BMI: Saudi Arabia Real Estate Report (Oct-11)
06 Dec 2011 (59 Pages)
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Abstract
After experiencing some instability due to the global financial downturn in 2009, the market recovered in
2010. Throughout 2011, the market experienced sustained growth, generated by government stimulus
spending and rising oil windfalls. This upward trend is forecast to continue in 2012 and beyond.
Saudi Arabia’s various real estate sectors are, however, developing in different directions and at varying
rates. The residential segment is growing the fastest, as the government is trying to bridge the widening
supply-demand gap. This has pushed up rents and land prices, and prompted the establishment of a large
government-led housing programme. The commercial market, however, suffers from an over-supply and is
forecasted to undergo more limited growth in the short- to medium-term.
While private sector investment is expanding, the government remains the sector’s primary growth driver. In
2011 the government allocated over US$82bn to fund housing construction. The new mortgage law – due to
be implemented by late 2011 – will further bolster residential demand, particularly among lower- and middleincome earners. Meanwhile, the reform of the investment code––granting foreigners the right to buy real estate––is also expected to increase demand and diversify the client base.
The office segment suffers from an over-supply, with new stock that cam online in FY2011. Although Jeddah
has a shortage of grade-A space, as new supply comes online tenants are moving to higher-end properties.
The retail segment is slightly over supplied, and the market trend is also shifting from lower-range outlets to
grade-A properties. Reinforced by investment in large infrastructure projects, the industrial segment is
undergoing sustained growth, particularly in Jeddah.
Includes 3 FREE Quarterly Updates.
After experiencing some instability due to the global financial downturn in 2009, the market recovered in
2010. Throughout 2011, the market experienced sustained growth, generated by government stimulus
spending and rising oil windfalls. This upward trend is forecast to continue in 2012 and beyond.
Saudi Arabia’s various real estate sectors are, however, developing in different directions and at varying
rates. The residential segment is growing the fastest, as the government is trying to bridge the widening
supply-demand gap. This has pushed up rents and land prices, and prompted the establishment of a large
government-led housing programme. The commercial market, however, suffers from an over-supply and is
forecasted to undergo more limited growth in the short- to medium-term.
While private sector investment is expanding, the government remains the sector’s primary growth driver. In
2011 the government allocated over US$82bn to fund housing construction. The new mortgage law – due to
be implemented by late 2011 – will further bolster residential demand, particularly among lower- and middleincome earners. Meanwhile, the reform of the investment code––granting foreigners the right to buy real estate––is also expected to increase demand and diversify the client base.
The office segment suffers from an over-supply, with new stock that cam online in FY2011. Although Jeddah
has a shortage of grade-A space, as new supply comes online tenants are moving to higher-end properties.
The retail segment is slightly over supplied, and the market trend is also shifting from lower-range outlets to
grade-A properties. Reinforced by investment in large infrastructure projects, the industrial segment is
undergoing sustained growth, particularly in Jeddah.
