One of the region’s fastest-growing cities, Riyadh has developed many of the foundations needed to compete globally. According to a new report by KPMG Middle East, the city’s next stage of development will require greater focus on turning its investments and transformation efforts into lasting improvements in productivity, innovation, and quality of life.
Applying the framework to Riyadh, the report finds that the Saudi capital has developed strong institutional and economic foundations that position it well for its next phase of growth. It also identifies opportunities to further strengthen human capital, innovation, livability and the city’s ability to translate investment into long-term economic and social outcomes.
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 underline the capital’s growing role as a regional and global economic centre, supported by sustained investment, institutional reform and digital transformation.
The report highlights particularly strong performance 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 capital also ranks 97th among 1,000 cities on the Oxford Economics Global Cities Index and 33rd among 275 cities on the Numbeo Safety Index. Together, strong government effectiveness, fiscal capacity and an increasingly competitive business environment provide a solid platform for continued growth.
At the same time, the assessment identifies several areas that will be increasingly important to Riyadh’s long-term competitiveness. Education and skills development remain a priority, with Saudi Arabia ranking 64th out of 81 education systems in the OECD’s 2022 PISA assessment. Talent and innovation also present opportunities for further 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 for the capital’s future development, particularly in the context of extreme heat, water scarcity and a relatively low-density urban form.
Omar Alhalabi, Partner and Head of Economics and Public Policy Advisory at KPMG Middle East, said: “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.”
Four priorities for Riyadh’s next phase
The report identifies four priorities that can help strengthen Riyadh’s competitiveness over the coming years.
First, strengthening human capital by improving alignment between education, workforce skills and the needs of a rapidly evolving economy. Building a deeper pool of highly skilled talent will be critical as Riyadh expands into more knowledge-intensive and innovation-led sectors.
Second, enhancing livability by ensuring major investments in projects including Green Riyadh, King Salman Park, Sports Boulevard and the Riyadh Metro translate into measurable improvements in mobility, accessibility and quality of life.
Third, deepening the business and innovation ecosystem by strengthening entrepreneurship, small and medium-sized enterprises, research institutions and innovation networks. The report notes that developing these domestic capabilities will be important in complementing the continued attraction of international businesses and foreign investment.
Fourth, strengthening the city’s “conversion capability” – its ability to translate investment and policy ambition into measurable outcomes. This includes stronger performance measurement, coordination across public institutions and effective delivery of long-term investment programmes.
While the report focuses on Riyadh, KPMG notes that its findings have broader relevance for cities worldwide as competition for investment, businesses and talent continues to intensify.
The report concludes that the next generation of globally competitive cities will increasingly be distinguished not simply by the scale of their investment or infrastructure ambitions, but by their ability to convert those investments into sustained economic, social and environmental outcomes.
