GoDubai
  
  
  
  
Citylife > Press Release
  Home Contact us Add to Favourites
Most Recent Postings
More Press Releses
Featured Sections

Event Finder
A daily roundup of exhibitions, promotions and other events in Dubai and the rest of the Emirates.
Submit an Event
Latest Dubai Press Releases >> Banking and Investments

 
  Share

JLL releases its Riyadh Q2 marketplace report as retailers continue expansion plans with a key focus on ‘shoppertainment' 

Riyadh, Kingdom of Saudi Arabia – July 18, 2017:  JLL, the world's leading real estate investment and advisory firm, today released its Q2 2017 Riyadh Real Estate Market report which assesses the latest trends in the office, residential, retail and hotels sectors. 

The market continued to ‘soften' in Q2 2017, with further declines in performance across all sectors. That said, in the retail sector shopping centre owners remain positive and continued with expansion plans, with a sharp focus on ‘shoppertainment'. While some owners are looking to encourage their tenants to operate cinemas for children, others are enhancing common areas within malls as a way of attracting greater footfall.

“The market overall experienced a general slowdown in Q2, with the government looking to boost the hospitality and retail sectors through promising policies,” said Mr. Jamil Ghaznawi, National Director and Country Head, JLL, KSA. 

“With these crucial changes in the government, and foreign investment through trade deals signed during Trump's historic visit, the market sentiment is likely to improve as we move into the second half of the year.”

The office sector witnessed completions including Elegance tower and Ghirnata Square, bringing the total office space up to 3.8 million sq m. With demand being limited, the office sector experienced increasing vacancies and a slight decline in rentals. 

The residential sector experienced slight declines in both rentals and sale prices in Q2. However, the Ministry of Housing has collaborated with six private developers to increase the supply in order to address the growing demand for affordable housing. 

There were no major openings in the hotel sector in Riyadh in Q2, but the pipeline for the second half of the year remains strong with major scheduled openings inclusive of the Crowne Plaza ITCC, Centro Waha and the Fraser Suites. 

Generally, all sectors of the real estate market are now in the downturn stage of their market cycle, with rents and prices decreasing. 

Sector summary highlights – Riyadh

Office
Hot Topic   
The completion date for the first stages of the King Abdullah Financial District (KAFD), which marks the new CBD, remains uncertain. Upon completion, this project will enjoy a strategic location, state-of-the-art designs and demand from the public and private sectors. Prospective occupants of KAFD are expected to surrender leases elsewhere in the CBD upon relocation. 

US President Trump's historic visit to Riyadh in May 2017 resulted in the signing of more than 40 agreements in sectors ranging from technology, industrial manufacturing and aerospace as well as defence. It is estimated that these deals could be worth as much as USD350 billion and create as many as 250,000 jobs both in Saudi and the U.S. 

Supply    
The total office stock currently stands at nearly 3.8 million sq m. Elegance tower completed in Q2 2017, adding 24,000 sq m near the intersection of the Northern Ring Road and King Fahad Road. Smaller completions included the office component of Ghirnata Square, adding around 3,000 sq m. 

Al Rajhi Tower and the Administrative Palaces by Ajlan are expected to complete next quarter, adding 30,000 sq m and 32,000 sq m respectively. CMC tower (12,000 sq m) is scheduled to complete in Q4 2017, along with Majdould Tower (70,000 sqm) and the remaining 26,000 sq m of office space in phase 1 of the ITCC. While there are other small-scale completions scattered around the commercial roads, these smaller projects, have a minimal effect on overall rents and vacancies.

Between 2013 and 2016, almost 479,000 sq m of office space was completed in Riyadh (average of 160,000 sq m pa). Future supply will clearly be at a higher rate over the next three years, with a potential of 237,000 sq m pa. The probability of project delays does however remain high, with these delays shielding existing properties from potential downward pressure on rentals. 

Performance 
The Riyadh office sector witnessed a marginal decline in performance in Q2. Vacancies have increased 3% to 16% compared to Q2 2016 while rents have decreased 3% from 1,272 to 1,240. The 12-month outlook remains soft with the market expected to move further in the favour of tenants. In response to the rising competition a number of landlords have launched redevelopment initiatives. Al Khozama Management Company has appointed Salini Ipregilo to undertake the SAR1.1 billion redevelopment of the Faisaliah complex in central Riyadh. 

Residential
Hot topic 
The Ministry of Housing has collaborated with six private developers to develop more supply to address the growing demand for affordable housing. One such agreement is with Dawaween Al Jazeerah to construct around 4,500 units in southern Riyadh. In addition, the Saudi Arabian Real Estate Company is expected to begin the off-plan sales of the Dhahiah Project, (a gated community comprising more than 500 villas, under the Wafi program) in H2 2017.
On the other hand, lower demand for high-end projects has caused some developers to hold back on construction, while others have reduced the scale of projects by selling vacant parcels they initially planned to develop themselves.

Supply  
The total stock of residential units in Riyadh stands at nearly 1,170,000 units. Between 2013 and 2016, almost 80,000 units completed (at an average of 27,000 units pa). The rate of supply is expected to remain stable over the next 3 years with a potential 77,000 units (averaging 26,000 pa). 

AlArgan delivered 50 of the 156 villas situated in its Al Qamrah project in Q2, with the remaining 106 villas expected to complete by the end of the year. The same developer also completed 40 of the 140 villas in its Manazil Ash Shurouq project, they are aiming to complete the remaining 100 villas in this project by year end, along with 498 villas and 732 apartments in the Green Oasis project in 2018. 

Other proposed completions by the end of 2017 include Damac Esclusiva and Damac Tower by Paramount, adding 189 and 252 high end apartments respectively. Al Tahaluf Real Estate are scheduled to deliver 139 villas in Bayt Al-Hurr 1, and  Malathek, (85 apartments on King Fahed Road in the An Namudhajiyah district) are also due to complete in 2017. Tabarak Holding's Aali Ar Riyadh (129 apartments) is one of the major completions scheduled for Q1 2018. 

Performance   
The residential sector experienced slight declines in Q2. The number of transacted apartments and villas fell by 19% and 41% respectively in Q2 2017 compared to the same period in 2016. Y-o-Y.  Marginal falls were recorded in both rents and sale prices in both the villa and apartment markets in Q2. The 12-month outlook remains unfavorable, with further declines in both prices and rentals expected.

Retail
Hot Topic 
Boosted by the reinstatement of benefits to public sector workers in Q1, retailers have continued their expansion plans, with the Saudi Company for Hardware (SACO), Manoushah Street and Jarir Bookstore all announcing plans for additional stores in Riyadh. SACO opened a new 9,600 sq m branch. Manoushah Street and Al Rajhi Group announced plans to open 25 fast food branches in Riyadh while Jarir Bookstore is also expanding its footprint in the city.
Retail property owners remain focused on shoppertainment. Some owners are supporting tenants applications for licenses to operate cinemas for children, while others are enhancing the common area and the main corridors within their malls. More than a dozen malls have announced events to celebrate the 2017 Riyadh Shopping and Entertainment Festival in July. 

Supply   
Total mall based retail stock in Riyadh stands at nearly 1.7 million sq m. Almost 238,000 sq m was completed during the past three years (average of 79,000 pa). There are higher levels of proposed completions in the next three years, with proposals exceeding 751,000 sq m (average of 250,000 pa), although projects delays are likely to affect at least one third of the proposed completions. 

Riyadh Park (92,000 sq m) and Rowaished Grand Mall (55,000 sq m) were the most notable completions in Q2 2017 with other smaller scale completions including Veranda  F&B (12,000 sq m), Ar Rawabi plaza (8,000 sq m), Al Badiah Plaza in Al Uraija (8,700 sq m) Levels (7,500  sq m) and Ghirnata Square (3,500 sq m). 

Majid Al Futtaim (MAF) is expected to lease space in Riyadh Park for the first Magic Planet family entertainment centre in the Kingdom. Some of the notable projects scheduled to complete by the end of 2017 include the retail portion of the ITCC (50,000  sq m) and Qurtoba Boulevard (72,000  sq m). Smaller scale completions by the end of 2017 could include the Elegant center (13,500 sq m), Elite on Dhabab Rd (11,000  sq m), Deyyafa (9,000  sq m) and Turki Square (2,400  sq m) with the Reef Commercial Center (11,000 sq m) scheduled to complete in Q1 2018. 

Performance 
The Riyadh retail market experienced a slight decline in Q2 2017. Vacancies have increased 2% over the past 12 months to 9%, with a further increase in market wide vacancies expected over the next 12 months. Rents have remained largely unchanged over Q2, but have fallen by 1% in regional malls and 4% in community malls over the past year. On a more positive note, the number of the ‘point of sale' transactions surged 35% and the value of these transactions increased 7% in Riyadh during the year to April 2017 compared to the same period in 2016. 

Hotel
Hot Topic  
As the Custodian of the Two Holy Mosques, King Salman has placed cultural heritage at the core of the Kingdom's strategy to boost the tourism sector in the 2030 vision. The Saudi Commission for Tourism & National Heritage (SCTH) is contributing to the growth of this sector and is investing more in the development of museums and archaeological sites than any other GCC state. The drive to expand the country's cultural offering spreads across all provinces and covers a wide variety of museums and cultural attractions. The inauguration of the Al-Faisal Museum for Arab-Islamic Art in Riyadh in June 2017 is a recent example of the endeavor to promote the Kingdom's history and culture. 

Crown Prince Mohammed bin Salman announced the launch of a new entertainment city that spreads over 334 sq km in southwestern Riyadh, which will enhance the hospitality sector. The project consists of entertainment, motor sports, sporting, housing and hospitality. The project details are expected to be announced gradually during the construction phase. The project groundbreaking will likely lay in Q1 2018 and the first phase is scheduled to complete in 2022. 

Supply  
There were no major hotel openings in Riyadh during the second quarter of 2017, with the total stock remaining at 11,900 quality hotel rooms. There was one major opening in the serviced apartment sector, with Boudl Al Matar adding nearly 160 serviced apartments during Q2.

The pipeline for the second half of the year stands at around 1,900 rooms, with major scheduled openings including the  Crowne Plaza ITCC, Centro Waha and the Fraser Suites in the serviced apartment market. While the total supply of rooms could surpass 16,000 by the end of 2019, further delays in materialization are likely. The hospitality market in Riyadh is expanding into satellite areas with mega-projects such as KAFD and ITCC increasing the supply of hotel rooms to the north of the city. 

Performance 
The Riyadh hospitality market remained under-pressure in Q2 2017. In spite of the visit of US President Trump and the accompanying GCC summit in May, the market witnessed a continued softening in performance compared to last year. Occupancy rates decreased from 63% to 59% YT May, while ADRs dropped from USD 219 from USD 193. Macro-economic factors including low-oil prices have negatively affected the business dynamics in the capital, as the Riyadh hospitality market remains highly dependent on the government and corporate segments. 



Posted by : GoDubai Editorial Team
Viewed 4788 times
Posted on : Tuesday, July 18, 2017  
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of GoDubai.com.
Previous Story : Jumeirah Zabeel Saray Appoints Director of Marketing and Communications
Next Story : Dabur International inaugurates its first ever robotics for plant operations
Email this article Print this article

Share this article with your friends and followers
NewsVine

Comments

Back to Top  
Most Viewed Press Release posted in the last 7 days
COLAB - Dry Shampoo
ORANGE & BERGAMOT Awaken the Cult Icon New Additions
FOREO delivers the ultimate festival survival kit for a glow-on-the-go.
The Perfect Gift Mark
Palladio Beauty - a Professional Line of Botanical & Vitamin-Infused Cosmetics
New XE 300 Sport Edition Wins Gripping Ice Race
Filorga Mesotherapist Derma Roller
Get Vibrant and lively hair with Rahua's new Color Full Range
Spring/Summer 18 Collection
OPPO unleashes the new Selfie Expert F7 with a 25 MP AI powered selfie camera
Enhance skin radiance, smoothness and brightness in just 14 days, with the new J...
Samsung launches Exciting Smartphone Trade-In Program with Galaxy S9 or S9+
Pinky Goat Launches BROWME
du to Offer New 9.7-inch iPad With Apple Pencil Support
Skyline University College Economics Day 2018: One Step towards Tomorrow
Dubai-based Al Kasir Group launches three Crypto assets backed by diamonds
New Blow Out Bar and Make-Up Studio SWISH by Immaclife Opens in Abu Dhabi in Apr...
Pandora Shine Discover A New Way to Shine
Stylish Nursing wear at Mums and Bumps
Penny Scallan Design Launches in the Middle East
Dubai Sports Council Pavilion a big hit at Bangkok SportAccord
Rolling Cones, a new luxury ice cream concept, launches at the Hyatt Regency Dub...
The new BMW M2 Competition
Roger Dubuis Excalibur Aventador S Verde Mantis
MINI at Auto China Beijing 2018
Gifts for Ramadan at Hour Choice
Mumzworld Announce Recruitment Drive To Empower Women in the Middle East
Abu Dhabi Ship Building Company Launches Two 64-Meter Landing Ships for the Kuwa...
Big Time with Graham Chronofighter Grand Vintage
Exclusive, Limited‐Edition, Swiss‐Made Cryptocurrency Watches
Toshiba Releases New, Powerful Surveillance and Video Streaming Internal Consume...
Sheikh Sultan bin Ahmed Al Qasimi Leads Sharjah Contingent to Kuwait Arab Media Forum
Etihad Aviation Group Launches Four Initiatives To Commemorate The Year Of Zayed
Mido Ramadan Watch Collection
Pandora Spring Embrace Nature's Beauty
The Beautiful Britain 2018
Understanding what women want Balmain reveals the Madrigal Mini II
SUC Organized 10-Day Free IELTS Workshop for School Teachers and Students
Adamavi - Elegant, Timeles S, and Reliable
Genesis G70 Luxury Sedan Arrives in Middle East
Samsung Launches New Washing Machine with Groundbreaking QuickDrive™ Technology ...
Airport Show Attracts Influential Aviation Leaders for Global Airport Leaders Fo...
Huawei Brings the Most Coveted Smartphone - HUAWEI P20 Pro to the UAE
Healthy Hair with HASK
A Face Transplant Operation is a Demonstration of Advanced Surgery and High Tech...
April Marks Autism Awareness Month at Nursery Chain
More Reasons to Head to the Ikea Store!
Tommy Fleetwood joins OMEGA's line-up of golfing greats
Mido Multifort Datometer Limited Edition - A piece of history on your wrist
GROHE DESIGN Presents the New ATRIO Experience Cube at Fuorisalone in Milan