19 September 2017
Access to public transport is often seen as a parameter to enhanced city living. With a number of major public transport projects in the Kingdom currently underway, the Saudi Vision 2030 (the Vision) goal of having three Saudi cities recognized in the top-ranked 100 cities worldwide is a step closer to being achieved. Among the objectives to increase usage of the public transport under the National Transformation Program 2020 (NTP) are the preparation of 20 public transportation policies (currently none) and increasing the number of cities with comprehensive public transportation plans to 16 (from the current 11).
With a budget of SAR 90 billion (USD 24 billion), the Riyadh Metro being developed by the Arriyadh Development Authority (ADA) is currently in advanced stages of construction and is scheduled to open in 2019. The metro network consists of six main lines spanning 176 kilometres, and 85 metro stations. The Riyadh Rapid Bus Transit System, which is being developed in tandem with the metro, comprises 24 lines with a total length of 1,083 kilometres and 776 bus stations.
Public transport in the central region extends outside of Riyadh following the Saudi Railway Company’s launch of the Northern Train in Q1 2017. The line links Riyadh, Majmaah and Qassim with a 460-kilometre-long railway track. When fully developed, the railway will extend to 1,250 km, further linking Ha’il (expected in Q3 2017), Jouf (expected in 2018) and Qurayat.
The Riyadh metro will create opportunities for Transit-Oriented Developments (TOD) and will increase property values around these transport nodes. The metro is expected to transform the traditional automobile-centric nature of development, which is a positive step toward market maturity. The resulting TODs are also likely to attract foreign investment, including international investors, who may want to buy mixed-use commercial properties along the main corridors of quality metro stations.
While transport projects in the central region are focussed on residents, those in the western region focus more on serving pilgrims. This is in line with the Vision’s goal of increasing the Kingdom’s capacity to welcome Umrah pilgrims to 15 million a year by 2020 and 30 million per year by 2030. The centrepiece Haramain High Speed Rail project (HHSR), a 444 km high-speed line linking Makkah to Madinah via King Abdullah Economic City and Jeddah, is expected to be operational by 2018. While the line will be operational year round, it is expected to carry around 240,000 passengers daily during the peak periods of Hajj and Umrah, greatly improving the quality of the pilgrimage experience. The Makkah Metro Project (including the bus system) is a further major, inner-city project approved by the council of ministers for the benefit of both pilgrims and residents.
The aviation sector has also seen a lot of recent activity across the Kingdom with a number of airports expected to be privatised by the end of the yea. In the meantime, a number of public private partnerships have been announced with the General Authority of Civil Aviation for the operation and expansion of airports across the Kingdom. This move is expected to improve the current passenger experience, particularly at King Abdulaziz Airport in Jeddah which is expected to process around 30 million passengers a year once the first phase is operational (expected 2018).
Given the large-scale nature of these transportation projects, many have experienced delays, which is a recurring theme in the Kingdom’s real estate market. While the prospect of investing in Saudi transport projects is luring for investors, delays may have a negative impact on investor sentiment. The NTP aims to improve the efficiency of transportation infrastructure by decreasing the percentage of transportation projects delayed from their initial completion dates down from 65% to 25%. Labour shortages, provision of services, and contractual disputes are some of the main causes of project delays that need to be addressed to achieve the goals and continue to attract investor interest.