Real estate trends: Saudi millennials aim for digitally enabled, smaller living spaces

Regional occupiers will have to review their office footprint across the Middle East based on recent government initiatives, CBRE said

  
Riyadh, Saudi Arabia. Image used for illustrative purpose.

Riyadh, Saudi Arabia. Image used for illustrative purpose.

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Saudi’s real estate sector’s outlook is relatively strong thanks to the government consistently introducing reforms and initiatives to support both the economy and the sector.

In the residential sector, the COVID-19 pandemic has shed light on space requirements for staff and labour accommodation, increasing focus on filling the market gap for a quality product featuring sufficient facilities and amenities.

In addition, the focus has shifted towards millennials as a key consumer class, with a requirement to reconfigure homes as digitally enabled spaces, as well as increasing demand for smaller living spaces, with developers responding by introducing greater proportion of apartments and townhouses within megaprojects, CBRE said.

The future of work

CBRE said recent government initiatives will force regional occupiers to review their office footprint across the Middle East, after the kingdom announced that foreign companies must base their regional headquarters there.

Physical offices are here to stay, but real estate companies will carry out portfolio optimisation via a mix of traditional, flexible spaces.

“Increased flexibility from local landlords [will] be critical to future success,” CBRE said.

Meanwhile in retail, there will be an increased focus on creating a retail experience to attract shoppers, but in hospitality, the recovery is likely to be longer as the kingdom kept its borders closed to international tourists until May 17th.

“Government-led projects are expected to become the powerhouse of the tourism sector in KSA once fully completed.

“The delivery of the first phases of projects such as the Red Sea or Al Ula will participate in the creation of a new perception of the KSA as a leisure tourism destination.”

Industrial and logistics

The kingdom also has a wide-ranging plan, the National Industrial Development and Logistics Program, to transform Saudi Arabia into a global industrial and logistics hub.

“Major infrastructure improvement projects targeting air, rail and road infrastructure, combined with plans to establish eight special economic zones by 2030, will underpin demand for institutional quality industrial and logistics real estate.”

Food security and cold storage space is expected to form a key component of speculative development in the industrial and logistics market, the company said.

(Writing by Imogen Lillywhite; editing by Seban Scaria)

(imogen.lillywhite@refinitiv.com)

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