There has been a strong demand for grade A floor space in the key real estate markets of Saudi Arabia including the capital Riyadh and Jeddah from the government and banking sectors, with large floor spaces in northern Riyadh broadly being targeted, according to JLL, a leading player in the real estate and hospitality services sector.
Interest in quality grade A floor space gathered pace in the third quarter, however Grade B office rents in Riyadh and Jeddah, are expected to remain under downward pressure, stated JLL in its Q3 2021 Real Estate Market Overview report released today (October 20).
An additional 170,000 sq m and 2,000 sq m of GLA is scheduled to be delivered in the final quarter of this year in Riyadh and Jeddah, respectively. The majority of this upcoming stock is Grade A floor space.
In the residential market, the delivery of units in both Riyadh and Jeddah continued apace in Q3 as the government made further progress in its aim to increase the percentage of Saudi families owning homes to 70% by 2030, stated JLL in its report.
"There were signs that activity in Saudi Arabia picked up as summer holidays came to an end and travel restrictions eased," remarked Khawar Khan, the head of research for the Middle East, Africa & Turkey region at JLL.
"This is positive news and shows that there is sustained growth in office demand, in particular for quality Grade A floor space in the major cities," he added.
In terms of performance, Riyadh's residential prices registered an average annual increase of five per cent for apartments and villas combined in Q3. On the same basis, rents increased by two per cent.
In retail, destinations in Q3 recorded an increase in footfall as the Saudi government began to ease restrictions on restaurants, cafes and cinemas.
With the opening of Jeddah Park and other smaller retail centres, Jeddah saw the delivery of 132,000 sq m of retail GLA in Q3. Over the same period, Riyadh saw the completion of 19,000 sq. m.
On the hospitality sector, JLL said no new projects were completed in either city during the quarter.
Assuming no further delays, around 1,800 and 900 hotel keys are planned to be delivered in Riyadh and Jeddah, respectively, by the end of this year, it added.-TradeArabia News Service