Firm notes the countries commercial, hospitality and retail outlets also performed well
JLL has reported that Saudi Arabia’s residential sector saw an acceleration in the number of units completed in Q1 of this year. The firm noted this was due to the government’s ongoing efforts to deliver housing which meets the needs and aspirations of its citizens.
According to JLL, Q1 2022 saw the completion of 4,000 and 2,000 units in Riyadh and Jeddah respectively, partly driven by the Ministry of Housing’s various initiatives to increase home ownership in the kingdom to 70% by 2030. The firm also noted that year-on-year, rents rose 5% in Jeddah and by 3% in Riyadh in Q1. On the same basis, sale prices in Riyadh rose by 5% and by 2% in Jeddah.
“KSA’s real estate sector continued to show promising signs that it has turned a corner in the first quarter of 2022, with increasing tourist numbers helping to provide a boost to the hospitality sector, consumers returning to retail outlets, and more positive business sentiment driving demand for office space. We look forward to this trend continuing over the remainder of the year,” said Khawar Khan, head of Research, MENA and Turkey at JLL.
He noted that the performance of the office market picked-up across the Kingdom, supported by improving economic conditions and rising business activity in the first quarter of this year. Average rents in Riyadh across a basket of Grade A & B office buildings increased by 8% year-on-year, while Jeddah saw a smaller rise of 3%.
Riyadh’s market-wide vacancy rate edged down to 4% in Q1 2022 from 5% a year earlier. Over the same period, the average vacancy rate for Jeddah dropped by 8%-points to 11%; this was mainly driven by a combination of rising demand from semi-government entities, private businesses taking on more floorspace and tenants re-locating from the south to better quality buildings in other locations across the city, he added.
On the hospitality market, the firm stated that Riyadh hotel occupancy jumped to over 71% in the first two months of 2022, compared with almost 51% in the corresponding period of 2021. Jeddah’s hotel occupancy rose by 2%-points to 46% over the same period. On the retail sector, JLL said in annual terms, rents for super regional and regional malls decreased by 5% and 7%, respectively, in Riyadh in the first quarter of this year.
On the same basis, in Jeddah, rents on average fell by 1% across super regional malls and declined by 5% for regional malls. Developers are increasingly focusing on creating unique F&B and entertainment experiences to attract footfall given the rebound being witnessed in these segments, the firm concluded.