The residential market in Saudi Arabia saw significantly positive outcomes in Q2 this year, outperforming other segments of the Saudi Arabia real estate market, according to Knight Frank.
“The government’s efforts to support growth in the residential market are delivering an exceptionally active development market,” Faisal Durrani, partner and head of Middle East research at Knight Frank, said.
“In addition, home values are responding to the buoyancy in demand, with apartment values in the capital accelerating at the fastest rate in the Kingdom, growing by 7.6 percent year on year, the fastest pace of growth since at least 2017,” Durrani added.
HERE'S WHAT THE REPORT HAD TO SAY ABOUT THE SAUDI ARABIA REAL ESTATE MARKET FOR Q2 2021:
OFFICE MARKET
Office performance in Q2 was subdued. Rental rates saw year-on-year declines across Grade A and B properties in the key markets of Riyadh, Jeddah, and the Dammam metropolitan area. Both occupancy and vacancy rates saw declines of 1-2 percentage points across Grade A and B offices. However, Grade A offices in Riyadh saw a positive change of 1 percentage point year on year. The change can be attributed to an increase in the number of foreign investors receiving licenses to start a business in Riyadh.
RESIDENTIAL MARKET
The residential market saw gains of 26% in residential sales volumes by the end of Q2 this year. The total value of residential transactions in the Saudi Arabia real estate market was bumped up by 2%. Meanwhile, the number of deals saw an increase of about 24%, with 58,000 residential transactions recorded in Q2 this year, compared to 47,000 deals for the same period last year. These positive outcomes were a result of government efforts to widen the mortgage market, and affordable housing schemes, the report said.
RETAIL MARKET
The retail market saw declines across the board for lease and occupancy rates in the retail segment of the Saudi Arabia real estate market. Community malls registered the largest declines of 2.8% in Jeddah and 2.7% in the Dammam metropolitan area.
HOSPITALITY MARKET
Significant gains were seen in Jeddah’s hospitality due to the Umrah pilgrimage, Eid holidays and summer domestic tourism. For the year to May 2021, average daily rates (ADR) grew by 32.5% year on year, and occupancy by 49%. RevPAR also saw a surge of 60%. Occupancy rates stabilised in T= the Dammam metropolitan area, with ADR growing year on year by 8.3%, and RevPAR by 7.4%. At the same time, average occupancy levels and ADR in Riyadh continued to slip, resulting in a drop in RevPAR by 21% in the year to May 2021.
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