Saudi Arabia’s real estate sector has started the year with fragmented performance and activity levels across the Kingdom’s regions.
Looking at Saudi Arabia’s office sector figures, visitation to the workplace has since late September 2021 remained above its pre-pandemic baseline and now sits 19.7 percent above the baseline, with the majority of occupier activity continuing to be very much skewed towards Riyadh. As a result, we have seen average rents in Riyadh’s Grade A segment increase by 8.6 percent and Grade B rents by 6.0 percent in Q1 2022. These market fundamentals also mean that landlords are seldom offering incentives.
In Jeddah, despite the lack of activity and with limited availability in the Grade A segment, Grade A rents rose by 10.8 percent in the first quarter, whereas Grade B rents continued to soften and fell by 4.3 percent. Grade A rents in Dammam and Khobar increased by 4.0 percent and 2.6 percent respectively, with Grade A rents in both locations now above their pre-pandemic levels.
Residential transaction volumes in Saudi Arabia fell by 23.4 percent in Q1 2022, compared to a year earlier, while the total value of transactions fell marginally by 1.9 percent. During this period, the number of transactions totaled 60,336 and the value of transactions reached SAR40.41bn. In Riyadh, the total number of transactions in Q1 2022 fell by 21.6 percent, and it also fell in the Damam Metropolitan Area (DMA) by 31.8 percent.
Jeddah on the other hand saw transactions volumes increase by 5.4 percent in the 12 months to Q1 2022. Over the same period, average apartment prices in Saudi Arabia have increased by 9.6 percent, with prices in Riyadh, Khobar, Dammam and Jeddah increasing by 13.2 percent, 11.3 percent, 9.6 percent and 4.5 percent respectively.
Taimur Khan, Head of Research – MENA at CBRE, said: “Looking ahead, due to the easing of restrictions, particularly in relation to religious tourism, a number of planned events such as the continuation of the Saudi Seasons initiative, and returning business visitation, we expect that performance in Saudi Arabia’s hospitality sector will continue over the course of 2022. However, as other global locations also continue to open their borders for restriction-free travel, we expect that locations which have benefitted from redirected visitations over the last two years, such as Al Khobar, will see performance levels deteriorate until the second half of 2022.”
SOurce:https://thepeninsulaqatar.com/article/29/04/2022/fragmented-performance-across-saudi-arabias-real-estate-sector-in-q1-2022