Riyadh Real Estate Market

Riyadh real estate market is getting a lot of attention from investors. The Real Estate team at KPMG Al Fozan & Partners have published a comprehensive and insightful report analyzing Riyadh’s Real Estate market in 2015 as well as highlighting the economic outlook for the residential, retail, office and hospitality sectors.

Some of the highlights of the reports are as follows:

Residential Sector

  • Demand on apartments and small-sized villas has remained robust
  • Sale prices of apartments and villas were subdued in 2015
  • The waiting period in residential compounds ranged between two to six month.
  • Residential compound occupancies averaged 87%
  • Around 3,500 new residential units are expected to enter the market
  • Property prices may witness some correction in line with their fair values.

Retail Sector

  • Average market wide occupancy was recorded at 95%.
  • Rentals and occupancies experienced marginal growth of 2%
  • The average rental rates across the city ranged between SAR1,800 to SAR3,000 per square meter
  • The demand for retail space in Riyadh is likely to remain healthy in the next 2 to 3 years
  • Few announced projects are likely to get delayed due to budget cuts from the government and current investor sentiment in Saudi economy.

Office Sector

  • Rentals and occupancies have remained stable in Central Business District (CBD)
  • Office buildings located on secondary locations experienced weakening rentals and increasing vacancy rates.
  • A correction and cautious phase will persist for office market in short to medium term.
  • Declining trend in both rental and occupancy levels is expected till the equilibrium is achieved between demand and supply.

Hospitality Sector Highlights

  • There are approximately 11,940 keys in Riyadh which comprises of 3, 4 and 5 star hotels.
  • About 50% of the current supply of hotel rooms is located in central locations
  • Average Daily Rates (ADRs) for 3, 4 and 5 star hotels stand at SAR 580, SAR 800 and SAR 930 per night respectively with a market wide occupancy of 65 – 67%.
  • The demand for hotel rooms in Riyadh is likely to remain robust
  • The hospitality sector’s performance is likely to remain steady.
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