Arab News, Saturday, Aug 05, 2023 | Muharram 18, 1445
Saudi Arabia’s real estate sector maintains growth surge in Q2: CBRE
Saudi Arabia:
Saudi Arabia’s thriving economy has resulted in rising occupancy levels and
an increase in the average rentals of commercial spaces in the Kingdom’s major
cities in the second quarter, according to a global real estate consultancy
firm.
According to CBRE’s latest report, offices in the
capital city of Riyadh had nearly 100 percent occupancy in the second quarter of
this year, with Grade A and Grade B properties witnessing a year-on-year rise in
average rental rates by 12.2 percent and 14.4 percent, respectively.
Grade A office properties have high-end amenities
and good connectivity, while Grade B spaces are less advanced than the former.
The report noted that Grade A office rents in
Jeddah increased by 20.7 percent in the second quarter of 2023, compared to the
same period a year earlier, while Grade B rents rose by 1 percent during the
same time frame.
“In the second quarter of 2023, Saudi Arabia’s
real estate market continued to see its positive momentum continue,” said Taimur
Khan, CBRE’s head of research for the Middle East and North Africa.
He added: “Market segments such as the Kingdom’s
hospitality, industrial and office sectors have recorded strong rates of growth
on the back of an influx of demand or a lack of suitable supply or in some cases
both.”
Residential sector overview in Q2
According to the report, the average apartment
price in Riyadh surged by 22.9 percent in the second quarter of this year
compared to the same period in 2022.
The report added that apartment prices in Dammam
rose by 2.4 percent annually in the second quarter.
However, apartment prices in Khobar and Jeddah
declined by 4.3 percent and 3.5 percent, respectively.
The report further noted that the total number of
residential transactions in Saudi Arabia declined 38.1 percent in the second
quarter to SR26.8 billion ($7.14 billion) compared to the year-ago period.
“One sector which has bucked the wider trend has
been Saudi Arabia’s residential sector. Heightened affordability challenges,
combined with a lack of suitable stock, has meant that the number of residential
transactions volumes fell sharply in the first half of 2023, compared to a year
earlier, albeit with prices increasing in most parts,” added Khan.
Tourism sector grew in Q2
The report noted that Saudi Arabia’s hospitality
sector witnessed robust expansion in the second quarter of 2023.
All key performance indicators of hotels improved
in the second quarter of 2023, with the average occupancy rate in the first six
months of the year increasing by 8.4 percentage points.
This trend helped hotels improve their average
daily rates, which increased by 25.2 percent.
In comparison, revenue per available room also
grew by 44.4 percent in the second quarter compared to the same period of the
previous year.