House rents in Jeddah and Riyadh increased by five percent and three percent, respectively, in the first quarter of 2022.
On the same basis, Riyadh’s sale prices grew by five percent and Jeddah’s by two percent.
In a report published by US-based commercial real estate services company Jones Lang LaSalle (JLL), its professional team is confident that this trend will continue throughout the year.
Further details show that Q1 2022 saw an increase in the number of units built in Saudi Arabia’s residential sector, thanks to the government’s efforts to provide housing that fits the needs and ambitions of its inhabitants.
Saudi Arabia’s real-estate sector continued to show promising signs that it has turned a corner, with increasing tourist numbers helping support the hospitality sector, consumers returning to retail stores, and a more positive business sentiment driving demand for office space.
With the kingdom’s Ministry of Housing’s efforts to raise homeownership to 70 percent by 2030, the completion of 4,000 units in Riyadh and 2,000 in Jeddah in the first quarter of this year is a good sign for the country’s future, according to JLL.
Office rents rise
In the first three months of this year, the performance of the kingdom’s office market improved as economic conditions improved and commercial activity increased.
Grade A and B office-building rents in Riyadh grew by eight percent year on year, while Jeddah witnessed a three-percent increase.
In the first quarter of 2022, the overall vacancy rate in Riyadh dropped from five percent to four percent.
This was due to a mix of increased demand from semi-government institutions, private enterprises taking on additional floor space, as well as tenants moving from lower-quality buildings in the south to higher-quality ones elsewhere in the city.
Hotels are mostly occupied
More than 70 percent of Riyadh’s hotels were occupied in the first two months of 2022, compared to just over 51 percent in the same period last year.
Over the same time period, Jeddah’s hotel occupancy increased by two percentage points to 46 percent.
Increased pilgrimage numbers are expected to follow the removal of social-distancing
measures at the two holy mosques in Saudi Arabia, which are currently functioning at full capacity, and are likely to see a significant increase in pilgrimage numbers.
Rents in Riyadh’s super-regional and regional malls fell by five percent and seven percent, respectively, in yearly terms in the first three months of 2022.
Similarly, rentals in Jeddah dropped one percent for super-regional malls and five percent for regional malls on this basis, according to the JLL report.
Because of a recent resurgence in the F&B and entertainment industries, developers are putting more effort into providing unique experiences to draw in visitors.
Comscore, a company that tracks box office trends, has reported that sales in Saudi Arabia are expected to rise by 95 percent in 2021.
Inflation in the housing market
In the first three months of this year, Saudi Arabia’s house price index rose by 0.4 percent over the same time in 2021.
Although commercial and agricultural real-estate prices fell by 0.5 percent, the index was affected by a 1.5-percent rise in residential real-estate prices.
In the first quarter of this year, Saudi Arabia’s General Authority for Statistics reported a 1.5-percent growth in the residential sector, mainly due to an increase in land plot prices of 1.8 percent on an annual basis.