Saudi Arabia’s property market is showing the first signs of recovery post COVID-19, with mortgage activity increasing by 38 percent in the 12 months to February 2021.
A decision to exempt real estate transactions from 15 percent VAT helped to boost activity in the residential market, according to Knight Frank’s Saudi Arabia Real Estate Market Review Q1 2021.
“The overall improvement in business confidence and market sentiment has led to a surge in residential mortgage loans, which rose by 38 percent in the 12-months to the end of February, which has in turn materialised in the form of a marked increase in residential transactions across the country, with Riyadh and Jeddah experiencing a 25 percent and 34 percent increase in deal numbers over the last 12 months,” said Faisal Durrani, head of Middle East research at Knight Frank.
However, there was variable performance in property values, with apartment prices increasing in three major cities, while villa prices fell.
Apartment price per square metre increased in Riyadh by 4.4 percent to SAR 3450 ($920) per sq. m, by 6.5 percent to 3950 per sq. m in Jeddah and by 3.2 percent to 3250 sq. m in Dammam Metropolitan Area (DMA) by the end of Q1 2021.
Villa prices in Riyadh fell by 1.6 percent to SAR 3750 per sq. m, by 6.3 percent to SAR 5,000 per sq. m in Jeddah and by 8 percent to SAR 3250 per sq. m in DMA.
Rents increased marginally in Riyadh’s Grade A office market by 0.5 percent but fell in Jeddah by 2.8 percent and DMA by 4.3 percent, in the first three months of the year.
In the retail sector, rents for average sized and super-regional malls fell by 2.5 percent in Riyadh. Community malls witnessed a three percent drop in rents.
(Writing by Imogen Lillywhite; editing by Daniel Luiz)
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