been completed, with the rest on track. It is unclear how many of those encompass giga-projects and their ancillary components.

According to an estimate at the start of the year by Knight Frank, the real estate consultancy, at least 26 giga-projects were in the pipeline in western Saudi Arabia and Riyadh, with a total value of $1.25 trillion. However, they believed that only $250 billion-worth had been awarded.

Kilian Murphy, associate director for the real estate team at Cooper Fitch, says that “critical projects with high return on investment and alignment with Vision 2030” appear to be exempt from the country's more “measured approach” to staffing seen this past quarter.

The UK’s Royal Institute of Chartered Surveyors last week reported in its Global Commercial Property Monitor that, while metrics like occupancy and rents continued to remain in positive territory, nearly half of respondents thought that the market may be near its peak or already in a downturn.

Market challenges

Scott Livermore, chief economist at Oxford Economics Middle East, says there is no cause for pessimism as Vision 2030 “should be seen as a long term destination.”

“The authorities’ shift to a more flexible approach around project timelines lends credibility to the transformation of the economy, even if there is some target slippage in some areas in the near term,” Livermore wrote in a column for AGBI.

Norah Alzahrani, a Riyadh-based business development manager at recruitment firm Tasc Outsourcing, says high inflation and interest rate hikes, as well as market dynamics such as oversupply of stock in certain segments and nations has had an impact on regional trends.

“Countries like the UAE, Qatar and Bahrain, which have diversified economies and robust real estate markets, might be less affected,” she says.

“However, even in these countries, certain segments of the real estate market, such as commercial and retail, could be experiencing challenges.”