Non-oil sector hits four-month high on sentiment optimism and domestic demand

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WHAT WE’RE TRACKING TODAY

Opec+ approves output increase

Good morning, all. We lead today’s issue with the Kingdom’s latest PMI reading — the non-oil private sector hit a four-month high in June amid a recovery in domestic demand and business confidence.

PLUS: We talk to Coldwell Banker Saudi Arabia CEO Youssef Khattar about what we can expect now that the rules governing foreigners’ real estate buys are out.

Opec+ sticks to the script

Opec+ approved an output increase of another 188k bbl / d in August — marking the alliance’s fifth consecutive monthly increase as producers continue unwinding voluntary supply cuts despite mounting concerns that the market is tipping into surplus, according to a statement. The decision follows identical quota increases for June and July — 206k bbl / d for April and May — and forms part of the group’s phased rollback of the 1.65 mn bbl / d voluntary production cut agreed in 2023.

The production increases are only beginning to translate into actual barrels: While quotas have continued to rise, actual output has yet to fully recover after the war disrupted exports. Opec’s latest monthly report (pdf) showed production stood at 33.13 mn bbl / d in May, down by 185k bbl / d m-o-m and still below pre-war levels of 42.72 mn bbl / d, although output began recovering in June as exports gradually resumed.

That recovery is now reshaping the market: The easing of disruptions following the ceasefire has released more crude into global markets just as demand growth slows. Opec recently cut its 2026 global oil demand growth forecast to 1 mn bbl / d from 1.2 mn bbl / d, while still expecting total demand to reach 106.1 mn bbl / d

What comes next? Assuming the alliance continues increasing quotas at the current pace, the remaining 379k bbl / d of the original voluntary cuts could be fully restored by the end of September, according to Reuters’ calculations.

A relief for 24-hour operators

The Housing Ministry is waiving the 24-hour operating fee for 10 types of business activities, Aleqtisadiyah reports. Businesses that will not have to pay the annual fee — up to SAR 100k — include fuel filling services at petrol stations, service centers and petrol stations outside urban areas, hotels, serviced apartments, resorts, pharmacies, wedding halls, rest houses, and medical and educational facilities.

The new rules are based on a 2019 Cabinet decision allowing commercial establishments to operate 24 hours a day. Municipalities will designate the commercial streets and locations where 24-hour businesses can operate to minimize disruption to residential neighborhoods.

Data point

60.8% — that was the hotel room occupancy rate in Saudi Arabia during 1Q, down 2.1% y-o-y compared to the same quarter in 2025, according to the latest Gastat data (pdf). Occupancy rates for serviced apartments and other hospitality facilities rose to 51.6% from 50.7% a year earlier.

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The big story abroad

Nato’s two-day summit kicks off tomorrow in Ankara and discussions are expected to revolve around the ongoing Russia-Ukraine conflict, the US-Iran war, and US President Donald Trump’s comments on Greenland. Trump demanded “loyalty” from the coalition ahead of the summit, where he is scheduled to meet with the heads of state of Turkey, Syria, and Ukraine.

The spread of AI use in financial services has triggered an “arms race” for regulators, according to Sheldon Mills, executive director of the UK’s Financial Conduct Authority. Mills argues that regulators need greater powers to monitor the rapid growth of AI, namely large language models, and underlined concerns over the softwares’ bias, opaque pricing, and personalized manipulation.

Meanwhile, in aviation: British low-cost airline EasyJet has agreed in principle to the fifth takeover bid proposed by global alternative investment firm Castlelake LP, valuing the company at USD 6.9 bn. The budget carrier has been struggling with rising jet fuel prices and muted demand since the regional war broke out.

Trump finagles Balogun favor from FIFA? FIFA will allow the US top goal scorer Folarin Balogun to play in the upcoming showdown with Belgium — despite the footballer earning a red card in his last match — after Trump urged FIFA President Gianni Infantino to review the suspension. This move marks the first reversal of its kind since 1962 and has drawn criticism from many, including the Belgian federation.

Saudi non-oil sector hits four-month high on sentiment optimism and domestic demand

Saudi Arabia’s non-oil private sector closes 2Q on stronger footing: The Kingdom’s PMI rose to 53.3 in June, up from 52.8 in May and the highest reading in four months, according to Riyad Bank Saudi Arabia’s latest report (pdf). The jump signals continued recovery momentum heading into 2H, fueled by a rebound in domestic demand and improving business confidence. Still, the reading remains softer than the survey’s long-run historical 56.8 average.

Domestic demand drove the strongest growth in new orders since February. Firms reported a sharp acceleration in new business volumes in June, with project approvals, stronger domestic customer spending, and renewed sales activity. “New orders are up and we’ll be seeing more movement on the Vision 2030 revamp which happened this year, now that choke points are starting to re-open,” MENA economist Hamzeh Al Gaaod tells us.

The global market still offered little help: Foreign orders contracted steeply for the fourth month in a row, with firms citing ongoing regional logistics challenges and foreign competition as the primary constraints.

Businesses found faster ways to get their hands on supplies, turning to local sources and new routes to hit their best delivery speeds since February. Yet, purchasing activity remains calm as firms aren’t rushing to place new orders due to plenty of stock on hand, keeping buying activity quieter than usual.

MEANWHILE- June capped off the toughest quarter for costs in 15 years. Businesses are feeling the pinch from every angle — fuel prices, shipping costs, and supplier hikes linked to regional tensions have all surged. On top of that, companies had to dig deeper to cover rising staff salaries, leading to the second-highest output charges in six years, with nearly 22% of businesses raising their prices and only 8% reducing them.

Sentiment is at its highest since January: Business optimism climbed, with the future output index surging to the highest level since the beginning of the year. “The improvement in expectations points to growing confidence in the domestic business environment and suggests that companies increasingly anticipate favorable market conditions to support business activity over the coming month,” Riyad Bank Chief Economist Naif Al Ghaith said in the report

Coldwell Banker Saudi’s CEO on whether foreign real estate buyers show — and when

We've mapped where foreigners can buy real estate. The harder question is whether they will, and when. With the geographic zones now public and the Saudi Properties portal live, the opening shifts from a regulatory question to a commercial one — which buyers, which assets, and how fast any of this converts into transactions. We put that to Coldwell Banker Saudi Arabia CEO Youssef Khattar, who advises the developers and investors now deciding whether to move. Edited excerpts from our conversation:

EnterpriseAM: You advise developers and investors named in these zones. Now that the full map is out, did it land where the market expected, and what caught you off guard?

Youssef Khattar: For Riyadh, 90 to 95% of what developers and investors were expecting is there. Everyone was anticipating the mega and giga projects, like the Red Sea and the transit-oriented developments, and those came through. The good thing is it’s not a final list. If you have a strong project, a full master plan, a prime location, something genuinely unique, you can still get an exception later.

Makkah and Madinah were the real question. We were in doubt about whether they’d allow freehold or a 99-year leasehold. That was critical, because in Masar and other projects in Makkah, developers were taking a real risk without knowing which way it would go. Now they’ve approved 100% ownership for Muslims in specific zones. Honestly, we didn’t expect it to be approved that widely — we thought it would be limited to a few master plans, no more than that.

For the other cities, we don’t expect much foreign interest, apart from expats already living there, and they could buy under the old rules anyway.

E: Qatar, Oman, and the UAE opened up to foreign buyers years ago. What’s the case for Saudi Arabia?

YK: For anyone looking at the GCC, Saudi Arabia is the biggest and strongest economy in the region. Investors from Asia or Europe were already asking, why can we invest in the UAE or Qatar, but not here? Saudi has the largest population, the strongest market, and it sits between the Gulf and the Red Sea. Since Vision 2030 was announced in 2016, they’ve wanted to come in, but the framework wasn’t clear. Now it is.

For investors and developers already in the GCC, from Kuwait, from Bahrain, the appeal is that the demand here is local. The population is small in the UAE or Qatar, so most of the demand comes from foreigners. Here, the biggest demand comes from the domestic market, so there’s less risk. A developer can build and still sell to the customers he already has at home, and at the same time sit on top of that local demand.

E: Which asset classes are foreign buyers actually gravitating toward?

YK: It depends on the city. In Riyadh, individuals want small apartments. They’re building a portfolio because the returns are the highest in the region, and they see a big runway over the next 10 years with everything coming to the city. Corporate investors and developers will build what they already build at home — towers, villas, communities.

For international buyers, the pull is branded residences. We don’t yet have developers with a strong global reputation, so if I'm buying somewhere and I don't know the developer, I want a brand I can trust. People trust the brand, not the developer, unless the developer has a real regional or global presence. That’s where the big potential is for the coming years.

Makkah and Madinah are different. There, it’s hospitality and branded residence, 100% — hotel apartments, serviced residences, studios. Visitors aren’t end users, as they’re not staying long or looking for a villa. They want easy access to the Haram, and that’s it. The Red Sea luxury projects are their own story — very unique, but the supply is so limited that you can’t count on huge global demand there.

E: How fast does foreign capital actually materialize, and what’s standing in the way?

YK: Very soon, I think. Once developers understand what foreign buyers actually want, and how to structure the payments and the transfers and registration around them, things will move. It takes time to set up, but I’d expect to start seeing transactions from September. Over the summer, people are still learning the process. Give it four to eight weeks, and by September foreigners start coming into the market.

Two things to keep in mind. On financing, there’s still no access to finance for foreigners who aren’t residents. I don’t know if that changes later, but for now there’s none, because the goal is to bring in FDI, not to let foreigners buy using local facilities. And on supply, about 90% of what’s available to foreigners now is off-plan. It’s not a ready product you can finance.

Most of the approved zones are still raw land or under design, so it takes at least three to five years, then five to 10. It’s a long-term strategy. We are discussing at Coldwell Banker how to model the supply against this demand, especially for Makkah and Madinah, because we don’t think the coming supply will cover demand in the short term.

E: Riyadh spent the last year on reforms to cool prices and get more housing to Saudis. Does a wave of foreign demand undo that?

YK: If the government had let foreigners own everywhere, without dedicated zones, the impact would be big. Prices would start rising, because sellers would expect demand from every direction. But because ownership is limited to zones, I don’t see a big impact on the local market. Locals buy different products, different units, in different areas.

Where prices will go up is Makkah and Madinah, and only because supply there is limited. That’s the one real driver. Saudis can already own everywhere in those cities, so for foreigners, the price rises only within the dedicated zones. I don’t expect a big impact on local prices or local supply, because the local demand is somewhere else entirely, not in the areas where the new regulations apply.

So in effect, you get two markets: the local market on one side, and the zoned market on the other, on a different price scale and a different supply timeline, almost isolated from each other, and it varies city by city.

GO DEEPER- We mapped the zones themselves, including the Riyadh and Jeddah lists, the Makkah and Madinah projects, who can buy, and the cost stack, in our explainer earlier this week.

Costs squeeze Almarai’s 2Q earnings

Almarai squeezed

Surging costs drag down Almarai’s bottom line: Almarai posted a 1.7% y-o-y drop in net income to SAR 636 mn in 2Q, while revenue climbed 11% y-o-y to SAR 5.9 bn, according to an earnings release (pdf). Rising feed shipping costs for the dairy segment and higher energy-driven distribution expenses weighed on the food giant’s bottom line even as sales volumes expanded across all markets and product categories.

Meanwhile, the protein and bakery categories were the bright spots. Both posted higher net income y-o-y, carried by poultry volume growth from expansion projects and an improved sales mix in bakery.

Sumou and Arch will develop a mixed-use project in Jeddah

Sumou Real Estate inked an agreement with Arch 3 Real Estate — on behalf of Arch Real Estate Development Fund 3 — to develop a mixed-use project in Jeddah, according to a disclosure. The project will have a total built-up area of 57k sqm, with Sumou overseeing the entire development process from feasibility studies, design, and regulatory approvals through to marketing and sales.

The details: The project is expected to generate over SAR 700 mn in sales. Under the agreement, Sumou will receive a development management fee equal to 10% of the construction contract value, a marketing fee of 3% of total project sales, and a real estate brokerage commission of 2.5% of total sales. The agreement will run for 36 months from the date the project’s off-plan sales license is issued.

GCC insurers weather the geopolitical storm

The Middle East conflict is impacting Gulf ins. company growth, but the risk remains under control. Saudi Arabia, Kuwait, Qatar, and the UAE are not expected to see a major hit to profitability, but the war is still quietly reshaping the ins. sector and hitting top lines, Associate Director at S&P Global Ratings Mario Chakar said in a webinar attended by EnterpriseAM.

The expectations: Saudi Arabia — the region’s fastest-growing market over the past several years — is expected to decelerate to 8-12% growth this year from a run of double digits, and the UAE is set to drop to around 10% from nearly 20% in 2025, while a broader economic slowdown quietly reduces claims as fewer people drive and travel, Director and Lead Analyst Emir Mujkic said. Kuwait is expected to hold at 6-8%, largely carried by Vision 2035 infrastructure spending.

The pressure that matters is structural, and it sits at the bottom of the market. In Saudi Arabia, Bupa and Tawuniya are racking up most of the income, while smaller players fight over what’s left, a gap the agency expects will widen, Chakar said. Motor underwriting ran a 107% combined ratio last year (anything above 100% loses money), and a soft pricing cycle that lasted longer than S&P expected only began correcting late in 2025.

A new risk-based capital regime is set to take effect on 1 January 2027, with a soft launch this year. Seven listed Saudi insurers already carry accumulated losses above 20% of share capital, and Chakar expects the rules to catalyze consolidation among the weakest. The market has already shrunk from 33-34 companies a decade ago to 25 listed today, against just 11 listed banks. Expect more mergers through 2026-2027, although S&P says that deals have moved more slowly than billed, with signed MoUs stalling before close.

Qatar's catalyst is a delayed law: A mandatory health ins. scheme, on the books since 2022 and pushed back repeatedly, is expected to lift market growth from around 5% this year to 15-20% once live, mirroring what happened when Dubai, Abu Dhabi, and Saudi mandated coverage. S&P Associate Director Sachin Sahni said Qatar is the most profitable of the four markets, with 85-90% combined ratios and 6-8% ROE, but warned that ins. companies may need to raise capital to write the new business.

The UAE is crowded and cushioned. The top three companies hold roughly 50% of the ins. market, and about half of all business is ceded to reinsurers — a margin drag that earned its keep during the 2024 floods, Mujkic said. Too many companies writing similar coverage keeps consolidation pressure on, with several listed players running near or below minimum solvency requirements.

The diversification trap. A handful of GCC ins. companies are pushing into India, Turkey, and Africa for growth — all markets S&P rates higher-risk. Turkish underwriting loses money across the board (110-115% combined ratios, propped up only by ~40% deposit yields against 30%-plus inflation) and Indian margins are thin. Growth that comes with deteriorating performance can be a ratings negative, not a diversification win, according to Sahni.

MARKETS THIS MORNING-

Asia-Pacific markets are trading mostly higher this morning, buoyed by investor optimism ahead of the upcoming earnings season. South Korea’s Kospi is up 0.7%, and the Shanghai Composite is up 0.2%. Japan’s Nikkei dipped 0.3%, and the Hang Seng is flat. Wall Street futures are in the green.

TASI	10,799	-0.3% (YTD: +2.9%)
MSCI Tadawul 30	1,436	-0.2% (YTD: +3.5%)
NomuC	22,690	-1.0% (YTD: -2.6%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	4.25% repo	3.75% reverse repo
EGX30	51,131	+1.2% (YTD: +22.2%)
ADX	9,901	+0.9% (YTD: -0.9%)
DFM	6,059	+1.1% (YTD: -0.9%)
S&P 500	7,483	0.0% (YTD: +9.3%)
FTSE 100	10,679	+0.3% (YTD: +7.5%)
Euro Stoxx 50	6,413	+0.8% (YTD: +10.6%)
Brent crude	USD 72.12	+0.5%
Natural gas (Nymex)	USD 3.25	+1.5%
Gold	USD 4,187	+1.5%
BTC	USD 62,988	-0.5% (YTD: -28.1%)
Sukuk/bond market index	912.91	0.0% (YTD: -0.7%)
S&P MENA Bond & Sukuk	152.08	-0.1% (YTD: +0.1%)
VIX (Volatility Index)	15.81	-2.1% (YTD: +5.8%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.3% yesterday on turnover of SAR 3 bn. The index is up 2.9% YTD.

In the green: Tabuk Agricultural Development (+9.9%), Naseej (+7.9%), and Red Sea International (+5.7%).

In the red: Saudi Fisheries (-10.0%), East Pipes Integrated Company (-6.5%), and Taprco (-5.3%).

THE CLOSING BELL: NOMU-

The NomuC fell 1.0% yesterday on turnover of SAR 11.8 mn. The index is down 2.6% YTD.

In the green: Twareat Medical Care (+8.3%), National Building and Marketing (+7.7%), and Alhasoob (+7.2%).

In the red: Keir International (-12.3%), Digital Research (-10.5%), and Hedab Alkhaleej Trading (-8.9%).

CALENDAR

AUGUST

30 August-1 September (Sunday-Tuesday): Saudi Paper and Packaging Expo, Riyadh International Convention & Exhibition Center.

31 August-3 September (Monday-Thursday): Leap Tech Conference, Riyadh Exhibition & Convention Center - Malham.

SEPTEMBER

8-10 September (Tuesday-Thursday): The WTM Spotlight Riyadh, Riyadh Front Exhibition & Conference Center (RFECC), Riyadh.

15-17 September (Tuesday-Thursday) The Global AI Summit, King Abdulaziz International Convention Center, Riyadh.

23 September (Wednesday): Saudi National Day.

28 September-1 October (Monday-Thursday): The International Conference on Theory and Practice of Electronic Governance (ICEGOV), Prince Sultan University, Riyadh.

OCTOBER

25-26 October (Sunday-Monday): The Global Proptech Summit, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

26-28 October (Monday-Wednesday): ACHEMA Middle East, Riyadh International Convention & Exhibition Center.

28-29 October (Wednesday-Thursday): Procurement and Supply Chain Futures Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

28-29 October (Wednesday-Thursday): Real Estate Supply Chain Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

30 October-1 November (Friday-Sunday): The New Global Sport Conference, Sofitel Hotel & Convention Centre, Riyadh.

NOVEMBER

11-12 November (Wednesday-Thursday): Aluminum Arabia, The Arena, Riyadh.

16-19 November (Monday-Thursday): Cityscape Global, Riyadh Exhibition and Convention Centre (Malham), Riyadh.

29 November-1 December (Sunday-Tuesday): The UN Trade and Development Global Supply Chain Forum, Riyadh.

Signposted to happen sometime in 2026:

2H: Sabic’s USD 6.4 bn Fujian project in China to start production;
November: The Esports Nations Cup, Riyadh;
The World Economic Forum’s Global Collaboration and Growth Meeting, Jeddah;

2027

FEBRUARY

1-3 February (Monday-Wednesday): Energy Regulators Regional Association annual conference, Riyadh.

MARCH

21-25 March (Sunday-Thursday):The World Water Forum, Riyadh.

22–24 March (Monday-Wednesday): Capital Markets Forum, Four Seasons Hotel, Riyadh

APRIL

26-29 April (Monday-Thursday): World Energy Congress, Riyadh.

JUNE

1-3 June (Tuesday-Thursday): The Saudi Entertainment and Amusement Expo, Riyadh Front Exhibition and Conference Center.

Signposted to happen sometime in 2027:

The Ocean Race finishes in Amaala on the Red Sea;
Riyadh-Kudmi transmission line to be completed;
Aero Middle East and Sand & Fun takes place in Thumamah Airport, Riyadh.

Signposted to happen sometime in 2Q 2027:

The Hail Region Water Networks Project is expected to be completed.

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