Unlocking the future of sustainable real estate in Saudi Arabia

Foreword

Saudi Arabia’s transformation, led by its Vision 2030 programme, has established the Kingdom as a major global hub for urban developers and investors. Across the country, ambitious giga and megaprojects that incorporate advanced digital technologies are building a new future for Saudi citizens.  

To realise the full social and economic potential of these projects, Saudi Arabia must seize the opportunities created by the global environmental, social and governance (ESG) investment movement. Projects that meet the highest international ESG standards and sustainable finance criteria can unlock a rapidly growing source of capital. ESG best practices will also ensure that Saudi urban developments deliver the best possible housing and living spaces for all residents, regardless of their wealth, in line with Vision 2030’s quality-of-life objectives. 

This report provides guidance for developers on how to comply with complex, constantly evolving international ESG regulations, and practical recommendations on implementing ESG best practices throughout a project’s life cycle, drawing on evidence from one of the Kingdom’s leading mega-projects.   

Executive summary

Affordable, well-built housing is a critical component of Saudi Arabia’s drive to build a modern, inclusive society, as outlined in the Kingdom’s transformative Vision 2030 roadmap that emphasises a sustainable approach to housing development, adhering to ESG principles to ensure long-term environmental and social impact. Saudi homeownership per household rose from 47% to 60% between 2018 and 2022 and is on track to reach its Vision 2030 target of 70% by the end of the decade.^₁

This ambitious housing programme is an important part of a series of mega urban development projects, which have already attracted huge inflows of foreign capital. However, Saudi developers must ensure that every stage of these projects - from initial planning to completion - meets the highest international ESG standards. Firstly, this is an ethical imperative that aligns with Vision 2030’s commitment to enhance the quality of life of all Saudi citizens. Secondly, it is a commercial imperative, given the increasing worldwide importance of ESG investing in urban real estate projects. 

For Saudi urban developers, world-class ESG compliance is the key to attract global investors and unlocking major long-term opportunities.

However, the complexity of urban development projects, which involve multiple stakeholders and sectors, means that achieving the highest possible level of ESG compliance is a formidable challenge. This report, produced by PwC’s Germany real estate ESG team and PwC Middle East real estate team, draws on interviews with local and international investors in Saudi Arabian real estate and on the latest ESG guidelines. It sets out a comprehensive methodology for Saudi urban projects to implement ESG compliance, incorporating best international practices in urban development and sustainable finance.  

Four guiding principles

Define the methodology’s framework. To achieve the highest international ESG compliance, urban projects must:

Key findings

By observing these principles, urban developments can achieve a series of successful ESG outcomes. ESG real estate transformations:  

• Offer significant opportunities at every stage of a project’s life cycle to minimise risks and maximise returns.  

• Enable flexible, proactive risk management in a dynamic, constantly evolving environment.  

• Attract international investors, in line with Saudi Arabia’s National Investment Strategy and Vision 2030 goals.  

• Increase long-term access to international capital by integrating sustainable finance requirements into Saudi urban development projects.  

• Respond to growing demands from stakeholders for ESG-compliant real estate projects. 

• Ensure compliance with rapidly rising global standards in sustainable finance.

 What’s next?

Building a Saudi ESG model for urban development

In highly competitive global funding conditions - where access to capital increasingly depends on meeting ESG standards - Saudi urban projects face the real risk of losing critical investment if they fail to comply with stringent environmental, social, and governance requirements.  

Moreover, ESG is a moral imperative for the real estate sector. Projects that are not environmentally sustainable, socially inclusive, and transparently governed are fundamentally misaligned with the spirit and objectives of Vision 2030.   

This report has set out how adherence to the four guiding principles will enable urban projects in the Kingdom to comply with best global ESG practice. However, this does not mean disconnecting from the Kingdom’s rich and ancient design and architectural heritage. On the contrary, these principles are deeply rooted in the traditions and values that have shaped Saudi society over generations, forming the foundation of a uniquely Saudi ESG approach to urban development - one that blends sustainability, cultural identity, and visionary growth. Establishing a Saudi ESG model for urban development will firmly establish the nation as a leader in driving sustainable urban transformation.