Riyadh has evolved into a ‘globally competitive city’ – and is ready for its next phase
Over the past decade, Riyadh has strengthened its foundations and evolved into a globally competitive city. That is according to a benchmark by KPMG, which highlights that the city’s next challenge is translating this momentum into lasting gains in productivity, innovation and quality of life.
The report, titled ‘The Future of Urban Competitiveness: Riyadh’s City Transformation in Perspective’, applied KPMG’s global City Competitiveness Framework to Riyadh, concluding that Saudi Arabia’s capital city has built strong institutional and economic foundations that are positioning it well for its next phase of growth.
KPMG’s framework assesses cities across three dimensions: governance, the economy and business environment, and the living environment. Under these three layers sit a total of 18 indicators that measure performance in the respective domain.
Riyadh’s evolution
Riyadh contributes approximately half of Saudi Arabia’s non-oil GDP, is home to an estimated 7.5 million residents and hosts more than 600 multinational regional headquarters. According to the report, these indicators reflect the city’s growing role as a regional and global economic centre, supported by sustained investment, institutional reform and digital transformation.
The report finds Riyadh performing particularly strongly in areas shaped by policy reform and public investment. Saudi Arabia ranks third globally on the UN E-Government Development Index, while Riyadh ranks 27th on the IMD Smart City Index. The city also places 97th among 1,000 cities on the Oxford Economics Global Cities Index and 33rd among 275 cities on the Numbeo Safety Index.
According to Lisa Kelvey, Global Head of Infrastructure and Transport at KPMG, Riyadh’s rise resembles “a compelling case study” for policymakers and city planners around the world. “As one of the world’s most ambitious urban transformation programs, Riyadh’s journey offers valuable insight into how sustained investment, institutional reform and strategic leadership can strengthen competitiveness over time.”
The next phase of growth
The city’s strong government effectiveness, fiscal capacity and an increasingly competitive business environment provide according to the Big Four firm a solid foundation for continued growth.
Omar Alhalabi, Partner and Head of Economics and Public Policy Advisory at KPMG in the Middle East, commented: “Riyadh has built many of the foundations associated with globally competitive cities. The next stage of its transformation is about converting those strengths into measurable outcomes for businesses, investors and residents. That means accelerating talent development, deepening innovation, enhancing livability and ensuring that long-term investment continues to deliver lasting economic value.”
That “lasting economic value” should be realized through a range of different levers that drive long-term competitiveness. Education remains a priority, with Saudi Arabia ranking 64th out of 81 education systems in the OECD’s 2022 PISA assessment. “Strengthening human capital by improving the alignment between education, workforce skills and the needs of a rapidly evolving economy is an important priority,” said Alhalabi.
Talent and innovation also present opportunities for continued progress, with the Kingdom ranking 48th on the INSEAD Global Talent Competitiveness Index and 47th on the WIPO Global Innovation Index.
The report also highlights environmental resilience as an increasingly important consideration, particularly given the challenges associated with extreme heat, water scarcity and a low-density urban form. KPMG cites examples focused on enhancing livability, for example the investments in Green Riyadh and King Salman Park which improve the quality of life for Riyadh residents.
Other recommendations handed by the report include deepening the business ecosystem by strengthening entrepreneurship, small and medium-sized enterprises, research institutions and innovation networks to complement continued foreign investment, and strengthening coordination across public institutions to enhance the effective delivery of long-term investment programmes.
