Performance across Saudi Arabia’s various real estate market asset classes remains mixed, however the residential market continues to outperform, according to global property consultants Knight Frank.
The number of residential transactions in Riyadh has witnessed a 77 per cent growth, year on year and a similar story is playing out on the Red Sea coastal city of Jeddah, where the number of homes sold is up 44 per cent on this time last year, said Knight Frank in the latest quarterly Saudi Arabia Real Estate Market Review.
Faisal Durrani, Partner and Head of Middle East Research, said: “The post-Covid recovery was never going to be smooth sailing, but we are seeing sustained growth in certain segments of the market. In the residential market, for instance, the government’s various initiatives, such as Sakani and Wafi are continuing to contribute to an acceleration in home ownership rates across the kingdom. Furthermore, the government’s efforts to support growth in the residential market are delivering an exceptionally active development market, with 155,000 new homes scheduled to complete before the end of 2023 across Riyadh, Jeddah and Dammam; 100,000 of which are in Riyadh alone.”
“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 per cent year on year, the fastest pace of growth since at least 2017,” he added.
On the kingdom’s office market, Knight Frank said with the exception of Riyadh, rental rates continue to ebb as demand remains muted.
“Looking ahead, burgeoning supply is quickly emerging as an area of concern. We’re tracking nearly 1.8 million sq m due for completion by the end of 2023, 56 per cent of which is planned for Riyadh.”
According to him, domestic demand will help to soak up some of the new supply as economic reforms drive greater business activity, but questions remain on the impact of all the new stock.
Knight Frank expects total office stock in Riyadh and Jeddah to reach 5.3 million sq m and 1.8 million sq m by the end of 2023.
The retail sector has been one of the most significant casualties of the pandemic, it said.