Saudi Arabia’s Asset Management Expands Amid Rising Challenges

Saudi Arabia’s asset management sector is experiencing rapid growth, fueled by rising investor participation, a young population, and an expanding stock market. However, this growth comes with risks, particularly the concentration of investments in real estate, which could pose challenges for diversification and long-term stability.

Rapid Expansion of Asset Management

According to Standard & Poor’s (S&P), Saudi Arabia’s asset management industry has grown at an average rate of 12% annually between 2015 and 2024, with assets under management (AUM) reaching approximately $295 billion by March 2025. The sector’s growth is supported by increasing regulatory support, the development of equity and debt markets, and the availability of investment products such as exchange-traded funds (ETFs) and real estate investment trusts (REITs).

Timucin Engin, Head of Research and Strategy at S&P in Riyadh, expects AUM could surpass $500 billion by 2030, contingent on market conditions. Such expansion not only provides banks and asset managers with opportunities to offer loans, checking accounts, and digital banking services tied to investment products, but also encourages a stronger culture of savings among Saudi citizens.

Concentration Risk and Market Challenges

Despite the sector’s growth, a large portion of private fund assets remains heavily concentrated in real estate, which accounts for nearly 50% of AUM, followed by equities. While real estate remains a sought-after asset in the Gulf Cooperation Council (GCC) region, this concentration creates heightened risk for investors, particularly in the event of market downturns.

The number of public fund subscribers has increased significantly, from around 265,000 in 2013 to nearly 1.6 million in 2025. Approximately one-third of these investors are concentrated in REITs, which amplifies potential vulnerabilities. Experts emphasize that broadening investment portfolios to include diversified asset classes is crucial for long-term resilience.

Regulatory Support and Institutional Growth

The Saudi Capital Markets Authority (CMA) has implemented amendments to improve transparency, disclosure, and risk management in investment funds. Public funds can now invest in privately placed debt instruments, supporting the country’s emerging private credit sector. These measures also encourage institutional participation, which could increase liquidity, enhance credit availability, and improve overall market depth.

International asset managers such as Lazard, BlackRock, Goldman Sachs, and Morgan Stanley have established or expanded regional headquarters in Riyadh, reflecting the Kingdom’s growing prominence in global finance. Their presence brings expertise, innovation, and a wider range of investment solutions for both retail and corporate clients.

Closing Insights

Saudi Arabia’s asset management sector demonstrates strong growth potential, driven by regulatory reforms, demographic trends, and rising investor engagement. However, concentration risks, particularly in real estate, underline the importance of diversification.

For banks and financial institutions, offering loans, mortgages, and deposit products aligned with investment opportunities can strengthen customer relationships and long-term financial stability. Investors should monitor market developments, consider diversified portfolios, and stay informed about regulatory changes to navigate risks effectively.

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