Riyadh’s property market continued to soften in Q3: JLL

Riyadh's real estate market maintained its downtrend in Q3 2017, with declines reported in the residential, office and retail sectors, real estate consultancy JLL said in a report.

“All real estate sectors continued to soften over Q3 2017, although the pace of growth appears to be slowing as parts of the retail and hotel sector approach the bottom of their current cycle,” JLL said.

Sales prices of apartments in Riyadh declined 4 percent year-on-year (YoY) in Q3, while villa prices 5 percent YoY.

Rents of apartments and villas declined 6 percent and 4 percent respectively on an annual basis, with the market seeing more vacant units as expatriate families leave in the wake of recently introduced expat levies.

The total residential stock stood at 1.17 million units. Nearly 6,000 units are expected to enter the market by the year-end, but at least 1,000 of these will be delayed until 2018, the report said.

In Riyadh’s retail real estate sector, nearly 44,000 square meters (sqm) of additional retail space was completed in Q3 2017.

The market is expected to witness additional completions by the end of this year, with notable projects such as Qurtuba Boulevard and Reef Commercial Center slated for 2018.

Meanwhile, the Saudi capital is expected to see 1,300 new hotel rooms come on line in Q4 2017; however some projects may delay opening to 2018. 

“The Riyadh hotel market remains heavily dependent upon business travel. This is however changing, with 2017 marking a record year for mega-project announcements in the tourism sector in the Kingdom,” JLL said.

In the office market, vacancies edged up 1 percent YoY to 16 percent in Q3 2017. This figure is expected to slightly increase over the next year, against soft demand and further supply in the pipeline.

Office rents decreased 4 percent over the past 12 months to average SAR 1,244 per sqm.

The level of new supply is expected to increase, with around 650,000 sqm currently scheduled for completion in 2018, but some projects are likely to be delayed until 2020 and even further.