Riyadh retail sector shows growth in Q4
4th February 2015
Property consultant JLL has released its latest report on the Riyadh market revealing trends in the office, residential, retail and hotel sectors in Saudi Arabia’s largest city.
“In the last quarter of 2014, we have witnessed the introduction of new mortgage regulations requiring a 30% down payment on all home financings; this has restricted growth levels in the residential market,” said Jamil Ghaznawi, National Director and Country Head of JLL KSA. “While in the office sector, new supply has constrained performance and increased vacancies. Confidence in the retail markets remains strong as reflected in the announcement of various new shopping centres, positively effecting rental growth figures.”
He added that supply increases in the hotel sector showing that occupancy rates were improving and average daily rates remain under downward pressure.
“The Saudi real estate market is heavily dependent on government spending and while the more prudent approach is unlikely to have an immediate impact on the market in 2015, it certainly makes the end of a period of rapid increase in spending, which could constrain the growth of the real estate market in the longer term,” he said.
According to the report the retail sector saw no new completions over the last quarter, as only smaller retail centres were delivered. Rents have slightly increased in regional and community shopping centres whereas super regional malls saw no increase. Vacancy levels in major malls have slightly decreased (-1%) during this quarter. Delays in the KAFD and ITCC projects have resulted in their retail components being pushed back into 2015 and beyond.
In the residential sector property values in Riyadh have increased over the past year, while the last quarter saw more subdued growth. No new hotels were delivered to the hospitality sector during the last quarter of 2014.