Index Saudi Arabia 2023 was held in September at the Riyadh Front Exhibition & Conference Centre. A relevant part of the show was dedicated to Office Interiors, with some of the leading international brands operating in the country. Another focus of the exhibition was the Hotel & Hospitality Expo and the Lighting Design & Technology Expo, including bathroom, accessories, surface finishing, decor, textiles, interiors, and bedding products.

GIGAPROJECTS FOR LONG-TERM DEVELOPMENT

Saudi Arabia has announced several ambitious plans to launch a wave of megaprojects that are set to transform the country into a global economic powerhouse. With investments of billions of dollars, the Kingdom is embarking on a journey to diversify its economy away from oil, create jobs, and boost its international standing as a leading hub for trade and tourism.

Planned projects address several sectors including consumer goods, construction, financial services, and manufacturing. However, most future projects are in the design stage, either at a conceptual or more detailed level. In terms of projects out to bid, construction is the largest segment and is expected to dominate over the long term.

Key drivers for project investments include the Kingdom’s population growth; the energy transition into the hydrogen economy; net zero, renewables, and carbon capture; Vision 2030 and the Giga-Projects program as well as ESG and the focus on sustainable construction and construction technology.

Giga projects in Saudi Arabia include the US$ 500 billion NEOM – being built on an area covering 26,500 sq. km in northwestern Saudi Arabia; The Red Sea Project on 28,000 sq. km; AMAALA on 4,155 sq. km; Qiddiya “capital of entertainment, sports, and the arts” on 3, 66 sq. km. and the US$ 17.1 billion Diriyah Gate.

THE OFFICE FURNITURE SECTOR

According to CSIL (see ‘The World Office Furniture Industry’ report), Saudi Arabia is the largest office furniture market in the Gulf region and clearly that with the highest potential. Local production is almost entirely dedicated to the Saudi market and increased significantly since 2017, gaining over 30% of its value in total.

According to the Ministry of Industry and Mineral Resources, the whole furniture sector in Saudi is composed of 423 operating industrial units with a growth of about 80 units in the last decade only. The total number of employees stood at 28,000 people, meaning an average of 66 employees per company, confirming that the furniture sector is a medium-small player sector.

More specifically, the office furniture is constrained in the country. Besides a contained number of industrial plants producing office furniture located mainly in Riyadh, there are plenty of smaller workshops that are difficult to identify but worth considering on the production count.

Most of them are small producers also manufacturing school furniture, metal cabinets, hospitality, healthcare furniture, and fixtures (mainly doors). Furthermore, it should be considered that there is a relevant number of small workshops often managed by trading companies (importers).

IMPORTS TO DRIVE THE GROWTH

After registering a downgrade trend in 2017-2020, Saudi imports of office furniture rebounded in 2021 (+50%) and increased again the following year to a value of US$ 240 million. Values increased by +4% in 2022/2021 and by +5% as a yearly average since 2017.

In 2022, about 51% of imports originated from Asia-Pacific, another 30% came from Europe, 6% from North America, and other Gulf Countries represented 5%. At the single-country level, China is by far the largest supplier for Saudi Arabia with a 46% share (30% in 2017), while Italy represents about 11% of the total (19% in 2017). The United States ranked third (6%), while Spain stood at 5%, the United Kingdom and Poland followed with a similar share of about 3%. Fast-growing countries are China, the United Kingdom, Poland, Jordan, and Vietnam.

At a product level, office chairs import incidence increased significantly in the period under observation. Inflows peaked in the pandemic period reaching a share of 22% in 2021 and stabilised to 20% in 2022 (8% in 2017). According to CSIL, the Top suppliers of office chairs are China, the United States, Italy, and South Korea.

However, it must be underlined that 80% of imports are represented by office furniture. The top suppliers are China, Italy, Spain, and the United Kingdom.