JLL: Riyadh Real Estate Overview Q3 2011
Download Now
Latest News
The road to home finance has been a long one for the Kingdom, but with its highly anticipated mortgage law edging ever closer to ratification, would-be homeowners and financial institutions are gearing up for a new era of opportunity.
With the announcement this year of a US$66.7 billion initiative to address the demand-supply imbalance in the Kingdom’s housing market, social infrastructure spend is topping the Government agenda as it focuses on building affordable homes for the future.
The South-East Asian island has seen a number of distinctive developments come to fruition over the past few years as the country further establishes itself.
The economy is being driven by strong demand across government, consumer and private sectors.
Saudi Arabia has remained politically calm during the 'Arab Spring' and subsequent events. The government is being proactive and has increased spending on housing benefits, education and healthcare. There is also a renewed drive to increase the employment of Saudi nationals and invest in skills development. Land values are generally increasing due to rising incomes and wealth in the economy.
Office
- Demand is strong in the Riyadh market, from the government, the multinational sector and also from Saudi conglomerates and contractors.
- The vacancy rate in the CBD has reduced during Q3 2011 and now stands at 16%.
- A large new business campus in the periphery has been able to increase rents as take up has improved.
- We will see a significant increase in the supply of high quality international standard offices in 2013 and 2014. Tenants will be able to trade up from the existing stock, but they may need to consider paying rental rates similar to those in Abu Dhabi or Dubai to take advantage of these new projects.
Residential
- Residential rents and sale prices on new units are increasing and should continue to do so into 2012.
- Sales of serviced plots to families, investors and small builders remains strong and still accounts for at least half of the residential sector activity.
- We perceive that speculative activity in the land market distracts from investment in housing development to some extent.
- The unfamiliar practice of owners association and collection of service charges is being tested by two new projects.
- 2,000 compound units are now under construction and will releive expat housing shortages in 2013.
Retail
- Average retail rents are increasing, but several centres have become obsolete and are experiencing reduced revenues.
- Large format retailers such as H&M, Home Centre, Extra and Al Seif Gallery have acquired units on main street locations outside of malls.
- The number of 'showroom' and community malls is increasing accross the new peripheral districts.
Hotel
- The Riyadh hotel market has reported improved trading results Y-o-Y over 2010.
- Apart from the Ritz Carlton, most of the new supply delivered during 2011 falls within the budget category.
- A large pipeline of 4 and 5 star hotels will be delivered in central and suburban locations in 2012-13.
Download Now
Your Comments
You must be logged in to add comments.