Saudi Arabia well placed to be strategic logistical hub between Europe, Asia: PGIM

Raimondo Amabile, Co-CEO of PGIM Real Estate, said that changes in supply chains due to the COVID-19 pandemic and geopolitical tensions have pushed companies to reassess their supply chain strategies, allowing opportunities to develop a strong logistics infrastructure that serves both local and global markets.

 

In an interview with Argaam on the sidelines of the Future Investment Initiative (FII) conference in Riyadh, Amabile added that Saudi Arabia’s prime geographic location positions it to be a potential strategic logistical hub between Europe and Asia, especially with the growing demand for e-commerce in the Kingdom. This could enhance growth opportunities in the logistics services sector and infrastructure development locally.

 

The global real estate market is undergoing a critical transformation after a period of challenges that saw property values drop by between 25-35% globally, noting clear signs of market stability and the gradual return of capital.

 

He added that the cost of capital is coming down, which may lead to an increase in real estate transactions and cash flow for investors, enhancing investor confidence and encouraging them to reallocate capital to the asset class.

 

He pointed out that the most attractive real estate assets for global capital include the housing sector under the concept of "global living," encompassing all types of residential properties for rent such as multi and single family housing, student housing, and senior housing.

 

He noted that demand for such types of housing is growing significantly, as tenant needs change from one generation to another, providing promising investment opportunities in the rental housing sector, which offers flexible and suitable options for both younger and elderly generations.

 

The real estate market in the Kingdom has great potential to keep pace with this global trend, as the residential sector in Saudi Arabia may grow toward family housing and rental units.

 

Moreover, the evolution of new generations in the Kingdom could lead to increased demand for rental residential properties, reflecting shifts seen in other global markets about 20 to 30 years ago, Amabile added.

 

The accelerated digital transformation, along with the increased reliance on artificial intelligence (AI), is driving demand for advanced data centers that meet the needs of major companies and governments. There are three main types of data centers: colocation data centers, hyperscale dedicated to cloud, and hyperscale tailored to AI model training.

 

He noted that Saudi Arabia has significant competitive advantages for attracting investment in this sector due to the availability of traditional fossil fuels and renewable energy, vast spaces, and political stability, making it an attractive option for global companies that aim to establish modern data centers that meet digital transformation needs.

 

Amabile concluded that there is an increasing trend among global investors to allocate capital to alternative assets, such as real estate, digital infrastructure, and renewable energy, and that Saudi Arabia is deemed a promising destination to attract some of these investments due to its geographic location, and political and economic stability.