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Riyadh’s commercial property market witnesses increase in rental rates across all segments
August 07, 2024 | Staff Reporter | KSA | Developers
The Saudi Arabian real estate market is experiencing a surge in activity, according to the latest report from CBRE Middle East. While demand across various sectors is robust, a shortage of quality stock is hindering the market’s full potential, says the global real estate consultancy firm.
Riyadh’s office market is particularly buoyant, with rental rates increasing significantly across all segments. Prime and Grade A office spaces are now fully occupied, while Grade B occupancy remains high at 99.4%. Jeddah and the Eastern Province cities of Dammam and Khobar also recorded rental growth and increased occupancy rates.
The Saudi residential sector is thriving, with sales transactions soaring in Riyadh, Jeddah, and Dammam. Riyadh saw the most substantial increase in sales, up 51.6% year-on-year. However, apartment prices declined in Jeddah and Dammam, while villa prices rose in Riyadh and Jeddah but fell in Dammam and Khobar.
While we are seeing strong levels of activity within Saudi Arabia’s real estate market, which in turn is bolstering rental and price performance in the vast majority of market segments, the lack of available quality stock is somewhat hampering the potential of the market.
Taimur Khan, Head of Research MENA at CBRE
Saudi Arabia’s hospitality industry is recovering strongly from the pandemic, with key performance indicators (KPIs) surpassing pre-pandemic levels. While overall occupancy and revenue per available room (RevPAR) grew nationally, performance varied across cities. Riyadh and Makkah saw significant RevPAR increases, driven by higher average daily rates (ADRs), while Jeddah and Khobar experienced declines in RevPAR due to falling ADRs.
The industrial and logistics sector is expanding, with the total area designated for logistical services within MODON increasing to 4.8 million square meters. Rental performance varied across cities, with Riyadh experiencing growth and Khobar and Dammam recording declines.
Taimur Khan, Head of Research MENA at CBRE, said, “While we are seeing strong levels of activity within Saudi Arabia’s real estate market, which in turn is bolstering rental and price performance in the vast majority of market segments, the lack of available quality stock is somewhat hampering the potential of the market. We expect this to continue to be the case in the short run although in the medium term, we expect that some of these supply constraints will begin to be alleviated, but only in parts.”
