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Saudi Arabia is one of the most exciting economies in the world. Its ambitious program to diversify the economy (Vision 2030) has unlocked enormous opportunities across different sectors, driving not only economic growth,
but an influx of new residents, investors, and professional expats. The coming years are likely to see more privatization, more business expansion, and more investors taking a keen interest in the kingdom.
If you’re an expat living in Saudi Arabia, it's an excellent time to put your savings to work by investing in any number of prospects. Foreign ownership is generally becoming easier and opportunities are becoming more diverse.
Below are six ways you can invest your money in Saudi Arabia’s increasingly dynamic economy.
The kingdom’s push to move away from oil means enormous growth across myriad sectors. That makes Tadawul, the country’s stock exchange, an interesting place to trade.
The exchange offers a range of opportunities depending on your risk appetite. If you want a more conservative play, there’s blue-chip behemoths like Saudi Aramco and Saudi Basic Industries Corporation.
Conversely you can target companies in emerging sectors that align with Vision 2030 initiatives – look for companies in areas that focus on technology, healthcare and renewable energy.
If you want broad exposure to Tadawul, you might consider investing in a fund that tracks the Tadawul All Share Index (TASI), or an ETF that generally tracks Tadawul equities, like the iShares MSCI Saudi Arabia ETF.
Note that if you are a Saudi resident with a valid residency card you can buy stocks directly on the exchange. That’s quite a perk considering that non-residents have to be very large foreign investors to buy stocks on the exchange (a minimum of $5 billion in assets under management).
Any single foreign investor can own up to 10 percent of a Saudi company, and foreign investors collectively can own up to 49 percent.
Saudi Arabia’s Sukuk, or Islamic bonds, market has been growing at a rapid clip in recent years. Sukuk work like traditional bonds, except they don’t pay out interest, which is prohibited in Islam. Instead, they represent ownership of an asset.
If you want to put your money into initiatives that promote sustainability, Saudi entities like the Public Investment Fund (PIF) and Alrajhi Bank, the world’s largest Islamic lender, have even been issuing green sukuk, meaning the proceeds go to environmentally friendly projects.
Read more about: Sukuk Vs Bonds: Exploring Halal Fixed-Income Alternatives
If you’re looking for a relatively low-risk investment with steady returns, buying sukuk from a sovereign entity or well-established corporation could be a good choice as they’re unlikely to default.
3- Sharia-Compliant Savings Accounts
If you’re looking for a safe traditional place to stash your savings and want to keep it halal, the kingdom’s Islamic banks offer sharia-compliant savings accounts.
They engage in profit sharing (mudarabah) rather than interest payments in order to remain sharia compliant.
Deposits are invested into halal ventures and the profits are divided with customers according to predetermined ratios. You can check out AlRajhi Bank’s sharia-compliant savings scheme Here for example.
As with mostly everything in the Kingdom, crowdfunding platforms have been on the rise in recent years. As an investor, these platforms offer excellent returns even on relatively small investments.
Funding Souq, which officially entered the Saudi market earlier this year, lets you invest in SMEs in the kingdom and make shariah-compliant returns. Other platforms let you invest small amounts of money in company debt, equity, or real estate projects.
Read more about: Types of Crowdfunding Platforms in Saudi Arabia
Unsurprisingly, real estate in the kingdom is booming. The country’s major cities, like Riyadh and Jeddah, have growing populations and increased urbanization. Major projects like King Salman Park and Qiddiya Entertainment City are likely to keep growth chugging along.
The kingdom’s overall reforms are likely to help its real estate market as well. With 100 percent foreign ownership allowed in certain sectors, demand for housing and offices will likely keep increasing.
P&S Market Research forecasted that the Kingdom’s residential market would see a compound annual growth rate (CAGR) of 8.6% from 2024 to 2030. Mordor Intelligence predicts similar growth in the Kingdom’s commercial real estate sector.
As an expat, you can purchase property in most cities other than the holy cities of Mecca and Medina. You will have to obtain a foreign investment license and you should check if there are any restrictions on the area you’re looking to invest in.
You can check out this guide for more information. If you want to invest in Saudi Arabia’s real estate market without buying physical property, you can buy into any number of Real Estate Investment Trusts (REITs), which were introduced to the Saudi stock market in 2016.
Read more: Conventional REITs Vs. Islamic REITs, And The Case for Investing In Them
If you’re an expat looking to truly invest and start a company, that too is getting much easier. Besides allowing 100 percent foreign ownership in most sectors as part of broader reforms, the kingdom has rolled out a growing number of credit schemes to help small businesses get the financing they need.
Initiatives like the country’s SME Bank offer microloans and loan guarantees. Its Funding Gate links government and private financiers with SMEs. And the Kafalah Program guaranteed 12.1 billion SAR to SMEs in 2023. In other words, there’s a growing raft of support if you’re in Saudi and want to launch a business.
Read more: Saudi Arabia’s SME Financing Programs
Saudi Basic Industries Corporation.
Tadawul All Share Index (TASI)
iShares MSCI Saudi Arabia ETF.
How to become an investor- Saudi Exchange
Saudi Arabia's Sukuk
Global sukuk issuance hits $91.9bn in H1: S&P Global | Arab News
Disclamer:
"The post is for educational purposes only and the Firm does not directly or indirectly provide these services. Funding Souq KSA is regulated by the Saudi Central Bank (SAMA). This communication is not directed at or intended to be acted upon by any Person in the DIFC."
