Saudi businesses suffering due to expat exodus

Published:  12 Nov at 6 PM
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A dearth of expats is leaving Saudi businesses counting the cost

Even although the vast majority of expat workers who’re suffering from Saudi Arabia’s new labour market reform are from the lower and middle-income groups, key private sectors such as housing, transport, education, recreation and retail are feeling increasingly negative effects. Expat citizens of Pakistan, India, Sri Lanka, Bangladesh and the Philippines are the hardest hit by Saudization , with many sending their families back to their home countries in an exodus which began almost two years ago.

Saudi’s housing sector is the worst hit to date, due to a massive decrease in demand for expatriate properties. Rents are continuing to fall, and supply is exceeding demand. Consumer spending in the retail sector is continuing its downhill slide, with even those expats still in work sending remittances back to their families rather than spending their wages in the local markets. The retail and wholesale trade as well as hotels and restaurants are feeling the pinch as their customer number continue to fall.

Transport providers, cars and truck dealers, home furnishing suppliers, eateries and providers of package holidays and other leisure activities have also been hard hit by the decline in customers, and the education sector has seen a fall of up to 35 per cent in the number of children registering. As a result, some 30 per cent of private schools operating in the local market are now out of business. However, Saudi commentators believe the down turn will be short-lived, as planned mega-projects employing thousands of workers will see new hordes of value-added expats flocking to the kingdom.
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