Riyadh – Lack of stock availability has impacted activity levels in Saudi Arabia’s real estate sector during the third quarter of the year.  

Looking at Saudi Arabia’s office sector figures, the majority of activity remains centered towards Riyadh, with occupancy levels now reaching 99.0% and 98.7% for Grade A and Grade B stock respectively. Constrained supply levels have continued to support growth in rental rates, where in the year to September 2022, average Grade A and Grade B rents in Riyadh increased by 5.9% and 3.5% respectively. In Jeddah, we have seen an uptick in demand with most requirements favouring serviced office offerings, as average Grade A rents increased by 8.2% when compared to Q3 2021. In the Eastern Province, Grade A rents in Dammam and Khobar registered an increase of 3.9% and 8.2% respectively over the same period.

Residential transaction volumes in Saudi Arabia fell by 15.5% in Q3 2022, compared to a year earlier, with the total value of transactions also slightly decreasing by 0.8%. Overall, the number of residential transactions totalled 37,743 and the value of transactions totalled SAR 25.6 billion this quarter. With regards to transactions on a regional level, the Dammam Metropolitan Area (DMA) was the only region to record growth in transaction volumes with an increase of 12.0% in the year to Q3 2022. Riyadh and Jeddah have maintained their downward trend in their total transaction volumes with their total diminishing by 31.1% and 19.3% respectively over the same period. Average apartment prices across Saudi Arabia have increased by 7.8% in the 12 months to September 2022, with prices in Riyadh, Jeddah, Dammam and Khobar increasing by 13.1%, 8.9%, 5.6% and 3.7% respectively.  

Looking at Saudi Arabia’s hospitality sector, the second half of 2022 has seen a strong rate of recovery underpinned by a rebound in religious tourism, the continued growth in the number of entertainment initiatives enacted across the country and the sharp rebound in conferences. As a result, the Kingdom’s ADR and average occupancy rate increased by 19.5% and 17.6% respectively, in the year to date to September 2022, with its RevPAR also increasing by 74.9%. In Riyadh, the average occupancy rate has improved by 5.0 percentage points when compared to the year to September 2021, posting notable growth of 23.4% and 35.1% in terms ADR and RevPAR respectively. In Jeddah, the hospitality market has also fared well, with the ADR and occupancy rate recording growth of 19.6% and 6.5 percentage points in the year to date to September 2022, where its RevPAR grew by 35.2%. In the holy cities of Makkah and Medina, the meaningful return of religious tourism has meant that RevPARs saw a marked increase of 266.6% and 214.6% over the same period, although it is worth noting the low base these percentage changes originate from. In the Eastern province, Dammam and Khobar have recorded deteriorating performance compared to a year earlier. 

Taimur Khan, Head of Research – MENA at CBRE, comments: “Whilst real estate market performance across all major sectors and cities in Saudi Arabia remains robust over the course of the third quarter, we are seeing limited levels of suitable stock curtail activity across the Kingdom. We expect this trend to continue in the short-run where activity levels are likely to remain somewhat subdued and performance indicators continue to trend up, almost uniformly across sectors and major metropolitan areas.”

-Ends-

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

Mehdi Aliouat
Head of Marketing & Communications - MENA
CBRE | Middle East Region
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