How Saudi Arabia’s Smart Cities Are Attracting Global Investors?
Saudi Arabia is leading a massive urban transformation to grow its smart cities. According to recent studies, the Saudi Arabia smart cities market was valued at $3.55 billion in 2019 and is projected to reach $14.75 billion by 2027. The Kingdom has initiatives to make Saudi Arabia the future of Smart Cities as part of its Vision 2030 Plan. The plan seeks to drive economic diversification and decrease dependence on oil via technology-based, sustainable city development.
The nation's vision to become a world leader in smart cities manifests in its large-scale investments, such as visionary projects like NEOM, The Red Sea Project, and Amaala. Thus, real estate giants such as DarGlobal are riding this tide, with high-profile projects such as Trump Tower Jeddah and Neptune, Interiors by Mouawad, in Riyadh, helping the Kingdom attract global investors.
In this blog, we’ll explore the scale and scope of Saudi Arabia’s smart cities, highlight key investment opportunities, and discuss future projects in Saudi Arabia.
Overview of Saudi Arabia Smart City Initiatives
The Kingdom has already invested billions of dollars in infrastructure to turn 11 cities into smart cities by 2030. In addition, the real estate market (residential and commercial) is expected to grow to a CAGR of 17.7% by 2029. Also, Saudi Arabia's multi-level strategy combines public-private partnerships (PPPs) and advanced technology. These technologies are further incorporated into urban planning, transportation, energy management, public services, etc.
In addition, by keeping sustainability their top priority, Saudi Arabia's smart cities aim to lower their carbon emissions through energy-efficient buildings, smart grids, and next-gen waste management technology. This approach makes these cities technologically superior and green.
Key Smart City Projects
Numerous government mega-projects are supporting Saudi Arabia's vision for a smart city. These projects are redefining what we think about smart cities and generating top-of-the-line real estate investment prospects for investors.
1. NEOM
NEOM is considered one of the most ambitious Kingdom’s projects as it's supposed to represent the future of Saudi Smart cities. It's a $500 billion future city that covers more than 26,500 square kilometers in northwestern Saudi Arabia. It aims to be a hub of innovation, clean energy, and advanced technology. The city's development is bifurcated into key projects: The Line, Oxagon, Trojena, Sindalah, Aquellum, Siranna, Epicon, Leyja, Gidori, and Utamo, each presenting a vision of sustainable living.
2. The Red Sea Project
The Red Sea Project is a luxury tourism project occupying 28,000 square kilometers along the western coastline. In 2030, the Red Sea aims to have 50 hotels with 8,000 rooms and more than 1,000 residential properties across 22 islands and six inland sites. These high-end real estate investments include Shebara, Shura Island, Thuwal Private Retreat, Desert Rock, Coral Bloom, Ummahat Islands, St. Regis Red Sea Resort, and many more.
3. Trump Tower Jeddah And Neptune, Interiors By Mouawad
DarGlobal's prestigious projects in Saudi Arabia, Trump Tower Jeddah and Neptune, Interiors by Mouawad in Riyadh, offer seafront residences and branded villas, respectively. These projects exemplify our commitment to aligning with the Kingdom's Vision 2030 by redefining luxury living and boosting the real estate sector. The interiors seamlessly combine traditional architectural elegance and next-gen tech.
Investment Opportunities in Saudi Arabia's Smart Cities
Saudi Arabia's smart cities’ projects and concepts are real estate investment prospects for domestic and global investors.
1. Smart Residential Projects
As more people move to cities from the countryside, smart residential projects are in great demand. Investors can consider luxury homes developed by DarGlobal, including the Trump Tower Jeddah, which features smart home tech, automated systems, and luxurious amenities.
2. Commercial and Mixed-Use Properties
To make Saudi Arabia smart cities more desirable, we have created an investment opportunity where development initiatives like residential, commercial, and retail facilities are well-integrated. Such mixed-use properties provide long-term rental yield potential, particularly in business centers like NEOM and King Abdullah Financial District (KAFD).
3. Luxurious and Eco-Friendly Resorts
The growing interest in sustainable tourism has spurred demand for green resorts in the region, especially in ongoing projects. Investors can explore opportunities in the Red Sea Project and Amaala, where properties are developed using green technology to offer financial rewards and long-term sustainability.
Benefits of Investing in Saudi Arabia's Smart Cities
Investing in Saudi Arabia smart cities opens doors to multiple financial and strategic gains and profits for domestic and international investors.
1. High Rental Yield
Due to rapid urbanization, more people are moving to the cities from the countryside, which has raised the demand for residential properties in Saudi Arabia’s smart cities. A recent study found that gross residential rental yields are generally high, hovering around 6-8% as of Q1 2025. Therefore, this must be treated as an opportunity for investors to capitalize on attractive rental yields.
2. Tax Advantages
Saudi Arabia has a zero income tax policy for foreign investors to make them invest in their smart cities. The Saudi government has also reduced VAT rates for real estate transactions to make property acquisition and resale more profitable.
3. Portfolio Diversification with Growth Potential
Investing in Saudi Arabia's smart cities enables international investors to diversify their portfolios. As the Saudi government focuses on public-private partnerships (PPPs), investors can gain lower risk and higher profitability due to joint ventures with reputable players.
Challenges and Considerations for Investors
Although Saudi Arabia's smart cities hold promising prospects for investors and citizens, investors need to be mindful of some challenges:
1. Project Delays
Mega-projects such as NEOM and The Red Sea Project have ambitious schedules, but big projects can be delayed, which might impact investment returns.
2. Environmental and Sustainability Compliance
Given the Kingdom’s goals on green living, projects must comply with sustainability standards. This may result in sudden higher development costs for investors.
3. Market Competition
As Saudi Arabia becomes increasingly popular among global investors and institutions, top real estate projects are increasing. That is why early investment is becoming essential for higher returns.
Future Outlook Of Saudi Arabia Smart City
Saudi Arabia's smart city real estate market is set to grow significantly in the next few years. Here's what the future looks like:
1. Long-Term Real Estate Boom
With Vision 2030 spearheading change, the real estate market will likely see sustained growth, presenting long-term investment opportunities and higher ROI.
2. Property Value Surge
Smart city property values are expected to jump as infrastructure progresses, and early investors will be rewarded with hefty capital appreciation.
3. Foreign Capital Flow
Saudi Arabia's pro-investor policies will keep attracting foreign capital, fueling market competition and profitability.
4. AI-Powered Real Estate Innovation
The convergence of best AI technologies has already made real estate projects more smart and effective, and it will continue to do so with new prospects.
5. Green and Sustainable Growth
Future smart cities will focus on sustainable infrastructure to make green real estate investments attractive.
Conclusion
From NEOM to the Red Sea Project, the Kingdom's ambitious projects, part of its Vision 2030 Plan, are on their way to revolutionizing the smart city concept. DarGlobal is part of this shift, offering luxury real estate projects that align with Vision 2030. Our smart and luxurious developments allow investors to own high-end properties in Saudi Arabia's smart cities.