Within a short span of time, over 540 global businesses have relocated their corporate headquarters to the Kingdom, surpassing the original Vision 2030 target of attracting 500 companies, 6 years ahead of the schedule.
As one of the fastest-growing economies in the world, Saudi Arabia has become a promised land for businesses with international growth aspirations.
Saudi Arabia RHQ Relocation is Driven by High Growth Prospects
There are some elements that explain the surging number of companies with HQs in the Kingdom, chiefly among which is the higher likelihood of successfully bidding on major government projects.
The myriad incentives provided as part of the Riyadh Headquarter (RHQ) program have been a major draw for global firms. These incentives include 0% withholding tax (“WHT”) on the payment made by the RHQ and a 10-year exemption on Saudization requirements.
The RHQ program is part of a bigger narrative that is aimed at bringing in high-growth companies to contribute to the Kingdom’s remarkable growth saga.
“Without an RHQ companies are not able to bid on giga projects,” noted Alex Nicholls, AstroLabs’ director of expansion during a conversation with Brandy Scott, on the Dubai Eye Business Breakfast.
In its stride towards diversification, Saudi Arabia has become and will continue to attract larger inflows of businesses as more companies realize the significance of having an on-ground presence in the Kingdom to capture once-in-a-lifetime opportunities—those who act quickly and decisively stand to benefit the most.
“Companies that were waiting to see what happened realized that Saudi Arabia is a very serious market primed for further growth and they want companies to be established in the Kingdom to have the privilege of working on these big government projects,” he remarked.
Saudi Arabia’s multi-dimensional competitive edge is rooted in a flourishing economy, developed infrastructure, and a business-friendly regulatory environment.
What Does the Influx of MNCs Heading to Saudi Mean for the Economy?
Large-scale corporations including, Morgan Stanley and Citi, have realized the importance of activating their RHQ license in Saudi Arabia.
In the wider economic context, this influx is crucial for bringing new expertise, technologies, and business practices to the Kingdom and supporting the ongoing development of key economic sectors such as tourism, construction, manufacturing, and technology. It signifies a fast-growing market where strategic investing leads to optimal business outcomes.
A greater private-sector involvement has contributed significantly to the non-oil sector, now accounting for 53% of the country’s real GDP, with on-oil investments surging by 70% since Vision 2030’s launch.
As such, the influx of global companies has led to a greater demand for commercial spaces, strengthening the real estate market’s global competitiveness.
According to Knight Frank’s analysis, Riyadh’s Grade A office lease rates have increased by 31% over the last 12 months, reaching SAR 2,604 per square meter. The city’s office space is expected to grow by 1 million square meters to reach 6.3 million square meters by 2026, reflecting the strong demand from relocating businesses.
Our 2023 Saudi Market Entry Report, highlighted that maximizing revenue generation is the primary motivation for survey participants’ strategic decision to enter the Saudi market. This underscores the market’s continued upward growth trajectory.
By adopting an “open-door policy” for international expertise and talent of all levels, the Kingdom will remain ahead of its peers as a key market of expansion for firms moving their HQs to Saudi Arabia, drawn to the pro-enterprise landscape that it offers.