2021-06-14-莱坊-Saudi_Arabia_Market_Review_Q2_2021_6页_9mb

Saudi Arabia Real Estate Market Review - Q2 2021 Summary

1. Office Market

• Performance: Fragmented, with Riyadh's market leading, Jeddah experiencing subdued performance.
• Prices: Grade A rentals increased slightly (+1.5% YoY), while Grade B fell more significantly (-2.7% YoY), suggesting higher demand for premium spaces.
• Vacancy: Generally low vacancy rates, particularly in high-grade spaces.
• Occupancy: High occupancy levels in Grade A spaces, indicating sustained demand, partly fueled by hybrid work trends keeping footprints positive.
• Supply: New completions (e.g., Joaib Tower, MASIC) added space; total supply expected to nearly double by 2023.
• Factors: Government reforms, increased investor licenses, focus on female workforce participation supporting demand; supply growth could offset gains in subsequent periods.

2. Residential Market

• Performance: Key government focus, with rising prices (+7.6% volume, +4.7% value YoY for apartments/villas).
• Prices: Jeddah saw high price growth (+5.9% YoY), while villa prices declined (-4.1% YoY) in Riyadh/DMA.
• Transactions: Significant sales volume increase (+77% YoY).
• Supply: Affordable housing schemes (Sakani) support market buoyancy, but supply for middle markets is often insufficient.
• Forecast: Supply aiming for over 1.4 million units by end-2023.

3. Retail Market

• Performance: Mixed bag, with DF&B leading the charge (+35% spending YoY). Mall rentals declined (+1-2.7% YoY). E-commerce boomed (+28% YoY in 2020).
• Footfall: Reduced due to closures and lockdowns.
• Supply: New supply added (~100,000 sqm Riyadh, 23,000 sqm Jeddah), impacting vacancy rates.
• Trends: Lifestyle, experience-based retail favored; online retail impacting demand for physical stores.

4. Hospitality Market

• Recovery: Low activity remains due to travel restrictions, but outlook improving.
• Demand: Expected to remain subdued in short term.
• Supply: Set to expand significantly (+27% or 4,800 rooms Riyadh +26% by 2023).
• Key Developments: Mega tourism projects (Qiddiya, Amaala, etc.) adding capacity. International borders reopening expected to boost recovery.
• Pricing: Occupancy steady, ADR slight YoY gains expected.

5. Overall

• Drivers: Government Vision 2030 reforms boosting confidence and demand; economic stimulus improving business conditions.
• Long-term Outlook: Continued demand growth expected from reforms and investments; however, balancing supply and managing affordability will be key challenges, particularly in retail and residential segments.