The residential market witnessed a solid growth across Saudi Arabia in the first quarter as demand for housing rose backed by increased levels of credit, employment, assistance and confidence, said Jones Lang LaSalle, the leading real estate investment and advisory firm, in its review of Riyadh and Jeddah real estate markets in Q1.
The residential prices were on the rise in both capital Riyadh and the Kingdom's leisure destination Jeddah.
In Riyadh, the average rents and prices of both apartments and villas witnessed a steady rise as supply continued to trail demand, said the report which highlights the latest trends in the office, residential, retail and hotel sectors of the market in the two cities.
Land prices in peripheral areas continue to increase, although "we perceive less speculative pressure than last year," the report said.
Villas remained the strongest performing sector in Jeddah, recording increases in both rents and sale prices during the first quarter.
The conditions in the apartment market remained more stable, with no increase in average price or rents being recorded. There have been no major additions to the retail supply in Jeddah, with most new supply in the form of small projects of less than 100 units, the report said.
On the office sector, the report said strong demand in the Riyadh office space market continues to absorb most of the space being delivered.
In 2014, the expert expects to see an increase in the availability of vacated second hand space in the CBD as companies implement their planned moves to new projects in the periphery.
The King Abdullah Financial District (KAFD) is poised to complete the first phase of office, residential, and retail space in the third quarter. The marketing center is now open and formal launch events will be held after Eid Al-Fitr, the report said.
The Arriyadh Development Authority (ADA) has announced the selection of architects and stunning concept designs for stations in the Riyadh Metro. The announcement of the winning consortium(s) to deliver the six-line system is expected imminently, it stated.
In a further boost to Riyadh, the Ministry of Housing has awarded contracts to develop 7,000 affordable housing units at a location northwest of the airport as the government continues to address the nation’s need housing.
The Shoura Council is reported to be considering alternative strategies for encouraging housing development, such as taxes on unused land, it added.
The Jeddah office space market continues to see strong demand from both government and private sector tenants and this has resulted in a reduction in vacancy levels over the quarter from 16 percent at the end of 2012 to just 12 percent at the end of Q1.
Rents have remained relatively stable across the market and are unlikely to increase during the remainder of 2013 given the significant levels of potential new supply, it added.
The increased vacancy rates and the greater choice available to tenants will maintain downward pressure on rental levels during 2013, especially for Grade B properties, the report forecast. –