Saudi Arabia

Riyadh office and residential rents both declined year on year in Q3

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Riyadh office and residential rents were down 4% and 3% year on year respectively.

Riyadh’s office rents declined 4% on an annual basis and 3% quarter on quarter in Q3 2018, according to JLL.

In a quiet business environment, gross leasable area remained largely unchanged at around 4.10 million square metres and vacancy rates remained flat at 8%.

Ibrahim Albuloushi, of JLL’s Hotels and Hospitality, MENA, Office, Residential, Retail practice, wrote that, “the performance of Riyadh’s real estate market remained relatively subdued across all asset classes. As such, all sectors remain in the downturn stage of their cycle.”

The total supply of residential units reached 1.29 million units, with a further 7,000 units expected over the last quarter of the year. Average rents and sale prices remained largely stable on a quarterly basis, with a 3% decline registered on an annual basis.

“While the upcoming supply pipeline consists of high-end projects, we are likely to see more affordable housing project announcements, in line with the Ministry of Housing’s drive to provide accommodation for all,” Albuloushi commented.

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The retail market saw the completion of Al-Dhahiah Center, which has had little impact on total retail GLA. Supply remained steady at approximately 2.14 million square metres. Rental rates continued to soften as vacancy rates increased to around 15% across all mall types.

Activity in the hospitality market remained subdued as no new hotel rooms were delivered over Q3 2018. Total hotel room stock in Riyadh remained unchanged at around 12,400 keys. While occupancy rates improved slightly, revenue per room remain under pressure.

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