European Investments in Saudi Arabia Set for Growth Across Multiple Sectors

European investments in Saudi Arabia are set to see notable growth over the next five years, encompassing green energy, metals, critical raw materials, advanced industry, and the digital sector.

Christophe Farnaud, the EU Ambassador to Saudi Arabia, told Al-Eqtisadiah that an upcoming memorandum of understanding in the energy field will create a structured framework for cooperation in energy transition and sustainability. The agreement is expected to boost investor confidence and strengthen long-term economic ties between the EU and Saudi Arabia.

Trade in goods and services between the Kingdom and the EU reached €90 billion ($105.6 billion) in 2024, making the EU Saudi Arabia’s second-largest trading partner, according to Farnaud. About 2,500 European companies currently operate in the Saudi market, highlighting the depth of economic relations between the two sides.

The ambassador said Saudi-European relations are experiencing qualitative development, particularly following the EU’s adoption of its Gulf Cooperation Council strategy in 2022. The strategy focuses on political, security, and economic cooperation, alongside cultural and humanitarian exchange. Farnaud noted that Saudi Arabia’s Vision 2030 provides an attractive framework for expanding this partnership.

The launch of the European Chamber of Commerce in Saudi Arabia in 2024 was another milestone, providing a platform to enhance cooperation between European and Saudi companies and strengthen mutual investments. According to Farnaud, economic ties now extend beyond traditional trade, encompassing investment, services, manufacturing, energy, and sustainability.

Farnaud also confirmed ongoing discussions to relaunch negotiations for a Free Trade Agreement between the EU and GCC countries, stalled since 2008. The goal is to reach a modern agreement covering investment, services, intellectual property protection, technical standards, and government procurement. Negotiations are also expected to begin for a bilateral strategic partnership with Saudi Arabia, focusing on industrial cooperation, critical raw materials, energy, and sustainability, including a memorandum of understanding in the energy sector.

The EU remains the largest foreign investor in Saudi Arabia, holding 29 percent of the total foreign direct investment stock, which reached €30.7 billion in 2023. Investments span transport, energy, industry, tourism, education, and training, with major European companies involved in strategic projects like the Riyadh Metro.

Farnaud highlighted renewable energy, green hydrogen, high-tech manufacturing, and industrial localization as sectors of shared priority. European investors are also increasingly interested in Saudi tourism, aligned with Vision 2030 targets to raise tourism’s GDP contribution to 10 percent. Opportunities exist across hospitality, tourist destination management, cultural tourism, transport, and sustainability, particularly in projects such as NEOM, AlUla, the Red Sea Project, and Diriyah.

Existing partnerships with leading European companies, including Accor and Kempinski, and French involvement in developing AlUla as a global heritage site, illustrate the growing engagement and potential for European investors in Saudi Arabia.