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Regulatory reforms helping drive growth in Saudi Arabia’s commercial real estate sector

Regulatory reforms helping drive growth in Saudi Arabia’s commercial real estate sector
Saudi Arabia’s commercial real estate sector is witnessing robust growth, driven by rising demand across key industries hospitality. Above, the lobby of the Ritz Carlton hotel in Riyadh. (AFP file photo)
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Updated 03 November 2024
MOHAMMED AL-KINANI
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Regulatory reforms helping drive growth in Saudi Arabia’s commercial real estate sector

Regulatory reforms helping drive growth in Saudi Arabia’s commercial real estate sector
Updated 03 November 2024
MOHAMMED AL-KINANI
Follow

JEDDAH: Saudi Arabia’s commercial real estate sector is witnessing robust growth, driven by rising demand across key industries, including offices, hospitality, and data centers.

The sector is also evolving with a focus on smart technologies, sustainability, and specialized assets, reflecting the Kingdom’s broader economic transformation goals.

Strategic government initiatives, such as Vision 2030, and increased foreign investment are playing a crucial role in this expansion, as highlighted by the latest Knight Frank report.

The Kingdom’s major cities are becoming regional hubs for commercial activity, attracting international businesses and supporting Saudi Arabia’s economic diversification efforts.

As the Kingdom continues to implement its Vision 2030 strategies, the commercial real estate sector is poised to play a pivotal role in shaping the future of the country’s urban landscape and economic growth.

The capital city, Riyadh, remains at the center of this surge, attracting numerous regional and international companies, while other cities such as Jeddah show early signs of growth.

According to Knight Frank’s biannual review of key trends and the performance of the market in the Kingdom for summer 2024, this growth is driven by rising demand and supported by strategic government reform initiatives.

The report by the London-based global real estate consultancy firm showed that the office market in Riyadh is particularly dynamic, benefiting from the regional headquarters program initiative, which has attracted European companies and spurred demand for office space.

In 2023, Saudi Arabia’s non-oil revenue reached 50 percent of gross domestic product for the first time, amounting to $453 billion, according to the Ministry of Economy and Planning.

The report added that this economic growth has significantly boosted demand for commercial real estate across all sectors, with Riyadh’s office market seeing the most benefit as office space demand rises.

The commercial real estate sector remains strong, with office yields holding at 7.75 percent, supported by shrinking availability and fast-increasing rents.

Investor interest in Saudi Arabia is also surging, with the government granting a record 2,884 investment licenses in the last quarter of 2023, marking a 125 percent year-on-year increase.

Knight Frank further noted that in the first quarter of 2024, the Kingdom recorded 104,000 new business registrations, up 59 percent from the same period the year before, bringing the total to over 1.45 million registrations.

Speaking to Arab News, Elias Abou Samra, CEO at RAFAL Real Estate Development Co. highlighted the current trends shaping the commercial real estate market in Saudi Arabia which has seen Riyadh become a magnet for commercial real estate at a regional level.

“The capital has attracted more than 500 regional and international companies since the launch of the headquarters program by Royal Commission of Riyadh City in 2021. We are expecting a new supply of approximately 5 million sq. meters of office space by 2030, and we believe this will barely match the pent-up demand,” he said.

Abou Samra added that as for other major cities the demand remains local and growth is organic, pending the roll out of certain initiatives and incentives such as special economic zones in King Abdullah Economic City and Eastern Province.

The executive pointed out that Riyadh has absorbed 90 percent of the demand in recent years and is expected to continue to do so for the next four years. He also added that the coast city of Jeddah is witnessing early signs of growth as major master plans and infrastructure projects reach advanced design stages.

“Other cities continue to serve their local and regional markets with a healthy 5 percent growth per year that is sustained, yet no paradigm shifts are sensible yet,” he said.

The sector will continue to benefit from ongoing digital transformation efforts, with technology playing a crucial role in shaping smarter, more efficient spaces.

Mamdouh Al-Doubayan, managing director at Globant for Middle East and North Africa, said that government support coupled with a growing focus on sustainability and the implementation of smart technologies will drive the market’s expansion.

“Key factors such as foreign investment, the evolution of regulatory frameworks, and demand for innovative, flexible workspaces will also play a critical role in the sector’s growth, he said, adding that his company is well-positioned to support this transformation.




Mamdouh Al-Doubayan, managing director at Globant for Middle East and North Africa. (Supplied)

Regarding the future success drivers for Saudi Arabia’s sector, Abou Samra highlighted that they go beyond basic supply and demand, emphasizing the market’s shift toward mixed-use and transit-oriented developments, reflecting greater sophistication.

“As such, part of demand springs from upgrades within existing stock of office space, and conversion of old stock to alternative asset classes. Another driver is the modernization and openness of the regulatory environment and quasi-governmental entities that are jointly paving the way for innovative products,” the CEO said.

Abou Samra added that the Mukaab at Riyadh’s New Murabba mega project is a testament to the new frontiers of commercial real estate in Saudi Arabia.

Addressing the impact of Saudi Vision 2030 on the strategic direction of commercial real estate development, Rafal’s CEO noted that the Kingdom’s decade-end plan touches all sectors of the economy, enhancing existing industries and introducing new ones like mining, tourism, and cloud computing.

“As a result, we are migrating from a one-size-fits all commercial real estate market to specialized assets,” he said.

Abou Samra identified data centers as the leading new addition to the commercial real estate market, followed by logistics and biomedical sectors. He emphasizes that these developments are driven by Saudi Arabia’s Vision 2030, which aims to diversify the economy by fostering new industries and reducing dependence on oil.

Shedding light on the areas or sectors within commercial real estate that are currently attracting the most investment, Abou Samra noted that, in addition to mainstream commercial office space, the industrial and logistics sectors have experienced double-digit growth since 2021.

He also highlighted that major regional players are entering these markets, and foreign direct investments in these sectors continue to flow into the Kingdom.

On the other hand, technology has become essential to the success of every industry, and commercial real estate is no exception.

Globant’s Al-Doubayan said technological advancements, including smart building technologies and digital platforms, are shaping the commercial real estate industry in Saudi Arabia, emphasizing their transformative impact on the sector in the Kingdom.

“Smart building technologies, integrated with IoT, AI, and data analytics, are enabling the creation of more intelligent, efficient, and adaptive spaces,” he said, adding that his company focuses on enhancing connected experiences within smart venues, allowing building owners and operators to offer seamless experiences for tenants and visitors, while optimizing resource management.

He further said that digital platforms are also revolutionizing property management, making it possible to monitor and automate operations in real time. “This evolution is key to supporting the Kingdom’s broader vision of smart cities and sustainable urban growth.”

The Saudi government is prioritizing the real estate sector, enacting over 18 pieces of legislation, as of May, to drive its growth and significantly boost its GDP.

These include real estate systems, executive regulations, and regulatory rules, reflecting the government’s commitment to this sector as part of Vision 2030.

The sector’s role and contribution to the Kingdom’s GDP reached 5.9 percent in the fourth quarter of 2023.

Reflecting on the impact of recent regulatory and policy changes on the commercial real estate market, the Al-Doubayan stated that Saudi Arabia’s regulatory shifts, including the implementation of more transparent property laws and foreign investment incentives, have significantly increased the market’s attractiveness.

“These reforms are creating an environment conducive to international investment and collaboration, which aligns with Vision 2030’s goals of diversifying the economy, as more policies are introduced to attract global businesses,” he said.

Moreover, he anticipated that the real estate sector will see continued growth, especially in digital transformation projects that enhance operational efficiency and sustainability.

Al-Doubayan added that sustainability is central to the future of commercial real estate in Saudi Arabia.

He emphasized that the country is making strides toward green building practices, which are increasingly becoming a priority for developers and tenants alike.

“Certifications such as Leadership in Energy and Environmental Design, or LEED, are gaining traction, encouraging buildings to reduce energy consumption and carbon emissions,” he said.

Topics: main real estate property Saudi Arabia

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Saudi Arabia transforming into ‘center of gravity’ in regional tech space: expert 

Saudi Arabia transforming into ‘center of gravity’ in regional tech space: expert 
Updated 5 sec ago
Reina Takla
Nour El-Shaeri
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Saudi Arabia transforming into ‘center of gravity’ in regional tech space: expert 

Saudi Arabia transforming into ‘center of gravity’ in regional tech space: expert 
Updated 5 sec ago
Reina Takla Nour El-Shaeri

RIYADH: Saudi Arabia is quickly becoming a dominant force in the regional technology ecosystem, establishing itself as the “center of gravity” for startups in the Middle East, according to an industry expert. 

In an interview with Arab News during the LEAP 2025 Tech Conference, Mohammed Al-Zubi, founder of Saudi early-stage venture capital firm Nama Ventures, stated that the rapid evolution of the event is a reflection of the momentum in the sector. 

“The amount of progress we’ve made from LEAP 23, 24, 25 — it’s phenomenal,” he said, adding that the impact of the event is mind-boggling. 

“Minister Al-Swaha was on stage — the level and magnitude of the announcements are really mind-boggling,” he added. 

He emphasized that the Kingdom is now a regional leader in investment, deal flow, and overall market growth. “If you look at all the reports, Saudi Arabia today is leading on all metrics.” 

Prioritizing teams over ideas 

As an early-stage firm, Nama Ventures focuses on investing in strong founding teams with complementary skill sets and clearly defined roles. 

Al-Zubi described the company’s investment approach as having two key components: a micro-level evaluation of the team and a macro-level assessment of the idea. “As they say in real estate—location, location, location—here, it’s team, team, team,” he explained. 

He stressed that Nama Ventures typically avoids investing in solo founders unless they have an exceptionally strong track record. 

“We typically don’t invest in solo founders unless the pedigree speaks for itself,” Al-Zubi said. Instead, the firm looks for teams with clear role clarity and complementary skill sets, ensuring a balance between execution, operations, and sales. 

“So it can’t be, you know, two sellers coming together. We want to see the seller, the doer, and the operator,” he explained. 

While Nama Ventures is willing to take risks related to execution, it steers clear of risks associated with unproven business prototypes. The firm prefers to invest in established business models rather than entirely new concepts.

“We don’t mind what we refer to as copycats,” he said. “We think about taking a model that works very well, innovating, and localizing it for this part of the world makes sense.” 

The firm is particularly interested in startups that can adapt existing successful business models to the MENA region while minimizing risks. 

AI across all industries 

While Nama Ventures remains broadly sector-agnostic, it is naturally inclined toward industries with strong transactional components. 

“Although we say we are sector agnostic, in reality, we don’t add much value if it’s a gaming or content company,” Al-Zubi noted. 

“We like and favor transactional stuff. Show me a product or service in exchange for a riyal.”

This focus has led the firm to invest more heavily in fintech, proptech, and other sectors with clear revenue streams. 

Artificial intelligence is another critical element in the firm’s investment thesis, not as a standalone category but as an embedded technology across various industries. 

“Today, we don’t think of AI as a separate model. We want to see AI embedded in fintech. We want to see AI embedded in proptech. We see AI embedded in entertaintech,” he said. 

Al-Zubi emphasized that startups that fail to integrate AI into their operations risk falling behind. “If you have not taken advantage of AI today, you are a generation behind, and you’re in the playground with a broken leg,” he added.

Nama Ventures has incorporated AI tools to enhance its investment process. 

The investment approach 

Al-Zubi highlighted that Nama Ventures differentiates itself by taking a highly involved approach to supporting its portfolio companies. 

The firm does not act as a passive investor but instead plays an active role in guiding founders, leveraging its entrepreneurial experience. 

“The beauty about this asset class is there is no such thing as an investor— you have to be a value-add investor by definition. We’re not silent financial investors. Part of our role is to provide value-add,” he said. 

He pointed to Nama’s experience as a key differentiator. “We’ve walked the talk. We say we are technologists that became technology managers, that became entrepreneurs, that failed and succeeded, that became angel investors, and then fund managers,” he explained. 

“I always joke and say, if you have not had a moment where you look into the ceiling worrying about payroll as a founder, you should not be writing checks for early-stage founders because you lack that entrepreneurial empathy.” 

Nama Ventures also helps its portfolio companies navigate the complexities of fundraising. “We do a lot of heavy lifting on structuring the rounds in itself,” Al-Zubi said. 

“A lot of the time, although we’re on the buy side—we’re investing—we’re really helping them out, almost like a sell-side advisory, in terms of helping them think about the deal and the terms.” 

He emphasized the importance of ensuring that founders understand the agreements they are entering. “We love that our founders are educated and sophisticated because it makes for a better long-term relationship.” 

The firm’s technical expertise also sets it apart from other investors. “We’re geeks. We’ve been on the console, we’ve written code,” Al-Zubi said. 

“If you want to be a tech investor and don’t have a tech affinity, I think that’s a disadvantage.” This hands-on technical knowledge enables Nama Ventures to assist startups in building their tech teams and optimizing their technical infrastructure. 

“We’re known as the fund that can help you find your CTO (chief technology officer) or connect you and help you with your tech stack.” 

An unconventional LP base 

Unlike many venture capital firms that raise funds from institutional investors or sovereign wealth funds, Nama Ventures opted to build its first fund primarily through high-net-worth individuals and family offices. 

“We opted for Fund I, which is not typical. We didn’t raise from sovereigns, we didn’t raise from institutions,” Al-Zubi said. “We went the high-net-worth family office route, and we enjoy a very healthy LP (limited partners) base.” 

Nama’s investors see the firm as a vehicle for accessing early-stage opportunities while managing risk. 

“We’ve got 63 LPs that have partnered with us, and we’ve become their feeder fund,” Al-Zubi explained.

Many of these family offices understand that early-stage investing can be highly risky and challenging to diversify on their own.

“A lot of the family offices come and say, I really should not be doing early-stage pre-seed and seeds. It’s too risky, I’m going to lose money, I cannot diversify—let Nama be my diversification engine. Let them uplift that deal flow, and I’ll cherry-pick their winners and co-invest with them.” 

This approach has allowed investors to invest in leading technology companies at such an early stage. 

Al-Zubi referenced startups like Tamara, Salla, and Calo, which are all Nama portfolio companies on the path to initial public offerings, with some currently crossing $1 billion in valuations. 

KSA’s support for startups 

Al-Zubi believes Saudi Arabia’s support for the startup ecosystem is unmatched globally. Having spent time in the Silicon Valley, London, and the Middle East, he argued that the Kingdom’s government-led initiatives are unparalleled. 

“I would argue that Saudi Arabia today has an unparalleled support and incentive plan for the tech startup ecosystem,” he said. “The coopetition between the government entities, whether it’s NTDP (National Technology Development Program), whether it’s MISA (Ministry of Investment of Saudi Arabia), whether it’s MISK—it’s incredible. It really is incredible.” 

He sees the Kingdom’s multi-layered approach to economic development—attracting global tech giants while nurturing early-stage startups—as a key driver of long-term growth. 

Just act 

Al-Zubi encourages aspiring entrepreneurs to take the leap and start their own businesses, highlighting that the experience of building a startup is an invaluable learning opportunity.

“My advice is just do it. You don’t have to have all the answers—you have to figure it out along the journey,” he said. 

“Even if you do an entrepreneurial endeavor and fail, you are so much more interesting for the next job. You’re probably going to get your boss’ boss’ job because you’ve spent a year, 18 months being a domain expert in that field.” 

He urged founders to embrace iteration and adaptability. “We have a saying: if you’re still on the same business model 18 months from launching, something is actually wrong. You cannot be that right,” he said. “Keep pivoting and iterating till you get more product-market fit before you run out of cash.” 

Topics: LEAP2025

Saudi Aramco executive highlights key factors to unlock AI potential

Saudi Aramco executive highlights key factors to unlock AI potential
Updated 09 February 2025
Reem Walid
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Saudi Aramco executive highlights key factors to unlock AI potential

Saudi Aramco executive highlights key factors to unlock AI potential
Updated 09 February 2025
Reem Walid

RIYADH: Real-world data, computing power, and talent are the three key factors required to unlock the full potential of artificial intelligence, according to a Saudi Aramco top official.

On the first day of LEAP in Riyadh from Feb. 9-12, the executive vice president of technology and innovation at Saudi Aramco Ahmad Al-Khowaiter, discussed in his speech “Transforming Industries with Data and AI” these main requirements crucial to Aramco’s success.

This falls in line with the National Strategy for Data and Artificial Intelligence, which aims to train 40 percent of the workforce in essential skills to combat data and AI illiteracy and develop a talent pool of 20,000 data and AI specialists.

It also aligns well with the strategy’s target of attracting SR75 billion ($19.99 billion) in local and foreign investments, as well as supporting over 300 startups to encourage entrepreneurship. 

“Maximizing its (artificial intelligence) potential requires three main elements, three main enablers. One is tremendous amounts of real-world data. You need the data first, then you need to be able to put in place computing power, computing infrastructure to be able to do the models,” Al-Khowaiter said. 

“Finally, and probably the most important element, which I think we tend to forget in our excitement around technology, is you need the talent. You need the subject matter experts who can tell you if the model is telling the truth,” he added. 

The executive highlighted that Aramco has over 90 years of proprietary data from its extensive geological and process surveys. He explained that the company collects about 10 billion data points daily across all its facilities. 

Al-Khowaiter also shed light on how building capable AI models are not limited to global tech companies. 

He said: “It is within the reach of enterprises, even startups, to design AI suited to their own businesses. We have believed this from the beginning, developing our own models with our own data, which is why it gives me great pleasure to introduce our latest innovation Plant Meta Brain, a time series transformer model utilizing large time series data sets.”

He added: “Using these large data sets, we’re able to model the real-time processes that underlie our operations, and we are able to provide actionable insight in real-time to operators, engineers, and scientists. By working in real time with minimal user input, we anticipate demand, optimize operations, predict product qualities, and maximize production.” 

Al-Khowaiter explained that this approach would allow the company’s experts to focus on more value-added tasks instead of troubleshooting or developing models from the ground up.

“We believe our AI is only as good as our HI, our human intelligence, and this is why we are training. More than 6,000 AI developers across the company,” he said. 

“We’re also using the engineers, scientists and operators we already have to work with those AI developers to train new models, making them more robust and more reliable,” he added.

Al-Khowaiter concluded by saying: “Aramco is not only using our unique size and scale to maximize the use of AI on an industrial scale but our decade’s worth of data.” 

Held under the theme “Into New Worlds,” LEAP 2025 aims to expand business networking and investment opportunities in the tech sector. 

The event plays a critical role in Saudi Arabia’s ambition to become a global technology hub, aligning with its Vision 2030 plan to diversify the economy. As part of this initiative, the Kingdom has pledged $100 billion toward advancing its technology sector.

Topics: LEAP2025

Saudi Arabia announces $14.9bn investment deals in LEAP 2025

Saudi Arabia announces $14.9bn investment deals in LEAP 2025
Updated 09 February 2025
Nirmal Narayanan
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Saudi Arabia announces $14.9bn investment deals in LEAP 2025

Saudi Arabia announces $14.9bn investment deals in LEAP 2025
  • Event attracted strategic investments in infrastructure and AI, along with startup funding rounds valued at over $10.9 billion
  • Kingdom is trying to avoid division and polarization as innovation takes center stage globally
Updated 09 February 2025
Nirmal Narayanan

RIYADH: Saudi Arabia has announced investments worth $14.9 billion in the technological sector on the first day of the LEAP 2025 Tech Conference as the Kingdom continues to spearhead its economic diversification efforts. 

During the event’s opening ceremony, the Kingdom’s Minister of Communications and Information Technology Abdullah Al-Swaha said Saudi Arabia is witnessing significant growth in the industry, with the number of jobs jumping from 150,000 in 2021 to 381,000 in 2024. 

LEAP 2025 is a flagship event in the Kingdom, as the nation eyes to become a global and regional tech hub, aligned with the goals outlined in the Vision 2030 program. 

“Under the leadership of His Royal Highness (Crown Prince Mohammed bin Salman), and in partnership with you, our global innovators and thinkers of the world — yet again, you keep making history in this dividing moment and announcing $14.9 billion worth of investments and announcements in this LEAP alone,” said Al-Swaha. 

“The numbers speak for themselves. As a digital economy collectively, we (MENA region) have grown by 73 percent to $260 billion in the region from 2021 to 2024. The Kingdom represents 50 percent of it. As a tech force, as His Royal Highness said this region is the new Europe,” he added.
“In terms of growth, we jumped from 150,000 tech force to 381,000 in Saudi, and as a result, the region grows,” Al-Swaha said.

Highlighting Saudi Arabia’s progress in the technological sector, the minister said his country currently has seven unicorns, while the region has 15. 

“If you look at the Kingdom alone, if you put it in the EU zone, we will be the fifth largest tech hub in Europe. If you use unicorns and startups as a proxy for growth, the region grew to 15 unicorns, and the Kingdom grew from two unicorns to seven,” said Al-Swaha. 

Major investment deals

During the event, Groq, a US-based artificial intelligence firm, announced investing $1.5 billion in its project developed in association with Saudi Aramco to launch the world’s largest AI inferencing data center in the Kingdom, following a memorandum of understanding signed in September. 

The inferencing data center is expected to play a crucial role in Aramco Digital’s vision to leverage advanced technologies that drive operational excellence and support Vision 2030. 

The event witnessed Alat, owned by Saudi Arabia’s Public Investment Fund, and Chinese tech giant Lenovo joining hands to establish an advanced manufacturing and technology center based on AI and robotics. 

Lenovo also announced the decision to establish its regional headquarters in the Kingdom. 

China-based retail and e-commerce company Alibaba said it will launch an AI empowerment program in cooperation with Tuwaiq Academy — the training arm of the Saudi Federation for Cybersecurity. 

US-based Databricks also pledged to invest $300 billion over the next three years to upskill Saudi citizens, build the company’s business in the Kingdom, and contribute to the local digital economy. 

SambaNova, another US software firm, agreed to invest $140 million to build advanced AI infrastructure in Saudi Arabia.

Gulf Data Hub, in cooperation with London-based investment firm KKR, announced it will develop data centers with a capacity of 300 megawatts to strengthen the Kingdom’s leadership as a global destination for AI. 

American cloud-based software company Salesforce said it will invest $500 million in the region and establish its regional headquarters in the Kingdom. 

Chinese cloud computing service Tencent Cloud has committed to investing $150 million in local infrastructure, resources, and partnerships within the technology sector over the coming years to support Vision 2030.

The President of Google for the Europe, Middle East, and Africa region, Tara Brady, said the tech giant will contribute $70 billion to the Kingdom’s economy over the next 10 years. 

“Google is committed to the region and the Kingdom. We believe this is the future. Google is doubling down, we believe, over the next 10 years, we could be contributing $70 billion to the economy,” said Brady. 

He added: “We are going to be skilling Saudi nationals, over the next 10 years, one million. We will also scale up the Kingdom to become the number one AI provider for the world.” 

Google Cloud announced investments in digital infrastructure for AI by launching a global hub in Saudi Arabia to serve regional and global demand. 

LEAP 2025 also attracted strategic investments in infrastructure and AI, along with startup funding rounds valued at over $10.9 billion. 

Steering ahead in the intelligent age

Al-Swaha said Saudi Arabia is trying to avoid division and polarization as innovation takes center stage globally. 

“In the analog and digital world, we were talking about the Global North and the Global South. For every dollar made in the Global South, somebody makes three times to five times in the Global North, and that is not acceptable. 

“For the intelligent age, this will even go bigger, where it is projected that only a billion to two will join this exclusive club called the intelligent age, and 6.5 billion by 2030 will be left behind,” said Al-Swaha. 

He added: “I would argue that leaving anyone behind in the intelligent age is as devastating as depriving an individual from getting access to oxygen, water and food.” 

The Saudi minister said the Kingdom is trying to ensure inclusivity in the technological sector, therefore ensuring prosperity for all in the future. 

The minister also said the digital economy is currently valued at $16 trillion. However, 2.6 billion people remain excluded, including 100 million in the Global North and 2.5 billion in the Global South.

“Crown Prince Mohammed bin Salman has bet on closing down the divide of the digital age by fueling cloud, entrepreneurship, tech, for the region and the world, and this is why we are laser-focused on continuing to be the biggest success story in closing down the skills divide, digital divide, and governance divide in partnership with you,” he said. 

Al-Swaha underscored the growth of the reduction of the gender gap in the technological sector and added that women’s empowerment in Saudi Arabia’s tech industry has already surpassed the EU, G20, and Silicon Valley. 

Highlighting the necessity to avoid polarization, the minister said: “We have to celebrate the chat GPT moment of 2022, but we also have to appreciate the DeepSeek moment. The world does not need polarization in the intelligent age. We need to work collectively to celebrate these advancements, where DeepSeek so far is beating all AI models.”

Topics: Saudi Arabia LEAP2025 Abdullah Al-Swaha Vision 2030 LEAP conference

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Tencent Cloud to launch Saudi operations in 2025 with $150m investment, says official

Tencent Cloud to launch Saudi operations in 2025 with $150m investment, says official
Updated 09 February 2025
Reina Takla
Nirmal Narayanan
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Tencent Cloud to launch Saudi operations in 2025 with $150m investment, says official

Tencent Cloud to launch Saudi operations in 2025 with $150m investment, says official
Updated 09 February 2025
Reina Takla Nirmal Narayanan

RIYADH: Tencent Cloud will begin operations in Saudi Arabia this year with an initial investment of $150 million, as the Chinese tech giant moves to expand its footprint in the Middle East, a company official said. 

Dan Hu, vice president of Tencent Cloud International for the Middle East and North Africa, said the company’s expansion aligns with Saudi Arabia’s broader push to attract foreign investment and establish itself as a global technology hub under Vision 2030. 

“Tencent Cloud’s Saudi region will become operational by 2025. We will see it this year,” Hu said in an interview with Arab News at the LEAP conference in Riyadh. “We are going to invest $150 million for the local infrastructure, we source partnerships over the next few years. We have to support the country’s Vision 2030.” 

The company is working to build its presence in the Kingdom by assembling a local team, forging partnerships, and expanding its customer base. 

“In China, Tencent was established more than two decades ago. We are probably one of the most reputable companies in China. We have WeChat, we have games ecosystem,” he said. 

While Tencent has an established and mature ecosystem in China, Hu acknowledged the company is still in the early stages of expansion in the Middle East. 

“Our data center will be operational by the end of this year. We are still trying to build up our local teams and to build up our local ecosystem, our suppliers and our customers, our system integrators, and our ecosystem partners,” he said. 

Despite its nascent presence in the Kingdom, Tencent has already secured major clients, including clean-energy leader BYD, even before its Saudi operations officially launch. 

Hu sees strong growth potential for cloud computing in the region, particularly in applications leveraging artificial intelligence and generative AI. 

“I think cloud computing can be a very robust infrastructure for AI applications. Cloud computing can be the underlying infrastructure to support the prosperity of AI applications in the Kingdom and also in the region,” he said. 

Hu added that Tencent Cloud has tailored offerings for customers in Saudi Arabia, including gaming solutions, live streaming, and real-time applications. 

Topics: LEAP2025

IBM expands AI workforce in Saudi Arabia, aligning with Vision 2030: CEO 

IBM expands AI workforce in Saudi Arabia, aligning with Vision 2030: CEO 
Updated 09 February 2025
Miguel Hadchity
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IBM expands AI workforce in Saudi Arabia, aligning with Vision 2030: CEO 

IBM expands AI workforce in Saudi Arabia, aligning with Vision 2030: CEO 
Updated 09 February 2025
Miguel Hadchity

RIYADH: US-based tech giant IBM employs a majority of Saudi nationals at its artificial intelligence lab in the Kingdom, underscoring the nation’s commitment to developing local talent. 

It was disclosed during a panel titled “Bringing Tech to Life” on the opening day of LEAP 2025, Riyadh’s flagship technology event, held from Feb. 9-12 under the theme “Into New Worlds.” 

Speaking at the discussion, IBM Chairman and CEO Arvind Krishna said: “Over 70 percent of our hires in (IBM’s AI and R&D lab) are Saudi nationals, not expats.”    

Launched at LEAP 2024, IBM’s $200 million Software Lab in Riyadh supports Vision 2030 by driving digital innovation, job creation, and global tech solutions, aligning with the Kingdom’s pledge to invest $100 billion in its technology sector. 

Saudi Minister of Communications and Information Technology Abdullah Al-Swaha, addressing industry leaders and aspiring innovators, stressed the importance of understanding market shifts.  

“I think no leader in the industry can really help educate all of us — leaders in the room, the youth, the women, the talent — about picking up market transitions and where the market is heading,” he said. 

Krishna acknowledged the growing excitement around AI but noted that for numerical purposes the technology has been in use for two decades. 

He also predicted a seismic shift in computing capabilities, with quantum computing expected to achieve a major breakthrough within the next two to three years.

“In three to five years, we will see something amazing on quantum computers,” he added.  

A key transformation Krishna highlighted was in AI training costs, forecasting a dramatic reduction. “I believe the cost of training will become 1 percent — one over 100 of what it used to be. DeepSeek was a proof point of that,” he noted. 

DeepSeek, a Chinese AI firm, gained rapid attention with its R1 large language model, released on Jan. 20 at a fraction of typical development costs.

Offered under an open-source license, DeepSeek-R1 quickly soared in popularity, with its AI assistant app topping Apple’s App Store and surpassing OpenAI’s ChatGPT. Its success triggered a stock market shakeup as investors reevaluated major US AI companies.  

While large general-purpose AI models currently dominate the field, Krishna emphasized the potential of domain-specific models, which today account for just 1 percent of usage.

“All the fascination is with these large models that serve everybody, but we believe in the next three to four years, domain-specific models will make up over half of all deployed models,” he said. 

LEAP 2025 aims to expand business networking and investment opportunities in the tech sector. The event plays a crucial role in Saudi Arabia’s goal of becoming a global technology hub, in line with Vision 2030’s economic diversification strategy.

Topics: LEAP2025

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