Saudi Arabia's commercial real estate sector is experiencing growth, a new report from the RICS (Royal Institution of Chartered Surveyors) has revealed. This occurs as the country's plan to diversify its economy increases demand in the overall property market.
According to the company's Global Commercial Property Monitor, the Middle East, and Africa region's markets remain strong even with the overall state of the world's economy. But here, we will highlight some of the main points the report gave about Saudi Arabia’s real estate market.
A STRONG MARKET GOING FORWARD
There is an increasing demand from both occupiers and investors across all sectors. The expectations are also positive for both rental and capital value increases, notably in Saudi Arabia, the United Arab Emirates, and Nigeria.
The Saudi Arabian market is growing according to 81% of respondents in the report. Huge spending on infrastructure, housing, and entertainment in the Kingdom has a strong role to play here.
Growth in demand for commercial property occupiers was reported to have decreased to 43% in the fourth quarter, compared to 60% in the previous quarter. However, the report notes that this figure is the same as the 43% in the fourth quarter of 2021, showing a consistent level of strong growth over the past year.
Like the rest of the Middle East and Africa region, this trend is also occurring in all areas of the market in Saudi Arabia. However, the office sector is showing better results than the retail and industrial sectors.
Saudi Arabia’s office sector recorded a 59% growth, which is slightly lower than the 64% reported in the previous quarter. However, the retail and industrial sectors still showed strong growth with 32% and 38%, respectively.
So, the Saudi Arabian commercial property market is continuing to remain strong.
REPORTED BOOST IN INTERNATIONAL DEMAND
Demand from international investors has been increasing in the past three quarters, with all sectors showing an upward trend. Additionally, Saudi Arabia has been particularly successful in attracting foreign buyers, with a net balance of 49% in the fourth quarter.
The Saudi Arabian commercial property market, like the UAE, has a strong case for future growth, even with global economic challenges.
Also, the UAE's commercial property market is strong, with around two-thirds of respondents believing the market is improving. Tenant demand growth in the UAE increased in all sectors during the last quarter of 2022.
So, according to the report, the future of the UAE's commercial real estate market also looks bright as predictions for property value increases in the next year remain positive. The report also noted that an increase in foreign investment in the market is a sign of growing confidence in the market's growth potential.
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