Saudi Arabia has seen huge increases in residential real estate sales in Riyadh and Jeddah amid rising demand for office space, hospitality and industrial properties, according to CBRE Middle East.
The global leader in commercial real estate has released its latest edition of the Saudi Arabia Real Estate Market Review for the second quarter of 2024.
Residential real estate in Saudi Arabia
In the second quarter of 2024, Riyadh’s Residential Market saw a significant increase in sales transactions, totalling 18,500, representing a growth of 51.6 per cent.
Similarly, Dammam experienced an annual growth of 22.4 per cent, with a total of 2,390 residential transactions.
Jeddah also witnessed a notable year-on-year increase of 43.2 per cent, reaching 9,392 residential transactions compared to the same quarter in 2023.
Analysing the apartment segment of the market, only Riyadh showed an increase in prices across the cities tracked by CBRE with average apartment price increasing by 6.6 per cent.
Average apartment price remained static in Khobar while they declined in Jeddah and Dammam by 0.9 per cent and 0.6 per cent, respectively.
In the 12 months to Q2 2024, in the villa segment, Riyadh and Jeddah registered annual expansions in their average villa prices of 3.3 per cent and 0.8 per cent, respectively.
Over the same period, average villa prices in Dammam and Khobar contracted by 0.4 per cent and 1.2 per cent, respectively.
Offices in Saudi Arabia
In Riyadh, demand for quality space in the office sector remained elevated as more international and local occupiers moved to the city.
Rental averages have increased in Prime, Grade A, and Grade B segments by 10.7 per cent, 11.5 per cent, and 14.6 per cent year-on-year, respectively.
In terms of average occupancy rates, Grade B office occupancy remained unchanged by 99.4 per cent, while Prime and Grade A saw respective upticks to arrive at 94.7 per cent and full occupancy, respectively.
In Jeddah, in the year to Q2 2024, average rental rates have improved in both Grade A and Grade B segments reaching 8.1 per cent and 13.1 per cent, respectively.
Average occupancy in both Grade A and Grade B also improved to 93.1 per cent and 88 per cent, respectively.
The office market in Dammam saw an increase in both market segments with Grade A and Grade B average rents increasing by 13.3 per cent and 6.2 per cent, year-on-year, respectively.
Looking at Khobar, average rent in Grade A assets increased by 6 per cent over the same period.
Average occupancy levels in both cities recorded increases with Khobar’s Grade A segment reaching 86.3 per cent, whereas Dammam Grade A and Grade B reached 87.2 per cent and 71.6 per cent, respectively.
Hospitality real estate in Saudi Arabia
The hospitality sector in Saudi Arabia has shown that in the year to date to June 2024, Key Performance Indicators (KPIs) of all major markets within Saudi Arabia now sit above their pre-pandemic baselines.
Year-on-year in the year to June 2024, the Kingdom’s average occupancy rose by 0.9 percentage points, its ADR climbed by 6.7 per cent, resulting in RevPAR increasing by 8.2 per cent over this period.
Looking at major cities, in the year-on-year in the year to June 2024, average occupancy in Riyadh fell by 1.5 percentage points, the capital’s ADR increased by 25.5 per cent, leading to a 22.4 per cent expansion in RevPAR.
Makkah’s key performance indicators demonstrated positive readings, starting with a 1.6 percentage point increase in average occupancy, accompanied by a growth of 1.1 per cent in ADR that culminated in a 3.6 per cent expansion in RevPAR.
In Madinah, although the city has seen its average occupancy rate weaken by 1 percentage point, ADR increased by 16.1 per cent, which facilitated a RevPAR growth of 14.5 per cent.
Khobar’s hospitality indicators regressed, with average occupancy softening by 1.7 percentage points and ADR contracting by 1.5 per cent, resulting in the average RevPAR decline by 4.1 per cent.
For Dammam, the average occupancy grew by 8.4 percentage points and although ADR decreased by 1.1 per cent, RevPAR observed an upturn of 14.5 per cent.
Finally, looking at Jeddah, the average occupancy registered a growth of 4.1 percentage points, which was contrasted by a fall of 9.9 per cent in ADR generating a decline in RevPAR of 4.2 per cent.
Industrial real estate in Saudi Arabia
In Saudi Arabia’s Industrial and logistics Sector, in Q2 2024, the total area designated for logistical services within MODON rose to 4.8 million square metre as part of the National Industrial Development and Logistics Program “NIDLP” efforts to attract both local and foreign investments and increase the local content participation in the industrial sector.
In terms of rental performance, in the 12 months to Q2 2024 average rents have improved in Riyadh by 2.8 per cent year-on-year.
Average rents in Khobar and Dammam witnessed an annual drop over the same period by 2.6 per cent and 0.7 per cent, respectively.
In the year to Q2 2024, Jeddah’s average rent highlighted a yearly increase of 2.3 per cent.
Taimur Khan, Head of Research MENA in Dubai, said: “Whilst we are seeing strong levels of activity within Saudi Arabia’s real estate market, which in turn is bolstering rental and price performance in the vast majority of market segments, the lack of available quality stock is somewhat hampering the potential of the market.
“We expected this to continue to be the case in the short run although in the medium term we expect that some of these supply constraints will begin to be alleviated, but only in parts.”
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