Market opportunity exists for developers catering to demand from buyers for a greater mix of unit type, size and price.
Riyadh, KSA August 3 2015 - Rising incomes and changing lifestyles are helping to drive significant growth in the supply of high rise residential developments in the Kingdom of Saudi Arabia, as demand from residential tenants and investors is spurring modern luxury high-rise developments in Jeddah, Riyadh and the 'tri-city' area. Colliers International's Modern Luxury: the Changing DNA of the KSA High Rise Residential Market provides a timely update on the state of the market and insight on the key trends likely to impact future development.
The Saudi residential landscape has transformed over the last five years, from comprising primarily of traditional residential high-rise towers to developers focusing on modern, luxury towers. Jeddah's Corniche is a prime location for skyward development, with Kingdom Tower, a symbol of luxury slated to be the world's tallest tower when completed in 2018, at the heart of this trend. In Riyadh, the success of the Burj Rafal has triggered further developments, while residents in the 'tri-city' area of Damman, Khobar and Dhahran are also seeing an increase in supply.
New high rise developments are increasingly catering to demand from buyers for a greater mix of apartment types and sizes. Traditionally, owner occupiers demand larger apartments (3 bedrooms or more) as their primary residences, while investors or buyers of second homes, seek smaller apartment types. In Jeddah, 60% of buyers are expected to be owner-occupiers while the number of investors is expected to be higher in Riyadh.
Iconic developments, such as the Kingdom Tower, or high rise properties that have branded hotels and residences are leading the way, offering developers a way to justify premiums as investors seek high quality and well located properties. Iconic towers can also play an important role in driving interest in the surrounding area, with the Kingdom Tower expected to play a similar role to the Burj Khalifa's impact on the Dubai Downtown area.
However, the focus on modern luxury means that there is a growing gap for 'affordable luxury' developments that maintain high standards while mitigating costs through simple design and efficient, smart buildings.
Imad Damrah, Managing Director, Colliers International in Saudi Arabia, said: "The strong demand for modern luxury high rise residential properties across Saudi Arabia is being demonstrated by high absorption levels among existing towers and pre-booking among forthcoming supply. While there is clearly a fundamental change occurring in this market segment, developers need to pay close attention to demand characteristics. Those developers with a strong reputation of delivery and partnership with iconic brands and commitment to luxury design, fittings and finishes will be best positioned to capitalize on the market opportunity. Furthermore, we see a clear gap appearing in the mid-market segment which is showing signs of undersupply given the overall shift in the market."
CONTACTS
Asia Hildebrand, Marketing & Communications Manager, +44 7481 606 767 or asia.hildebrand@colliers.com
Inci Gecekusu, Associate Marketing & Communications Manager +971 55 763 3737 or Inci.Gecekusu@colliers.com
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Colliers International is a global leader in commercial real estate services, with over 16,300 professionals operating out of more than 502 offices in 67 countries. Colliers International delivers a full range of services worldwide that includes: valuations, consulting, appraisals, brokerage, asset management, project management and research, within the residential, commercial, retail, hospitality, healthcare, education, infrastructure sector, Public Private Partnership (PPP) and economic and industrial free zones. In MENA, Colliers International has provided leading advisory services through its regional offices located in Dubai, Abu Dhabi, Riyadh and Jeddah since 1996. The latest annual real estate survey by Euromoney named Colliers International 'Best Advisor' in the MENA region, UAE, Qatar and Saudi Arabia. Colliers International has been recognized and ranked by the International Association of Outsourcing Professionals' Global Outsourcing 100 for 10 consecutive years, more than any other real estate services firm.
© Press Release 2015
