Stock - Riyadh skyline / Saudi skyline
GDP expanded 11.8% in the second quarter, when the non-oil economy grew 5.4%. Image Credit: Bloomberg

The more than 300 apartments in Abdulsalam Almajed’s new Riyadh complex sold in just a month for cash, without him even having to advertise.

This is Saudi Arabia, the world’s biggest exporter of oil, so it’s no surprise the property market is red-hot as income from a spike in energy prices flows through the economy.

But Almajed says the scramble for the 1-million-riyal ($266,400) homes reflects something else, too: the social and economic shift that’s reshaping the kingdom, accelerated by the crown prince’s overhaul program.

“There’s a change in mindset,” said Almajed, who heads family-owned developer Almajdiah Residence, as some Saudis embrace the more open style of living his firm caters to. “Today there’s beautiful creativity in Saudi designs.”

Crown Prince Mohammed bin Salman has ended or relaxed restrictions on entertainment and many other sectors, and is trying to curb a reliance on oil.

Ten years ago, many property owners wouldn’t even rent to women. Today, women are entering the labour market in greater numbers, and 30 per cent of Almajdiah’s buyers are female, acquiring investment properties or a home of their own.

They’re helping lift an economy transformed by energy markets. As much of the world is fretting about spiraling inflation fueled by Russia’s war in Ukraine and potential recessions, oil averaging more than $100 a barrel this year means Saudi Arabia’s economy is the fastest growing in the Group of 20.

Gross domestic product expanded 11.8 per cent in the second quarter, when the non-oil economy grew 5.4 per cent and is now larger than at the end of 2019, before the pandemic struck.

State energy company Saudi Aramco has reported the biggest quarterly adjusted profit of any listed company globally. Billions of dollars are flowing into Saudi coffers and raising state investments, boosting sentiment in a private sector reliant on government contracts.

Capital spending jumped an annual 64 per cent in April to June, as the kingdom embarks on a building spree including malls and parks as well as grandiose plans for a new city built from scratch and a luxury tourism development on the Red Sea. Overall spending was 16 per cent higher, even though this year’s initial budget forecast it would fall.

Summers typically send Saudi elites off to cooler climes in Europe, but Riyadh’s newest high-end restaurants are packed. At Coya, a Latin American chain, the most popular dinner seatings – 8.30pm-9pm – are fully booked a month ahead.

Combined cash withdrawals and points of sales transactions, an indicator of consumer activity, have bounced back, increasing an annual 9 per cent in June after a record high in March. Inflation last month was 2.7 per cent, about a third of the rate in the US or eurozone.

The Finance Ministry’s trying to break the habit of oil-tracking splurges and cutbacks, flowing stimulus through sovereign funds and into long-term projects like electric-vehicle manufacturing and tourism.

The economy is expected to expand 7.6 per cent this year but growth could fall back to 2.5 per cent by 2024, according to a Bloomberg survey of economists. Crude is now around $90 a barrel as global fears over economic downturns and the potential for more supply from Iran if its nuclear deal is resurrected continue to hang over the market.

“If there was another collapse in oil prices, there will again be slowing down in activity,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “But a number of positive factors are coming together at this point.”

Almajdiah caters to affluent professionals who want open-plan homes with abundant natural light. Many Saudis previously preferred houses with high walls and tiny windows to preserve privacy. But the social opening, along with smaller families and tighter budgets, is changing that.

The developer’s newest complex is built around shared courtyards and features cafes, gyms and a nursery.

The style echoes high-end housing in Dubai, the regional hub. Prince Mohammed has announced plans to double Riyadh’s population and attract millions of expatriates.

That’s key to Almajed’s optimism. The more people, the more apartments they’ll need, he said.