Prices of villas in Riyadh drop 3% in Q4 2018: JLL

Sale prices of villas and apartments in Riyadh fell 3 percent year-on-year (YoY) and 1 percent YoY, respectively, in Q4 2018, according to JLL’s Riyadh Real Estate Market Overview.

Average rent in Q4 declined by 1 percent YoY for apartments and 2 percent YoY for villas.

“On a quarterly basis, no noticeable declines were recorded in either sale prices or rentals, indicating the market is slowly reaching the bottom of its cycle,” the report said.

The research firm expects Riyadh’s residential market to continue ‘softening’ in the next 12 months, albeit at a slower rate, as more supply is handed over. However, with the completion of Riyadh metro the residential landscape is seen to change drastically as the value of properties in close proximity to the transit system will likely increase. 

A total of 29,000 residential units were delivered during 2018, supported by the government’s initiative to provide more housing for Saudi nationals.

In Q4 2018, 7,000 residential units were delivered, bringing the total supply of residential apartments and villas in Riyadh to 1.3 million units. An additional 30,000 units per annum are expected to hand over in both 2019 and 2020.

While some developers continued to expand their high-end residential offering, most remain committed to providing affordable residential solutions in-line with the government’s initiative.

*Estimates

As for office spaces, the next 12 months are expected to witness the completion of 190,000 square meters, increasing the total office stock to 4.5 million square meters by the end of 2019.

Q4 2018 saw the delivery of 131,000 square meter of gross leasable area (GLA), bringing the total office stock in Riyadh to 4.3 million square meters as of year-end 2018.

Occupancy rate stood at 8 percent in Q4, but average rent declined by 4 percent YoY to SAR 1,248 from SAR 1,298 a year earlier.

*Estimates

As for Riyadh’s retail GLA, around 470,000 square meters of retail space is scheduled for completion in 2019. The total of 98,000 square meters of retail GLA was completed in 2018.

Vacancy rates of retail space rose to 15 percent in Q4 2018, compared to 9% a year earlier.

“Given the level of upcoming supply and increased competition, we expect rents to remain under pressure over the next 12 months,” JLL said.

*Estimates

In the hotel market, around 1,700 new hotel keys were delivered in Q4 2018, raising the total inventory to 13,700 keys as of year-end 2018. 

Hotel occupancy rates increased to 55 percent in the November 2018 compared to the same period last year. Meanwhile average daily room rates (ADRs) declined 10 percent YoY to $170.

*Estimates