Report - Century 21

2
MESSAGE
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
Message from
General Manager
Century21Saudi is Saudi Arabia’s largest real estate marketing and consultancy
firm with five fully operational offices in different cities of KSA. We have long been
engaged in business with customers all over KSA in real estate industry, including
marketing, leasing, valuation, research, advisory and property management. We
provide optimal solutions for all stages of real estate development - from initial
feasibility to marketing and property management.
2015 marked the beginning of a significant change in real estate sector as Government
took some important steps to regularize the real estate market. Implementation of
70% loan to value restriction for mortgage and announcement about land tax on
white lands are the recent initiatives took by the government in this regard.
Because of these new implementations the real estate market performed slowly
during the first half of 2015 when compared Y-O-Y bases with 2014. The major
reason behind the slow performance is the adjustment phase which the market is
going through, as forecasted by Century21 Saudi. It is expected that the mortgage
law and government initiative of land tax will impact the market positively in the long
run and boost the real estate business.
Al Waleed Binzouman
General Manager
During H1-2015 real estate prices generally remained stable in the market while a
negative trend has been witnessed in some areas of Riyadh where per square meter
prices went down by 3% to 5%.
As part of our continued growth and strategy to exceed customer’s expectations,
Century21Saudi recently launched update version of our website. As a highly effective
and convenient information platform, the website of Century21Saudi after the latest
revision will play an even better role to meet your real estate needs.
We really appreciate your continued support and help, and we will continue making
greater efforts, sticking to our objectives, adhering to our faith, striving to make
progress and support our clients through innovative services with our broad vision
and pragmatic approach.
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CENTURY21 SAUDI® RIYADH Real Estate Market Overview
KSA MACROECONOMIC
KSA Macroeconomic Overview
E
conomy performance in 2014 came up at the very low
end of expectations with a deficit of SR54 billion despite
comfortable level in both oil prices ($99.5 per barrel for
Brent in 2014) and oil exports (year-to-October 7.1 million
barrel per day). This first fiscal deficit since 2009 was mainly due to
both falling revenues and rising expenditures. Total revenues slipped
by over 9% compared to the previous year, yet remained above the
SR1 trillion mark for the fourth year in a row. The growth in fiscal
expenditures, at 12.7% was the highest in the last three years,
exceeding the SR1 trillion mark for the first time.
Year
During last couple of years, inflation in KSA has been stabilized at
moderate level. In 2014, inflation was recorded at an average of
2.7% which reduced to 2.2% by June-2015.
Expenditure for 2015 is budgeted at SR 860 billion while Revenue is
at SR 715 billion. The current budget accounts for 89% of oil export/
revenue which still shows a dominating sector in spite of government
efforts to diversify hydrocarbon based economy.
Revenue
Expenditure
Surplus/Deficit
Projected
Actual
Projected
Actual
Projected
Actual
2011
540
1,110
580
804
-40
206
2012
702
1,240
690
853
12
387
2013
829
1,131
820
925
9
206
2014
855
1,046
855
1,100
0
-54.0
2015
715
-
860
-
-145
**All the numbers are in SR Billion
Government Revenues & Expenditures
(2011 - 2015)
1,300
400
300
975
2013
2014
2015 F
Nominal GDP (% Change)
4.8
1.1
-2.3
Real GDP (% Change)
3.8
3.6
2.5
Inflation
GDP Per Capita ( SR)
3.5
2.7
2.6
93,221
91,421
86,771
SR ( Billion )
KSA Economic Profile
200
650
100
0
325
-100
0
2011
2012
2013
Revenue
Expenditure
2014
2015 Budgeted
Surplus/Deficit
KSA Demographic Profile
Population
Population Growth Rate
Total Labor Force
Unemployment (Males)
2013
2014
2015 F
29,195,895
30,770,375
31,800,000
2.4%
2.5%
10,997,856
11,600,424
12%
11.7%
-200
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
KSA MACROECONOMIC
KSA Macroeconomic Overview
Oil Sector Overview H1 – 2015
Saudi Arabian crude production was up to 3.7% in Q2 - 2015
compared with the first quarter. The country continued its policy of
protecting its oil market share by squeezing out high-cost producers
via strong oil supply.
Crude Oil Production in Saudi Arabia increased from 9,809 TB/D
in Q1 – 2015 to 10,184 TB/D in Q2 – 2015.This raised up level of
production is due to increasing domestic demand and a desire to
hold market share.
The drift in oil prices has influenced the pace of economic activity in
Saudi Arabia. Activity has already slowed somewhat, and Century21
Saudi expect this trend to consolidate as the government trims the
pace of capital spending.
Non Oil Sector Overview H1 – 2015
The non-oil private sector grew by 3.3%. These figures confirm that
construction, non-oil manufacturing, transport and communications,
and wholesale and retail have shown marginal growth during H1 2015.
Construction sector’s growth was robust at 7.1% year-on-year. This
is due to huge activity in building infrastructure, commercial and,
increasingly residential projects.
Non-oil manufacturing grew by 3.3% year-on-year, supported mainly
by improved capacity and production levels for petrochemicals and
plastic products.
The wholesale and retail sector also recorded growth at 4.0% while
growth in the finance sector was at 1.10%.
NON – Oil Sectors
Construction Sector
Non-Oil manufacturing
Sector
Finance Sector
Whole Sale & Retail Sector
Growth
7.1 %
3.3 %
1.10 %
4.0 %
Market Trends
5
6
LAND TAX
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
Land Tax on Unused Urban Land in KSA
The Concept & Idea
The Unused Urban Land or a.k.a the “White Land” is a key driving force in meeting the growing housing demand in Kingdom of Saudi
Arabia. In other words, these big land parcels can be used in order to meet the housing shortages for majority of Saudi nationals, who are
currently residing in rented accommodation.
Background story
• At the end of last Year, The International Monetary Fund (IMF)
advised Saudi Arabia to implement a tax on vacant lands as a way to
increase non-oil revenues.
• March 23, 2015 - a plan approved by Government of KSA to
impose a tax on undeveloped land in urban areas
• Proposal submitted by: Newly formed Council for Economic and
Development Affairs.
• Rate for the tax and the time frame for implementation not
decided yet.
• The Council agreed that Ministry of Municipal and Rural Affairs
will be in charge to issue the implementing regulations to control
and organise the necessary mechanism to impose annual fees on
such land that is located within the white urban scale.
How this Tax will Impact?
• The introduction of such a tax will make the land trading market
more regulated as sellers won’t be able to hold the land for longer
as they will be subject to tax.
• More supply of land in the market is most likely to impact the land
prices and will trigger them down.
• The affordable housing project in the KSA market will get a big
push in two ways:
• Firstly, more supply of Land in the market to build housing units.
• Secondly, cost of land is a major constraint in any construction
project. Hence as a result of land tax, the land price is more likely
to move downward.
• The new Tax will force the land owners to sell their respective land
and this will increase the overall supply of land in the KSA market.
• The Demand & Supply will be narrowed down as increased supply
will help to boost the current housing projects in pipeline and will
provide room for new ones.
• This will also help to develop a more active real estate market
in KSA as key property developers will actively get involve in
starting new projects and hence increasing the overall real estate
transactions by value and numbers.
• This will help to boost the new mortgage law being implemented
as Banks will target the land owners and use their land as 30%
equity to finance their mortgage. This will positively impact the
banks business.
Why there is a need for such a Tax?
• Fewer players trying to manipulate the KSA Land market i.e. vast
areas of prime real estate being stockpiled by wealthy individuals
and companies with no intention of developing the land but simply
holding onto the land as a store of value and/or aiming to resell it
at a profit.
• High demand for affordable housing is on the rise in KSA as more
than half of citizens do not own their own homes, a high ratio for a
rich country. Rising rents make it hard for even the middle class to
afford housing; many Saudis do not meet qualifications for housing
loans from banks.
• The New Mortgage law needs a strong push as this new Land tax
regime will help to implement it in a better way both for the policy
makers and financial institutions.
Key Questions that need to be addressed:
1. How would you classify an unused land? What are the criteria?
2. Will there be minimum value criteria from which the tax would
start to apply.
• Exempt value (if any)
• Taxable value
3. Will there be a time limit that will apply before tax is levied on
the land owner?
Residential
Market Overview
8
RESIDENTIAL
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
Riyadh Residential Market Overview
D
espite the rapid expansion of residential real estate
market in KSA during the last year, the market is under
supplied as the demand is constantly rising.
Government estimates suggest that 60 percent of urban land in
Riyadh is currently undeveloped; thus the development of these
areas will definitely help to uplift the capital’s housing crisis by
increasing the stock of affordable housing. Ministry of Housing
has announced 160 new housing projects across the Kingdom out
of which Riyadh will contribute its maximum share by providing
number of upcoming housing projects.
Northern part of Riyadh is much active in terms of residential
development activities as several residential developments of
middle size are under progress especially at “Al Malqa” and “Al
Yasmeen” districts. Earlier this year, “Rafal Residence” project
by Rafal has announced the completion of concrete work on the
top floor of 28 story building. This is another vertical residential
project by Rafal Real Estate Development Co and will offer 172
luxurious residential apartments along with hotel suites. Another
mega project “Al Basateen” is aggressively under construction and
Supply
Riyadh residential sector is being driven by small and medium sized
developers and individuals as they are making around 80% of the
supply. Century21Saudi has observed rapid development activities
especially in the northern districts of the capital city.
Several projects, including mega projects like Rafal Residence and
Al Basateen project, are in different phases of development and will
contribute some units to the supply in last quarter of 2015.
Another dynamic product by Damac is in the pipeline by the name
of “Damac Esclusiva”. Ewaan Global Residential Company has
also initiated its first residential project in Riyadh which will offer
around 300 villas mainly targeting upper middle class segment.
Furthermore, there are numerous small developments in planning
and execution phases, being developed by local developers and
individuals which will help to bridge the gap between supply and
demand. It is expected that under construction projects will deliver
more than 2,500 units in coming six months.
planning to deliver 900 villas in coming years. Currently, Phase 1 is
under construction and will offer 61 villas at the initial stage. The
project is strategically located beside King Khalid road (Northwest
of Riyadh).
60%
of Urban Land In
Riyadh is Currently
Undeveloped
Riyadh Residential Projects – Anticipated Supply
No. of Units
Expected Year
of Completion
Rafal Residence
172
2015
Masharif Hills (Phase-1)
169
2015
Illoura Villas
70
2015
Canary Villas
40
2015
Damac Esclusiva
216
2016
Al Jawan
300
2017
Antara Residential Complex
520
2016
Ritaj Residential Project
292
2015
Al Basateen
900
2020
Bayt ul Hurr
216
2015-16
Project Name
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
RESIDENTIAL
Demand
Currently around 60% of Saudis living in Riyadh do not have their
own houses due to higher population growth and hike in land prices.
The rapid increase in population is the key element of rising demand
especially in Riyadh residential market. Also among nationals, the
living trend of joint families are now slowly ending up into nuclear
families and thus putting more pressure on the demand for houses.
Since the majority of Kingdom’s population lies between the age of
25-30 years and marriages are occurring in a speedy ratio, therefore
it gives a healthy push to demand in residential sector. Riyadh is
contributing the second largest share of Saudi population (24.9%)
which makes the residential sector as one of the most demanding
in real estate market.
House Ownership Ratio in Riyadh
50%
RiyadhHouseOwnershipRa2o
OwnHouses
30%
RentedHouses
50%
EmployerHouses
18%
OtherHouses
9
2%
38%
25%
Residen'alUnitsDemandSupplyMatrix
Demand
57,000
25,000
29,000
55,000
26,000
2016
32,500
59,000
26,500
2017
44,000
60,000
16,000
2018
38,500
60,000
21,500
2019
38,500
60,500
22,000
2020
38,000
60,800
22,800
Market Performance:
When compared Y-O-Y bases with 2014, the residential real estate
transactions have been reduced with a significant proportion
during H1-2015, because of 70% loan to value restriction and
new government announcement of Land Tax. Century21Saudi
has observed that overall sale prices of residential units (villas/
apartments) have some negative trend as the prices went down by
5% to 12% in some areas of Riyadh. However, reduction in sales
activities has given a push to rental market and rentals have been
slightly increased between 5% to 7% in different areas of Riyadh.
This rental increase has mainly been noted in apartments segment
while villa rentals mostly remained unchanged during H1-2015.
Popula2on
6.0
2015
6.2
2016
6.3
RiyadhHouseOwnershipRa2o
2017
6.4
OwnHouses
2018
6.6
2019
6.7
2020
6.8
RentedHouses
EmployerHouses
OtherHouses
30%
50%
18%
2%
Residen'alUnitsDemandSupplyMatrix
Supply
Demand
RiyadhResiden'alProjects–An'cipatedSupply
2014
ProjectName
32,000
Difference
57,000
ExpectedYearof
No.ofUnits
2015
29,000
55,000
Comple'on
2016
RafalResidence
2017
MasharifHills(Phase-1)
2018
IllouraVillas
2019
CanaryVillas
2020
32,500
25,000
26,000
59,000
2015
60,000
201560,000
26,500
44,000
169 38,500
70 38,500
40 38,000
201560,500
201560,800
22,000
172
0%
Own Houses
DamacEsclusiva
216
2016
AlJawan
300
2017
AntaraResiden2al
Complex
520
2016
RitajResiden2alProject
292
2015
AlBasateen
900
Employer Houses
Other Houses
16,000
21,500
22,800
70,000
28,000
Apartments:
House Ownership Ratio in Riyadh
Reduction in sales activities has slightly uplifted the rentals of mainly
50%
residential
apartments. An increase of 3% to 5% in apartment21,000
52,500
rentals
has
been witnessed especially in northern and eastern
38%
districts of the capital while sale prices mostly remained unchanged
35,000
14,000
as25%compared to 2014.
17,500
Average
rental rate of a 3 bedroom apartment varies between SR
13%
40,000 to SR 50,000 per annum in the northern and eastern districts
0%
while
SR 30,000 to 45,000 per annum in central Riyadh. Southern
Rented Houses
Employer Houses
Other Houses
0 Own Houses
2016
2017
2018
2019 living,
2020
region of 2014
Riyadh 2015
is comparatively
less desirable
for
here
No. of Units
rental rates ranges between SR 16,000
to SR 24,000 per year.
Supply
Demand
Difference
2020
Villas:
When compared with last year, the median prices of villas have
70,000
seen a negative trend in some districts of Riyadh where the prices
have gone down by 5% to 12% while prices remained stable in
52,500
other districts with no upward trend. . Rental rates of Villas mostly
remained stable in different districts of Riyadh.
35,000
As Sahafa, Al Yasmin and Al Malqa districts in the northern side,
while Ishbiliyah and Qurtabah districts at the eastern side are the
most desirable locations for villas as mostly development progress
17,500
has been noticed in these districts.
Government Revenues & Expenditures
(2011districts
- 2015)
Median sales price of an average sized villa/duplex in these
0
1300
ranges from SR 1.4 million to SR 1.8 million.
BaytulHurr
Rented Houses
Residential Units Demand Supply Matrix
RiyadhCityPopula2on(2014-2020F)
2014
13%
Difference
32,000
2015
No. of Units
Supply
2014
216
2015-16
Residential Units Demand Supply Matrix
RiyadhCityPopula2on(2014-2020F)
28,000
Popula2on
6.0
2015
6.2
2016
6.3
2017
6.4
2018
6.6
2019
6.7
2020
6.8
21,000
No. of Units
2014
14,000
7,000
RiyadhResiden'alProjects–An'cipatedSupply
ProjectName
ExpectedYearof
Comple'on
No.ofUnits
RafalResidence
172
2015
MasharifHills(Phase-1)
169
2015
IllouraVillas
70
2015
CanaryVillas
40
2015
DamacEsclusiva
216
2016
AlJawan
300
2017
AntaraResiden2al
Complex
520
2016
RitajResiden2alProject
292
2015
AlBasateen
900
2020
216
2015-16
975
BaytulHurr
2014
400
2015
200
100
0
325
-100
0
2011
2012
2013
2014
2015 Budgeted
2017
2018
No. of Units
300
650
2016
-200
Supply
Demand
Difference
2019
2020
0
7,000
0
10
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
RESIDENTIAL
Average Sale Prices (SR) of Apartments (130 - 160 sqm)
Area
Min
Average Annual Rents (SR) for Apartments (130 - 160 sqm)
Max
Riyadh East
Area
Min
Max
Riyadh East
Qurtaba
600,000
700,000
Qurtaba
26,000
35,000
Al Monisiyah
350,000
480,000
Al Monisiyah
25,000
30,000
Ishbiliah
580,000
650,000
Gharnada & Alshahda
30,000
35,000
Al Hamra
40,000
45,000
Al Nazeem
18,000
22,000
Riyadh West
Wadi Laban
450,000
550,000
Nakheel
850,000
1,000,000
Al Naseem (East)
18,000
24,000
Zahrah Laban
725,000
850,000
Al Naseem (West)
20,000
25,000
Al Nahdha
26,000
30,000
Al Yasmeen
480,000
700,000
Riyadh West
Hittin
550,000
850,000
Wadi Laban
20,000
25,000
Al Malqa
450,000
750,000
Nakheel
50,000
60,000
Raed
45,000
55,000
Dar Albaiza
250,000
400,000
Riyadh North
Al Aziziah
350,000
450,000
Al Nafal
55,000
65,000
Al Shifa
380,000
620,000
Al Yasmeen
50,000
60,000
Al Sahafah
40,000
45,000
Al Aqeeq
39,000
42,000
Al Malqa
50,000
60,000
Dar Albaiza
18,000
20,000
Al Aziziah
20,000
25,000
Al Shifa
18,000
23,000
Badr
15,000
18,000
Al Marwah
20,000
22,000
Shabra
15,000
17,000
Al Swaidi
20,000
25,000
Al Zahrah
16,000
20,000
Al Areeja
15,000
18,000
Al Badiah
20,000
25,000
Al Hazm
16,000
20,000
Al Darehmiah
17,000
20,000
Al Marooj
30,000
35,000
Al Nazha
35,000
40,000
Al Izdhar
38,000
45,000
Al Ta'awun
38,000
45,000
Al Museef
30,000
35,000
Riyadh North
Riyadh South
Riyadh Central
Al Ta'awun
580,000
780,000
Average Sale prices (SR 000’) of Villas (250 - 350 sqm)
Area
Min
Max
Riyadh East
Qurtaba
1,900,000
2,300,000
Al Monisiyah
1,000,000
1,350,000
Al Rimal
1,000,000
1,250,000
Gharnada & Alshahda
1,300,000
1,500,000
Al Hamra
1,700,000
2,100,000
Ishbiliah
950,000
1,300,000
1,300,000
1,500,000
Al Yasmeen
1,700,000
2,000,000
Al Sahafah
950,000
1,200,000
1,800,000
2,200,000
Al Aziziah
900,000
1,200,000
Al Shifa
950,000
1,250,000
Al Swaidi
1,000,000
1,300,000
Al Badiah
950,000
1,250,000
Al Nazha
1,700,000
2,300,000
Al Izdhar
1,500,000
1,750,000
Al Ta'awun
1,750,000
1,900,000
Riyadh West
Wadi Laban
Riyadh North
Al Malqa
Riyadh South
Riyadh Central
Riyadh South
Riyadh Central
OFFICE
Market Overview
12
OFFICE
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
Riyadh Office Market Overview
D
espite the brief recovery of rental rates in Riyadh office market during 2014 due to improved demand and delay in construction
of mega projects, first half of 2015 saw a negative trend in office rentals. There are several underlying causes of this reduction
but market oversupply will no doubt have major contribution along with ongoing construction of “Riyadh Metro Project” beside
most of the major roads. A major decrease in office rental has been noticed beside Olaya road and King Fahad road as the CBD
become less desirable area for the tenants looking for new office space, because of traffic issues created by ongoing construction work of
“Riyadh Metro Project”.
Supply
Completion of some buildings in ITCC and some B grade office
buildings added around 67,000 sqm in the office stock during first
half of 2015. By considering the construction pace, it is expected
that KAFD will not be able to deliver any office space during 2015.
Other than mega projects like KAFD and ITCC some other high rise
developments like “Hamad Tower” and “Al Rajhi Tower” will add
considerable office space in the market.
Demand
Other than public sector, the companies working for “Riyadh Metro
Project” and other infrastructure project as contractors and subcontractors remained the main demand generators of office space
during 2015.
Government policy to diversify the oil based economy into non-oil
sector growth is demand booster for office market.
In the recent years, trend in banking sector to open new branches in
newly developed retail centers is affecting the office space demand
negatively.
Anticipated Supply
GLA (sqm)
Expected
Completion
KAFD
800,000
2016
ITCC
230,000
2015 -16
Endowment Project
95,000
2016
Majdoul Tower
70,000
2016
Hamad Tower
31,000
2016
Project Name
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
OFFICE
Market Performance
Overall a decrease in office rental rates has been witnessed during
H1-2015. The areas mainly affected by this negative trend are Olaya
Road, King Fahad Road, Oroba Street, Takhasusi Road and South
of Riyadh. The main reason behind this negative trend in CBD is
ongoing construction of “Riyadh Metro Project” which created lot
of traffic issues in peak morning and evening hours.
This decrease in rentals ranges between 5% to 15% in different
areas. Companies looking for new office space are mainly targeting
north of Riyadh or moving along ring roads because of better and
easy accessibility.
During H1-2015 average rental rates varied across different districts
of Riyadh and ranges between as low as SR 350 per sqm in southern
part of Riyadh to as high as SR 1,100 in north of Riyadh. The average
city rentals of B/B+ Class office buildings ranges between SR 550 to
SR 850 per sqm. Prime A class office buildings are charging SR 1,700
per sqm without any decrease in rentals.
The vacancy rate varies between 15% to 20% and there will be
an upward pressure on vacancy rate with the completion of new
supply during 2015 & 2016.
In parallel, office rentals in newly developed business gates and
prime office towers like “Kingdom” and “Al-Faisaliah” remained
stable with healthy occupancy.
Office Rental Rates (H1-2015) - SR/Sqm
Min
Max
1,200
900
600
Salah-U-Din Road Malaz
Al Takhasusi Road
Oroba Street
Tahlia Road
Olaya Road
King Fahad Road
Ayesha bint Abu Bakkar Road
Anas bin Malik Road
Northern Ring Road
Khalid Bin Waleed Road
Khurais Road
Eastern Ring Road
300
0
13
14
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
OFFICE
Office Rental Rates - H1-2015
(Grade B & B+ Class) (SR/sqm)
Area
Min
Max
Eastern Ring Road
650
750
Khurais Road
650
800
Sheik Hassan bin Hussain bin Ali Road
450
550
Khalid Bin Waleed Road
550
600
King Abdullah Road (East)
550
650
King Fahad Road (North)
750
850
Northern Ring Road
950
1,200
Anas bin Malik Road
550
700
Abu Bakr Siddique Road
550
650
Otman bin Affan Road
600
700
Olaya Road (North)
650
770
Al-Swaidi Al-Aam Road
380
450
Ayesha bint Abu Bakkar Road
350
400
King Fahad Road (Center)
900
1,150
Olaya Road (Center)
750
850
Prince Mohammad bin Abdul Aziz
Road (Tahlia)
950
1,050
Oroba Street
750
850
Al Takhasusi Road
650
800
Dabbab Street
600
700
King Abdullah Road
700
800
Moosa Bin Naseer Road
650
700
Salah-U-Din Road Malaz
650
800
Al Hasa Road
550
650
Office Market Trends
Total Inventory
(sqm)
Vacancy Rate
Y-T-D completed Stock (sqm)
Average Asking Rent
(B Grade Offices in CBD) (SR/sqm)
Total
2,950,000
15%-20%
65,000
850
Market Trends
Retail
Market Overview
16
RETAIL
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
Riyadh Retail Market Overview
R
etail is top performing sector of Capital`s real estate
Market because of steady growth we witnessed since
last few years. Century21 Saudi observed that major
expansions took place predominantely in the North
of Riyadh where a lot of new retail malls are under construction
with modern shopping concept. Retail growth is mainly driven
by expansion plans from leading retailers, fast food chains, and
fashion brands. “Hyper Panda” and “Tamimi” are expanding very
aggressively while “Danube” is also increasing its presence in
different areas of Riyadh.
Recently Completed Projects
Project Name
GLA (sqm)
Nakheel Mall
53,251
Tala Mall
31,216
Balancia Bazaar
26,700
Khatwah Center
12,060
Sahafa Center
8,700
Alia Plaza
45,366
Yasmeen Center
15,270
Ongoing construction of “Riyadh Metro Project” is creating lot of
traffic issues in CBD (Olaya and King Fahad Road) making these
location less desirable for retailer’s expansion. Also, Century21 Saudi
witnessed some retailers moving from Olaya road to Takhassusi
Street, Urubah Road, and King Abdulaziz Road.
Supply
During H1-2015 we witnessed several openings of community malls/
strip retail centers, “Malqa Center” and “Telal Center” are the two
new openings of first half. Lot of high end retail projects are under
development along “Northern Ring Road” in proximity of KAFD,
“Riyadh Park”, “Riyadh Walk”, Nakheel Center” and “The Boulevard”
are some of the major upcoming developments. The concept of
“High End Retail Park” is the idea retailers are going to test through
these developments.
By considering the retail market activity and pre booking status of
these upcoming projects we can assume that this new supply will
be easily absorbed in the market without creating any supply shock.
Anticipated Supply
GLA (sqm)
Expected
Completion
Malaz Mall
49,048
2016
The Boulevard
30,000
2015
The Corner
8,000
2016
Al Yarmouk Center
5,457
2015
Riyadh Park
92,000
2017
Al Diriyah Festival City Mall
250,000
2018
Khaleej Mall
43,028
2015
Al Makan Mall
23,357
2016
Project Name
The completion time of the two major projects (KAFD and ITCC) in
Al Hamra Mall
51,787
2015
Riyadh has been extended to 2016 or beyond. These delays have
Mall of Arabia
164,630
2018
resulted in their retail components being pushed forward into the
future years. The aforementioned projects will contribute around
150,000 square meter of retail space. This will take the total stock of Because of limited options of entertainment, fully air-conditioned
retail space in Riyadh over 3.2 million square meters.
shopping malls and hypermarkets have become the source of
amusement and entertainment facilities for the residents and this
Demand
factor is also playing a major role in increase the retail demand.
High growth in discretionary spending along with growing young
population are the key demand generators in retail sector. Retailers The Retail Market has been galvanized through rapid expansions by
are fully aware of the market potential and are aggressively Hyper Markets and Food Chains. Lastly, the demand for luxury and
expanding to increase their presence to cover the market effectively. designer brands is on the rise in Riyadh and this has exhilarated the
idea of strip retail centres.
The constant population growth rate and increase in disposable
income among Saudis and Expats has kept the box ticking in Retail
Market.
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
RETAIL
Market Performance
During H1-2015 the rental values of the retail sector remained
stable with an increase in most areas of Riyadh.
Average Rentals for traditional retail showrooms escalated by
around 5% in different areas of the city. The shopping malls and
strip retail centers rentals witnessed an overall increase of 5% to
10%. This increase was minimal in south of the city and beside Olaya
and King Fahad Road while maximum in the north of Riyadh.
City wide vacancy rate during H1-2015 was around 10%. Although a
large supply is expected to be in the market during 2015-2016 but
by seeing the retailer’s expansion trends and opening of new
17
brands we can assume that the new supply will be absorbed in the
market without any further pressure on vacancy rates.
Rental rates of community malls/strip retail centers ranges between
SR 1,000 per square meter to SR 2,200 per square meter while
regional and super regional malls are charging relatively higher
rentals because of their elevated footfall.
“Northern Ring Road” and “Prince Turki Bin Abdulaziz Al Awal”
road are hosting most of the upcoming major retail developments.
After completion of ongoing projects on these roads they will be
transformed into major shopping hubs of Riyadh City.
Showroom Rental Rates (SR/sqm) (Outside Malls)
2,400
1,800
1,200
Min
Al Nahda Road
Al Hasa Road
Salah-U-Din Road Malaz
Moosa Bin Naseer Road
Prince Sultan Street
Makkah Road
King Abdullah Road
Dabbab Street
Al Takhasusi Road
Oroba Street
Tahlia Road
Olaya Road
Northern Ring Road
King Fahad Road
Madina Al-Munawrah Road
Western Ring Road
Khurais Road
0
Eastern Ring Road
600
Max
Retail Market Trends
Current Retail
Space (sqm)
Vacancy Rate
Future Supply (2015-2017) (sqm)
Average per sqm Asking Rents in
Modern Strip Retail Centers
Total
2,850,000
10%
650,000
SR 1500 – SR 2500
Market Trends
18
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
RETAIL
Retail Showrooms Rental Rates H1-2015 ( Line Shops -Outside Malls) - SR/Sq m
Area
Min
Khurais Road
Min
Max
King Fahad Road
1,500
2,200
Olaya Road
1,000
1,200
Prince Mohammad bin Abdul
Aziz Road (Tahlia)
2,000
2,250
Oroba Street
1,200
1,400
Riyadh Central
Riyadh East
Eastern Ring Road
Area
Max
1,000
1,200
700
800
1,000
1,300
700
850
1,000
1,300
Al Takhasusi Road
1,000
1,300
Omar Bin Abdulaziz Road
950
1,200
King Abdul Aziz Road
1,300
1,500
King Abdullah Road
900
1,100
Dabbab Street
1,300
1,500
Imam Saud bin Abdul Aziz
Road
750
900
King Abdullah Road
1,200
1,500
Prince Bandar Bin Abdulaziz
650
750
Makkah Road
1,000
1,500
Al Imam Asshafi Road
600
700
Prince Sultan Street
1,200
1,500
Imam Saud bin Abdul Aziz
Road
1,000
1,200
Western Ring Road
650
800
Moosa Bin Naseer Road
1,000
1,200
Al-Wadi Road
575
700
Salah-U-Din Road Malaz
975
1,100
Madina Al-Munawrah Road
900
1,050
Al Hasa Road
850
1,000
575
750
1,000
1,200
King Fahad Road
1,200
1,400
Northern Ring Road
1,100
1,350
Imam Saud bin Faisal Road
750
900
Anas bin Malik Road
900
1,200
King Abdul Aziz Road
1,100
1,400
Dammam Road
Sheik Hassan bin Hussain bin
Ali Road
Khalid Bin Waleed Road
Riyadh West
Prince Mashal bin Abdul Aziz
Road
Riyadh North
Abu Bakr Siddique Road
900
1,100
1,000
1,350
Al Khair Road
750
900
Olaya Road
900
1,200
Kharj Road
475
650
Al-Aziziyah Road
475
600
Dirab Road
450
500
Southern Ring Road
700
900
An Nasr Road
475
575
Al-Swaidi Al-Aam Road
525
600
Hamzah bin Abdul Mutlib
Road
725
900
Ayesha bint Abu Bakkar Road
750
925
Otman bin Affan Road
Riyadh South
Al Nahda Road
Hospitality
Market Overview
20
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
HOSPITALITY
Riyadh Hospitality Market Overview
R
iyadh, the Capital City is a prime destination for business
travellers & corporate tourism.
Century21 Saudi witnessed that H1 – 2015 was a stable
period for the hospitality sector. Although there were no major
addition except Double Tree by Hilton but occupancy rate showed
an upward trend and reached around 62% and is expected to
remain stable over the remaining period of the year.
The initiatives being taken by the government including plans of
airport expansion & developments to boost overall passenger
capacity; this will significantly increase business travellers and the
flow of domestic tourists.
Hotels Delivered during H1 - 2015
Hotel Name
Double Tree by Hilton
No of Rooms
Open
223
H1 - 2015
Branded Furnished Apartments
Riyadh’s branded furnished apartments sector is a key area for
niche investment and expansion in the hospitality sector. Although
the city is equipped with local furnished apartments across major
districts but the market lacks major brand names.
Marriott Executive Apartments are the only Branded and fully
furnished apartments in the Capital.
Hilton is currently developing a serviced apartment tower next to its
Hilton Riyadh Hotel which is expected to enter the market by 2016.
DAMAC Properties is currently developing its branded serviced
residences called DAMAC Esclusiva which will enter in the market
by 2016.
Branded Furnished Apartments
Hotel Name
Marriott Executive Apartments
No of Apartments
117
Hilton Residence Apartments
250**
DAMAC Esclusiva -Branded Serviced
Residences
100**
(** Under-construction)
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
Supply
Century21 Saudi witnessed a sluggish H1 -2015 for hotel market
supply. The Key addition during H1 – 2015 was Double Tree by
Hilton. It added 223 keys and took the Capital’s Hotel inventory to
11,308 keys.
A major portion of supply is anticipated to be next year (2016).
The upcoming additions in the Capital’s hotel industry will be Nobu
Hotel Riyadh with 134 keys.
The Inter-continental and Wyndham hotels in K.A.F.D. will add
653 keys. Also in the pipeline is Studio M Hotel (with 143 keys) by
Waseel Properties and Millennium & Copthorne Hotels, which is to
be located on King Fahd Road.
HOSPITALITY
21
Upcoming Key Hotels in K.A.F.D
No of Rooms
Expected
Completion
Wyndham Hotel
210
2016
Indigo Intercontinental Hotel
225
2016
Riyadh Intercontinental Hotel
218
2016
Hotel Name
22
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
HOSPITALITY
Demand
The Capital’s financial hub and the new central business district will
be the King Abdullah Financial District (K.A.F.D.). Century21 Saudi
observed that major projects and expansions are around this area.
Upcoming Key Hotels in Riyadh
Hotel Name
No of
Rooms
Expected
Completion
During the research Century 21 Saudi observed that Major
investments in infrastructure projects like K.A.F.D. and Riyadh
Metro are the significant elements in boosting the business tourism
industry in Riyadh, which will directly have a positive impact on the
hospitality industry.
Studio M
145
2015
Le Meridien
231
2016
Nobu Hotel Riyadh
134
2016
Marriot Courtyard Hotel (Olaya)
229
2016
Swiss belhotel Riyadh
126
2016
The corporate sector was the driving force and also those travelling
from different cities or countries to attend Exhibitions, Seminars &
Conferences, which also attract local government officials and the
private sector.
Radisson Park Inn
168
2016
DAMAC TOWERS Paramount Hotel
215
2016
Al Faisaliah Resort & Spa
154
2016
Market Performance
Century 21 Saudi observed that the hotels occupancy rate reached
around 62% during H1 – 2015. The healthy occupancy is due to the
increased corporate & business travel.
As the market is becoming increasingly competitive it has put
pressure on the hotel industry to offer more competitive rates.
The average daily rate for a 5 – star hotel is SAR 1,100 while for a
4 – Star Hotel is SAR 700 respectively.
The market outlook for the furnished apartments is promising and
in high demand. The average rate for a one bedroom furnished
apartment ranges between SAR 350 to SAR 450 depending upon
the location. Apartments in the CBD are offered at higher prices
than the market average.
The occupancy rate for furnished apartments is currently at 70% in
the Capital. The higher occupancy is due to their competitive rates
compared to hotels.
Hotels
occupancy rate
reached up to
62%
in Riyadh
Hospitality Market
Trends
Total Inventory
(Rooms)
Occupancy Rate
Supply in Pipeline (Rooms)
Average Daily Rate
(4 & 5 Star Hotels)
Total
11,308
62%
5,700 – 8,300
SR 950
Market Trends
Land Trading
Market Overview
24
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
LAND TRADING
Riyadh Commercial Land Market Overview
Overview:
Decline of
26%
In H1-2015, total 4,692 transactions worth SR 24.6 billion have been
done, with a decline of 26% when compared to H1-2014.
Commercial land prices mostly remained stable in most areas of the
Riyadh. Century21 Saudi tried to find a reference of commercial
land prices decline, as rumored by some real estate sector experts,
but unable to find any actual evidence where commercial land has
been transacted with lower rate.
No. of Transactions
COMMERCIAL LAND TRADING (H1-2014 Vs. H1-2015)
Month
No. of Transactions
Value of Transactions
2014
2015
Change %
2014
2015
Change %
Jan
906
833
-9%
4,582,716,300
3,997,681,324
-15%
Feb
881
489
-80%
4,534,428,461
5,168,800,688
12%
Mar
840
672
-25%
2,911,650,939
2,857,646,089
0%
Apr
914
778
-17%
3,482,889,049
2,824,821,405
-23%
May
1,135
929
-22%
4,726,866,753
4,668,400,958
-1%
Jun
1,244
991
-26%
5,819,243,675
5,139,277,774
-13%
Total
5,920
4,692
-26%
26,057,795,177
24,656,628,238
-6%
Commercial Land Sale Prices H1-2015 (SR/Sqm)
30,000
Min
Max
22,500
15,000
Urobah Street
Tahliah Street
Olaya Road
King Fahad Road
Ayesha Bint e Abu Bakar Road
Southern Ring Road
Kharj Road
Anas Bin Malik Road
Northern Ring Road
Madinah Munawara Road
Western Ring Road
Prince Saad Bin Abdul Rahman
Khurais Road
0
Eastern Ring Road
7,500
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
LAND TRADING
Commercial Land Sale Prices H1-2015 (SR/Sqm)
Area
H1-2015
Min
Max
Eastern Ring Road
7,000
9,000
Khurais Road
5,000
6,500
Dammam Road
5,000
7,000
Al shaik Jaber Alahmed Alsabah Road
4,200
5,000
Saad Bin Abdulrehman Road
4,500
5,500
King Abdullah Road
6,500
8,000
Imam Saud bin Abdul Aziz Road
5,000
6,500
Hassan Bin Hussain Bin Ali Road
4,500
6,000
Western Ring Road
5,000
6,500
Madina Al-Munawrah Road
4,160
4,680
King Fahad Road
12,000
15,000
Northern Ring Road
9,500
12,000
Prince Saud bin Mohammad bin Muqrin Road
5,000
6,500
Anas bin Malik Road
7,500
8,500
King Salman bin Abdul Aziz Road
7,500
8,000
King Abdul Aziz Road
7,500
9,000
Abu Bakr Siddique Road
5,500
6,500
Otman bin Affan Road
6,000
7,000
Al Khair Road
5,500
6,000
Salboukh Road
1,100
1,700
Olaya Road
9,000
12,000
Kharj Road
1,850
2,500
Southern Ring Road
5,000
5,500
Hamzah bin Abdul Mutlib Road
3,600
4,500
Ayesha bint Abu Bakkar Road
4,000
4,800
King Fahad Road
17,000
22,000
Olaya Road
13,000
15,000
Prince Mohammad bin Abdul Aziz Road (Tahlia)
13,500
15,000
Oroba Street
8,500
10,000
Al Takhasusi Road
10,000
12,000
King Abdul Aziz Road
9,500
11,000
Riyadh East
Riyadh West
Riyadh North
Riyadh South
Riyadh Central
Dabbab Street
7,500
8,500
King Abdullah Road
10,000
13,000
Makkah Road
7,500
8,500
Prince Sultan Street
6,500
7,500
Imam Saud bin Abdul Aziz Road
7,000
7,500
Moosa Bin Naseer Road
6,000
7,000
Salah-U-Din Road Malaz
8,000
10,500
Al Hasa Road
5,000
6,000
Al Nahda Road
5,500
6,500
25
26
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
LAND TRADING
Riyadh Residential LAND Market Overview
Curve down Price
Overview:
In H1-2015, total 25,564 transactions worth SR 24.2 billion have
been done, with a decline of 33% when compared to H1-2014.
5% 10%
Residential land prices generally remained stable in most areas of
the Riyadh while some decline in residential land prices (5% to 10%)
has been noticed in Southern and western parts of Riyadh. This
decline is mainly attributed to the government announcement of
land tax in first quarter of 2015.
TO
in Southern & Western Region
RESIDENTIAL LAND TRADING (H1-2014 Vs. H1-2015)
No. of Transactions
Month
Value of Transactions
2014
2015
Change %
2014
2015
Change %
Jan
6,229
3,493
-78%
6,433,454,678
3,202,039,374
-101%
Feb
5,464
3,487
-57%
6,280,183,024
2,506,823,454
-150%
Mar
4,981
4,740
-5%
7,420,407,407
5,153,314,075
-44%
Apr
5,121
3,774
-36%
4,452,533,566
3,231,648,612
-38%
May
6,181
4,713
-31%
5,348,936,553
4,502,142,593
-19%
Jun
5,950
5,357
-11%
5,839,740,444
5,670,365,792
-3%
Total
33,926
25,564
-33%
35,775,255,672
24,266,333,900
-47%
Average Sale Prices of Residential Lands (SR/sqm)
Min
Max
6,000
3,000
Al Warud
Al Sulaymania
Al Murooj
Al Olaya
Al Badiah
Al Swaidi
Al Shifa
Al Aziziah
Al Malqa
Al Yasmeen
Al Ghadeer
Nakheel
Arqa
Ishbiliah
0
Al Yarmook
1,500
Al Hamra
(SR/sqm)
4,500
CENTURY21 SAUDI® RIYADH Real Estate Market Overview
LAND TRADING
Average Sale Prices of Residential Lands (SR/sqm)
Area
H1-2015
Min
Area
Max
Riyadh East
H1-2015
Min
Max
950
1,150
Riyadh South
Qurtaba
2,600
2,800
Dar Albaiza
Al Monisiyah
1,500
1,800
Al Aziziah
1,200
1,500
900
1,250
Al Mansooriah
1,500
1,700
Gharnada & Alshahda
3,200
3,500
Al Shifa
1,500
1,700
Al Hamra
2,900
3,400
Badr
750
950
Al Quds
2,850
3,300
Ahad
650
800
Al Yarmook
2,200
2,400
Al Marwah
1,250
1,550
Al Qadsiah
1,800
2,000
Shabra
1,650
1,800
Al Ma'eezlah
1,300
1,550
Al Swaidi
1,500
1,700
Ishbiliah
2,000
2,300
Al Zahrah
1,500
1,700
850
1,200
Al Areeja
950
1,150
Al Janadriah
1,100
1,300
Al Badiah
1,050
1,250
Al Salaam
2,600
3,000
Taweeq
950
1,100
Al Naseem (East)
1,300
1,850
Namar
1,100
1,250
Al Naseem (West)
1,350
2,000
Al Hazm
950
1,100
Al Manar
1,300
1,550
Al Hair
250
450
850
1,000
Al Darehmiah
1,100
1,500
Al Rimal
Al Nazeem
Al Nahdha
Al Sulai
1,600
1,750
Riyadh Central
Al Jazira
1,800
2,000
Al Olaya
3,500
4,000
Al Sa'adah
1,500
1,650
Al Mazar
3,500
4,000
Al Murooj
2,650
3,000
Riyadh West
Al Mahdiah
1,000
1,200
King Fahad
2,500
2,750
Al Hada
3,700
4,300
Al Nazha
3,200
3,700
Arqa
3,100
3,500
Al Izdhar
2,700
3,000
Khuzami
4,300
4,600
Al Ta'awun
2,700
3,000
Nakheel
4,000
4,500
Al Museef
2,200
2,700
Zahrah Laban
1,500
1,800
Salahuddin
3,800
4,200
Al Mursalat
2,800
3,300
Riyadh North
Al Aarz
1,450
1,750
Al Sulaymania
3,000
3,500
Al Qeerwan
2,000
2,200
Al Warud
3,750
4,200
Al Ghadeer
3,800
4,500
Al Malaz
2,700
3,000
Al Rabeeh
3,000
3,500
Jarir
2,700
3,000
Al Nada
2,800
3,300
Al Rahmaniyah
3,300
3,700
Al Nafal
2,750
3,000
Al Mohammadiyah
3,700
4,000
Al Wadi
2,600
3,000
Al Maghrazat
2,500
2,750
Al Yasmeen
2,200
2,600
Hittin
3,800
4,500
Al Aqeeq
2,800
3,500
Al Malqa
3,500
3,850
27
About Us
About Century21®
Century21® is one of the most recognized name in Real Estate Market with approximately 6,700 independently owned and
operated franchised brokerage offices in 75 countries and territories worldwide and represented by more than 102,000 real
estate experts.
Century21 Saudi is official representative of Century21® in
the Kingdom of Saudi Arabia since 2005; specialized in Real
Estate Evaluation (Appraisal), Marketing and Leasing Services,
Real Estate Research & Advisory and Property Management.
Century21 Saudi’s Research & Advisory Department (CRA)
has been established in 2009 and has a proven track record
of providing a variety of research-based services to the
business arena all over KSA market.
Services
Equipped with highly qualified analysts & researchers,
Century21 Saudi is capable of responding all major segments
of Real Estate market (Residential, Commercial, Industrial
and Hospitality) with professional decorum.
Our offered services are:
• Feasibility Studies.
• Highest and Best Use Studies.
• Strategy & Planning Advisory.
• Pricing Strategies.
• Market Research Analysis Studies.
• Development Solutions.
• Site Assessment.
• Market Forecast.
• Real Estate Market Review.
Contacts
For Assistance in development & marketing decisions please contact:
Al Waleed Hamd Binzouman
General Manager
[email protected]
Mobile: 0555 194 919
Eng. Alaa Al-Thagafi
Deputy General Manager
[email protected]
Mobile: 0558 199 194
Asif Iqbal
Head of Research and Advisory
[email protected]
Mobile: 0555 177 076
Abdulaziz Al-Mohaiza
Marketing Manager
[email protected]
Mobile: 0505 983 926
Riyadh - Main Office
P.O. Box : 300374 Riyadh : 11372 - Tel: +966 (11) 4000 360 - Fax: +966 (11) 485 7338 - www.century21saudi.com
Disclaimer
In order to prepare this report, Century21 Saudi collected the data from outside sources as well as by survey of Century21 Saudi research team. Century21
Saudi is confident about the reliability of published data. However, we do not guarantee the completeness and accuracy of the data.
This report is prepared for information only. The assessments and values articulated in this report are subject to change without any notice. Therefore, no
investment decision should be made based on the information presented in this report. Century21 Saudi will not be responsible for any loss that may be
sustained as a result of the information enclosed in this report.