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Eye of Riyadh
Business & Money | Monday 5 August, 2024 11:21 am |
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Saudi Arabia’s Real Estate Market Records Strong Activity in the Second Quarter of 2024.

CBRE Middle East, the global leader in commercial real estate, released its latest edition of the Saudi Arabia Real Estate Market Review for the second quarter of 2024.

 

In Riyadh, demand for quality space in the Office Sector remained elevated as more international and local occupiers moved to the city. Rental averages have increased in Prime, Grade A, and Grade B segments by 10.7%, 11.5%, and 14.6% year-on-year, respectively. In terms of average occupancy rates, Grade B office occupancy remained unchanged by 99.4%, while Prime and Grade A saw respective upticks to arrive at 94.7% and full occupancy, respectively. In Jeddah, in the year to Q2 2024, average rental rates have improved in both Grade A and Grade B segments reaching 8.1% and 13.1%, respectively. Average occupancy in both Grade A and Grade B also improved to 93.1% and 88.0%, respectively. The office market in Dammam saw an increase in both market segments with Grade A and Grade B average rents increasing by 13.3% and 6.2%, year-on-year, respectively. Looking at Khobar, average rent in Grade A assets increased by 6.0% over the same period. Average occupancy levels in both cities recorded increases with Khobar’s Grade A segment reaching 86.3%, whereas Dammam Grade A and Grade B reached 87.2% and 71.6%, respectively. 

 

In the second quarter of 2024, Riyadh’s Residential Market saw a significant increase in sales transactions, totaling 18,500, representing a growth of 51.6%. Similarly, Dammam experienced an annual growth of 22.4%, with a total of 2,390 residential transactions. Jeddah also witnessed a notable year-on-year increase of 43.2%, reaching 9,392 residential transactions compared to the same quarter in 2023.

 

Analyzing the apartment segment of the market, only Riyadh showed an increase in prices across the cities tracked by CBRE with average apartment price increasing by 6.6%. Average apartment price remained static in Khobar while they declined in Jeddah and Dammam by 0.9% and 0.6%, respectively. In the 12 months to Q2 2024, in the villa segment, Riyadh and Jeddah registered annual expansions in their average villa prices of 3.3% and 0.8%, respectively. Over the same period, average villa prices in Dammam and Khobar contracted by 0.4% and 1.2%, respectively.

 

The Hospitality Sector in Saudi Arabia has shown that in the year to date to June 2024, Key Performance Indicators (KPIs) of all major markets within Saudi Arabia now sit above their pre-pandemic baselines.

 

Year-on-year in the year to June 2024, the Kingdom’s average occupancy rose by 0.9 percentage points, its ADR climbed by 6.7%, resulting in RevPAR increasing by 8.2% over this period. Looking at major cities, in the year-on-year in the year to June 2024, average occupancy in Riyadh fell by 1.5 percentage points, the capital’s ADR increased by 25.5%, leading to a 22.4% expansion in RevPAR. Makkah’s key performance indicators demonstrated positive readings, starting with a 1.6 percentage point increase in average occupancy, accompanied by a growth of 1.1% in ADR that culminated in a 3.6% expansion in RevPAR. In Madinah, although the city has seen its average occupancy rate weaken by 1.0 percentage points, ADR increased by 16.1%, which facilitated a RevPAR growth of 14.5%. Khobar’s hospitality indicators regressed, with average occupancy softening by 1.7 percentage points and ADR contracting by 1.5%, resulting in the average RevPAR decline by 4.1%. For Dammam, the average occupancy grew by 8.4 percentage points and although ADR decreased by 1.1%, RevPAR observed an upturn of 14.5%. Finally, looking at Jeddah, the average occupancy registered a growth of 4.1 percentage points, which was contrasted by a fall of 9.9% in ADR generating a decline in RevPAR of 4.2%.

 

In Saudi Arabia’s Industrial and logistics Sector, in Q2 2024, the total area designated for logistical services within MODON rose to 4.8 million square metre as part of the National Industrial Development and Logistics Program “NIDLP” efforts to attract both local and foreign investments and increase the local content participation in the industrial sector. In terms of rental performance, in the 12 months to Q2 2024 average rents have improved in Riyadh by 2.8% year-on-year. Average rents in Khobar and Dammam witnessed an annual drop over the same period by 2.6% and 0.7%, respectively. In the year to Q2 2024, Jeddah’s average rent highlighted a yearly increase of 2.3%.

 

Taimur Khan, Head of Research MENA in Dubai, comments: “Whilst we are seeing strong levels of activity within Saudi Arabia’s real estate market, which in turn is bolstering rental and price performance in the vast majority of market segments, the lack of available quality stock is somewhat hampering the potential of the market. We expected this to continue to be the case in the short run although in the medium term we expect that some of these supply constraints will begin to be alleviated, but only in parts.”

 

About CBRE Group, Inc. 

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.  

 

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