Riyadh has been selected as the new Regional Headquarters by more than 200 international companies who wish to compete for Government contracts from 1st January 2024 onwards.
Companies from a wide variety of sectors, including technology, real estate, consulting, construction, healthcare, and hospitality, have now selected Riyadh as their Middle East headquarters.
Well-known companies who have made a move include IHG Hotels & Resorts, PWC, Deloitte, Huawei, and GE Healthcare, who have been attracted by incentives offered by the Saudi government, which include a 30-year exemption on corporate tax.
Beginning on January 1, 2024, the policy will require international companies wishing to secure government contracts to relocate their regional headquarters to Saudi Arabia.
“Regional Headquarters in the Kingdom of Saudi Arabia: is a unit of a Multinational group duly established under the laws of Saudi Arabia to support, manage, and provide strategic direction to its branches, subsidiaries, and affiliates operating in MENA region. RHQ program invites global companies’ regional headquarters to relocate to Saudi Arabia, it was established as a joint initiative between Ministry of Investment (MISA) and Royal Commission for Riyadh City (RCRC)”- Ministry of Investment (MISA)
This initiative is part of a broader strategy to strengthen Riyadh’s standing as a global commercial center, which is already witnessing a significant inflow of corporate migrations.
Key Facts About the Kingdom of Saudi Arabia (KSA)
Saudi Arabia holds the position of the most substantial economy in the Middle East and North Africa (MENA) region, ranking as the 18th largest economy globally, representing the economic prominence of Saudi Arabia within the MENA region and on the global scale,
- It is the first among the G20 Nations. Group of Twenty (G20) is a group of the world’s major economies. The G20 represents all inhabited continents, 80% of world GDP, 75% of global trade, and 60% of the world’s population.
- Saudi Arabia (KSA) stands out as a vibrant and youthful G20 economy, boasting a population where 67% is under 35, signifying a demographic of considerable dynamism.
- In 2021, Saudi Arabia secured the 34th position in the World Digital Competitiveness Index, showcasing its substantial prowess and competitiveness in the digital realm on a global scale.
- With a population of 35.2 million, Saudi Arabia represents 60% of the Gulf Cooperation Council’s (GCC) total population, reflecting its significant demographic influence within the region.
- Saudi Arabia achieved the 21st rank in the World’s Happiest Index in 2021, underscoring the Kingdom’s commitment to well-being and happiness among its residents.
- As of the first quarter of 2021, Saudi Arabia’s Gross Domestic Product (GDP) per capita amounted to $22.18, providing a measure of the economic output per individual in the country.
- The Kingdom’s real GDP for the first quarter of 2021 reached $701.5 billion, contributing approximately 47% to the total real GDP of the Gulf Cooperation Council (GCC), highlighting Saudi Arabia’s substantial economic significance in the region.
Corporate Migrations across Various Sectors
Companies from diverse industries, including energy, technology, healthcare, and hospitality, have already established their regional bases in Riyadh. There are several notable entrants from Europe, the United States, the United Kingdom, and China.
European powerhouses like Schneider Electric, ABB, Siemens, Philips, Schlumberger, and Egis Group have moved to establish their regional bases in Riyadh.
Prominent U.S. firms, such as Bechtel, White & Case, GE Healthcare, Pepsico, and Baker Hughes, have relocated to Riyadh.
Northern Trust Corp., a global financial powerhouse with a staggering $1.3 trillion worth of assets under management, has established its Middle East headquarters in Riyadh, Saudi Arabia.
This aligns with the January 2024 deadline that requires international companies to have their regional headquarters in Saudi Arabia to apply for government contracts.
Moreover, to elevate the standards of real estate in the kingdom, focusing on technology and sustainability. The international Real Estate Consultancy Firm JLL has established its regional headquarters in Riyadh’s King Abdullah Financial District (KAFD).
From the UK, PwC, Deloitte, and Unilever have moved their regional headquarters to Riyadh. IHG Hotels & Resorts have already opened their Saudi headquarters in Riyadh.
Currently managing 40 hotels in Saudi Arabia and 32 under construction in the kingdom, IHG is expanding significantly, with 50% of its Middle East development now focused on Saudi Arabia.
Moreover, in a significant step in developing public parks and urban spaces, aligning to establish sustainable and attractive spaces, Knight Frank recently opened their Saudi office in Laysen Valley in Riyadh.
The expansion strategy of IHG Hotels & Resorts and Knight Frank aligns perfectly with the Kingdom’s diversification plans under Saudi Vision 2030.
Major Chinese corporations, including BGI, Nuctech, Dahua Technology, iMile Delivery, Huawei, and China Comservice, have joined the bandwagon.
The Saudi government offers attractive incentives to encourage such relocations. These incentives include a 30-year exemption from corporate income tax and withholding tax on headquarters activities.
Additionally, companies receive exclusive discounts and comprehensive support services, such as relocation, concierge, facilitation, and professional advice.
Expected Economic Impact
This strategic initiative is poised to boost the Kingdom’s economic development significantly. It’s expected to facilitate giga projects like NEOM, [Red Sea Global], and Qiddiya, contributing to Saudi Arabia’s vision to diversify its economy and reduce its dependence on oil.
A Global Hub
With over 200 international companies setting up their regional headquarters in Riyadh, the city is quickly emerging as a new global commercial hub. This is a major shift in Riyadh’s global economic role and a testament to Saudi Arabia’s vision of diversifying its economy.
The move is expected to result in significant economic growth for the Kingdom, positioning it as a global leader in various sectors.