Affordable housing ‘to boost Riyadh’s property market’
Although market conditions in Saudi capital Riyadh remain relatively unchanged this quarter, the government’s continued focus on providing affordable housing to its nationals will in turn boost the city’s overall real estate sector, according to a leading property expert JLL.
In line with the National Transformation Program 2020, the Ministry of Housing aims to increase home ownership for nationals from 47 per cent to 52 per cent through boosting affordable residential supply, stated JLL in its Q2 Riyadh Real Estate report.
A continued focus on this sector of the market was evident this quarter with the ministry announcing eight new public-private partnership (PPP) agreements and the distribution of 105,174 affordable residential products during the year to May, it added.
“While some developers are expanding their high-end offering, most remain focused on the affordable sector of the market in line with the governments’ continued focus on driving home ownership for nationals. This will continue to be a key driver for the real estate market overall,” remarked Craig Plumb, the head of research, Mena at JLL.
Despite there being little change in market conditions, the government continues to launch ambitious new real estate projects in and around the capital that are set to boost all sectors of the real estate market in years to come, he noted.
The latest such project, initiated by the Public Investment Fund (PIF), is Qiddiya which includes a significant residential component and aims to attract 17 million visitors to the entertainment sector, 12 million retail visitors and 2 million hotel visits by 2030, he added.
On the retail sector, JLL said that following the impressive Q1 activity, an even higher rate of activity is expected in the second half of 2018 compared to the first one.
Vacancy rates increased 3 per cent Y-o-Y in Q2 to reach 12 per cent, while rents continued to decrease by single-digit rates, with the community malls being the worst performing relative to super regional and regional malls, it stated.
In the office space, the property expert said market saw another 42,000 sq m added to the sector in Q2. The second half is expected to see a more significant increase in activity with approximately 151,000 sq m scheduled for completion.
Due to the delays of some future projects, property owners of existing buildings with low vacancies were able to maintain rents at their current levels, said the leading property expert.
According to JLL, the total residential stock in Riyadh remained unchanged at around 1.26 million units, with 15,000 units expected to complete by the year-end.
The sales and rents of villas and apartments saw a single-digit decrease on a yearly basis but stabilised on a quarterly basis, it stated.
The hotel sector was inactive with no notable completions recorded this quarter. Room rates were down 5 per cent Y-o-Y hitting $182 year to May, while occupancy levels remained unchanged at around 59 per cent relative to the same period last year.