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Affordable housing driving Riyadh's real estate market, says JLL
Affordable housing driving Riyadh's real estate market, says JLL

Continued government focus on increasing home ownership in the capital through new affordable supply and more public-private partnership (PPP) agreements  

Riyadh, Kingdom of Saudi Arabia – 18 July 2018:  Although market conditions in Riyadh remain relatively unchanged this quarter, the governments’ continued focus on providing more affordable housing to drive home ownership amongst Saudi nationals will in turn boost the capital’s overall real estate sector, says JLL’s latest report.

In line with the National Transformation Program 2020, the Ministry of Housing aims to increase home ownership for nationals from 47% to 52% through boosting affordable residential supply. A continued focus on this sector of the market was evident this quarter with the Ministry announcing eight new PPP agreements and the distribution of 105,174 affordable residential products during the year to May 2018. 

“While some developers are expanding their high-end offering, most remain focused on the affordable sector of the market in line with the governments’ continued focus on driving home ownership for nationals. This will continue to be a key driver for the real estate market overall,” said Craig Plumb, Head of Research, MENA at JLL.

Despite there being little change in market conditions, the government continues to launch ambitious new real estate projects in and around the capital that are set to boost all sectors of the real estate market in years to come. The latest such project, initiated by the Public Investment Fund (PIF), is Qiddiya which includes a significant residential component and aims to attract 17 million visitors to the entertainment sector, 12 million retail visitors and 2 million hotel visits by 2030. 

Following impressive Q1 activity for the retail sector, an even higher rate of activity is expected in H2 2018 compared to H1 2018. Vacancy rates increased 3% Y-o-Y in Q2 2018 to reach 12%, while rents continued to decrease by single-digit rates, with the community malls being the worst performing relative to super regional and regional malls. 

In the office space, the market saw the addition of 42,000 sq m of in Q2 2018. The second half is expected to see a more significant increase in activity with approximately 151,000 sq m scheduled for completion. Due to the delays of some future projects, property owners of existing buildings with low vacancies were able to maintain rents at their current levels. 

The total residential stock in Riyadh remained unchanged at around 1.26 million units, with 15,000 units expected to complete by the year-end. The sales and rents of villas and apartments saw a single-digit decrease on a yearly basis but stabilised on a quarterly basis. 

The hotel sector was inactive with no notable completions recorded this quarter. Room rates have declined 5% Y-o-Y to reach USD 182 in YT May 2018, while occupancy levels remained unchanged year to May 2018 at around 59 % relative to the same period last year.

 

Posted by : Saudi Arabia,Riyadh, Jeddah, Dammam, Meccca and Medina PR Network Editorial Team
Viewed 989 times
PR Category : Real Estate & Retail
Posted on : Wednesday, July 18, 2018  2:48:00 PM UAE local time (GMT+4)
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