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Riyadh’s property market reported an impressive growth in 2019, with the volume of residential real estate transactions increasing by 53 percent over the previous year, according to new data released by CBRE.
The global real estate consultancy firm also reported that the value of transactions in the Saudi capital went up by 63 percent.
In October 2019, Saudi Arabia’s Ministry of Housing launched an initiative to support residential renovations by providing financing for homes that are more than 15 years old. According to CBRE, this decision will likely result in higher activity among the existing aging stock within the central districts of Riyadh.
Residential mortgages for individuals in the kingdom recorded a growth rate of more than 250 percent in terms of the number of contracts signed from January 2019 to November 2019.
The Saudi capital also witnessed growth across other major real estate segments, the CBRE report showed.
Hotel occupancy rose 5 percent in 2019 compared to 2018, and according to CBRE’s Market Snapshot, supply stood at 17,700 units in Riyadh in 2019 with 4,500 more expected to enter the market by 2023.
The retail segment of the market saw a positive performance as well. There is likely to be an increased focus on ‘shoppertainment’, with around ten cinemas opening in the capital since 2018 and wider plans to open more than 350 cinemas across the country by 2030, the report said.
According to the report, supply stood at 2.91 million square metres (sqm) of gross leasable area (GLA) in 2019, with 609,000 sqm GLA expected to be delivered by 2023.
Saudi Arabia’s unemployment rate declined to 12 percent in the third quarter of 2019 from 12.8 percent in the same period in 2018.
The jobless rates are expected to continue to decline in the short term, with a positive impact expected in terms of increased potential office demand, CBRE said.
The report also noted that co-working and flexible office working structures have continued to disrupt the global office markets and are expected to reshape Riyadh’s office leasing market.
With the Riyadh Metro expected to be operational this year, CBRE said properties near the transportation link will benefit from enhanced accessibility and connectivity.
“The recent economic and social initiatives and legislation introduced by the Saudi Government have already had an extremely positive impact on the country’s real estate sector,” Simon Townsend, Head of Strategic Advisory at CBRE Middle East, North Africa and Turkey (MENAT) and General Manager, CBRE Saudi Arabia , said.
“We are already starting to witness impressive growth across major real estate segments including residential, hospitality and retail, and this upward trajectory is likely to continue in the short to medium term,” Townsend added.
(Writing by Gerard Aoun; editing by Cleofe Maceda)
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