Saudi Arabia, with nearly $1 trillion in assets under management, has become an attractive destination for European companies seeking to extend their reach and tap into new markets. The Kingdom’s strategic efforts to enhance cross-border collaborations and attract foreign investment have made it a compelling market for businesses looking to establish a presence in the region.
Through regulatory reforms aimed at streamlining business operations—such as simplifying licensing procedures, increasing transparency, and offering tax incentives—Saudi Arabia is actively encouraging foreign investment. As a result, European firms are finding that expanding into the Kingdom provides access not only to a rapidly growing domestic market but also to the broader Middle East and North Africa (MENA) region due to Saudi Arabia’s advantageous geographical position.
This article explores opportunities available for European companies in Saudi Arabia, focusing on the experiences of Germany, France, Italy, and Spain in various sectors.
Germany: Long-standing Economic Presence
Germany has maintained a robust economic presence in Saudi Arabia for decades, particularly since the establishment of the German Saudi Arabia Liaison Office for Economic Affairs (GESALO) in 1978. This strong relationship has led to over 800 German companies operating in the Kingdom across sectors such as manufacturing, technology, services, and consulting. Many German firms collaborate with local partners, allowing for a smooth integration into the Saudi market.
In March 2023, the German-Saudi Investment Forum in Berlin resulted in the signing of seven Memoranda of Understanding (MoUs) in areas like chemicals, waste management, renewable energy, and advanced engineering. The manufacturing sector is a particular focus, where Germany’s technological expertise complements Saudi Arabia’s natural resources and development goals.
One notable event, the “German-Saudi Symposium on Innovation in the Glass Industry” held in June 2024, showcased the potential for further cooperation, particularly in sustainable development projects. Germany’s advanced engineering capabilities continue to be a vital asset in Saudi Arabia’s drive towards economic diversification.
France: A Growing Presence in Saudi Arabia
France has steadily emerged as a key player in Saudi Arabia’s economic landscape. Many French companies have relocated their regional headquarters to Riyadh, recognizing the Kingdom’s potential as a hub for business growth in the MENA region.
In 2023, Saudi Arabia and France signed 24 MoUs and investment agreements valued at approximately $2.9 billion, spanning clean energy, healthcare, and advanced manufacturing. One prominent sector where French firms have made significant inroads is healthcare. French architecture firm Unanime has expanded operations in Saudi Arabia, focusing on designing cutting-edge medical infrastructure. Additionally, a partnership between Saudi Arabia’s SmartHealth and France’s Visiomed will establish 40 healthcare centers across the Kingdom.
Other key collaborations include an MoU between Shurfah Holding Company and Hoffman Green Cement Technologies to produce decarbonated cement, as well as a deal between Saudi Arabian Military Industries (SAMI) and France’s Figeac Aero to manufacture aircraft parts, further strengthening ties between the two nations.
Italy: Intensifying Bilateral Relations
Italy and Saudi Arabia have strengthened their bilateral relationship recently, with 21 agreements and MoUs signed during the Saudi-Italian Investment Forum held in Milan in September 2023. These agreements span sectors such as clean energy, real estate, healthcare, waste management, and technology.
Among the highlights of this collaboration is a partnership between Saudi Arabia’s ACWA Power and Italy’s A2A, aimed at developing green hydrogen projects across the Middle East and North Africa. Another important agreement involves the collaboration between Italy’s Continuus-Properzi and Saudi Arabia’s Bahra Electric to localize the production of copper and aluminum rods within the Kingdom, contributing to its industrial development.
The real estate sector also witnessed a significant partnership, with Cipriani Group and Alkholi Holding Company planning to develop a luxury project in Riyadh called Casa Cipriani. Moreover, Saudi Arabia and Italy are discussing joint investments in sectors such as automotive, mining, oil and gas, defense, hydrogen, and space, demonstrating the wide range of opportunities available.
Spain: Strengthening Economic Ties
Saudi Arabia’s relationship with Spain has also grown stronger in recent years, with Spanish investments in the Kingdom exceeding $3 billion. The Saudi-Spanish Business Forum held in April 2024 further highlighted this collaboration, which has spanned sectors like construction, civil engineering, finance, energy, and water desalination.
One key collaboration is the partnership between Saudi Arabia’s National Housing Co. and Spain’s Urbas Middle East Real Estate Co. to build nearly 600 housing units in the Al-Fursan suburb, contributing to Saudi Arabia’s urban development goals.
European Firms Seize Opportunities in Saudi Arabia
The robust economic relationships between Saudi Arabia and European countries such as Germany, France, Italy, and Spain exemplify the vast opportunities available for foreign investors in the Kingdom. From healthcare to green energy, real estate to advanced manufacturing, European companies are increasingly recognizing Saudi Arabia as a strategic market for growth and expansion, benefiting from the country’s ongoing regulatory reforms and ambitious development plans.
As Saudi Arabia continues to open its doors to international business through various reforms and incentives, it is poised to remain an attractive destination for European firms seeking to expand their operations across the region.