riyadh real estate market overview 2015 - english

2 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewMESSAGE

Al Waleed BinzoumanGeneral 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.

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.

Message fromGeneral Manager

4 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewKSA MACROECONOMIC

KSA Macroeconomic Overview

Economy 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.

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.

Year Revenue Expenditure Surplus/Deficit

Projected Actual Projected Actual Projected Actual2011 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)

-200

-100

0

100

200

300

400

0

325

650

975

1,300

2011 2012 2013 2014 2015 Budgeted

Revenue Expenditure Surplus/Deficit

SR (

Billio

n )

KSA Demographic Profile

2013 2014 2015 FPopulation 29,195,895 30,770,375 31,800,000

Population Growth Rate 2.4% 2.5%

Total Labor Force 10,997,856 11,600,424

Unemployment (Males) 12% 11.7%

KSA Economic Profile

2013 2014 2015 FNominal GDP (% Change) 4.8 1.1 -2.3

Real GDP (% Change) 3.8 3.6 2.5

Inflation 3.5 2.7 2.6

GDP Per Capita ( SR) 93,221 91,421 86,771

5CENTURY21 SAUDI® RIYADH Real Estate Market Overview KSA MACROECONOMIC

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%.

KSA Macroeconomic Overview

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

6 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewLAND TAX

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.

Land Tax on Unused Urban Land in KSAThe Concept & IdeaThe 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.

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?

ResidentialMarket Overview

8 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewRESIDENTIAL

Despite 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

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).

SupplyRiyadh 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.

Riyadh Residential Market Overview

Riyadh Residential Projects – Anticipated Supply

Project Name 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

60%of Urban Land In

Riyadh is Currently Undeveloped

9CENTURY21 SAUDI® RIYADH Real Estate Market Overview RESIDENTIAL

DemandCurrently 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.

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.

Villas: When compared with last year, the median prices of villas have seen a negative trend in some districts of Riyadh where the prices have gone down by 5% to 12% while prices remained stable in other districts with no upward trend. . Rental rates of Villas mostly remained stable in different districts of Riyadh. 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 has been noticed in these districts.Median sales price of an average sized villa/duplex in these districts ranges from SR 1.4 million to SR 1.8 million.

Apartments:Reduction in sales activities has slightly uplifted the rentals of mainly residential apartments. An increase of 3% to 5% in apartment rentals has been witnessed especially in northern and eastern districts of the capital while sale prices mostly remained unchanged as compared to 2014.

Average rental rate of a 3 bedroom apartment varies between SR 40,000 to SR 50,000 per annum in the northern and eastern districts while SR 30,000 to 45,000 per annum in central Riyadh. Southern region of Riyadh is comparatively less desirable for living, here rental rates ranges between SR 16,000 to SR 24,000 per year.

RiyadhHouseOwnershipRa2o

OwnHouses 30%

RentedHouses 50%

EmployerHouses 18%

OtherHouses 2%

Residen'alUnitsDemandSupplyMatrix

Supply Demand Difference

2014 32,000 57,000 25,000

2015 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

RiyadhCityPopula2on(2014-2020F)

Popula2on

2014 6.0

2015 6.2

2016 6.3

2017 6.4

2018 6.6

2019 6.7

2020 6.8

RiyadhResiden'alProjects–An'cipatedSupply

ProjectName No.ofUnits ExpectedYearofComple'on

RafalResidence 172 2015

MasharifHills(Phase-1) 169 2015

IllouraVillas 70 2015

CanaryVillas 40 2015

DamacEsclusiva 216 2016

AlJawan 300 2017

AntaraResiden2alComplex

520 2016

RitajResiden2alProject 292 2015

AlBasateen 900 2020

BaytulHurr 216 2015-16

House Ownership Ratio in Riyadh

0%

13%

25%

38%

50%

Own Houses Rented Houses Employer Houses Other Houses

Residential Units Demand Supply Matrix

0

7,000

14,000

21,000

28,000

No.

of U

nits

0

17,500

35,000

52,500

70,000

No. of Units

2014 2015 2016 2017 2018 2019 2020


Riyadh City Population (2014-2020F)

Po

pu

lati

on

(M

ln)

5.9

6.2

6.5

6.7

7.0

2014 2015 2016 2017 2018 2019 2020

6.86.7

6.6

6.46.3

6.2

6.0

Table 2


2011 1110 804 206

2012 1240 853 387

2013 1131 925 206

2014 1046 1100 -54

2015 Budgeted 715 860 -145


-200

-100

0

100

200

300

400

0

325

650

975

1300

2011 2012 2013 2014 2015 Budgeted


RiyadhHouseOwnershipRa2o

OwnHouses 30%

RentedHouses 50%

EmployerHouses 18%

OtherHouses 2%

Residen'alUnitsDemandSupplyMatrix


2014 32,000 57,000 25,000

2015 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

RiyadhCityPopula2on(2014-2020F)

Popula2on

2014 6.0

2015 6.2

2016 6.3

2017 6.4

2018 6.6

2019 6.7

2020 6.8

RiyadhResiden'alProjects–An'cipatedSupply

ProjectName No.ofUnits ExpectedYearofComple'on

RafalResidence 172 2015

MasharifHills(Phase-1) 169 2015

IllouraVillas 70 2015

CanaryVillas 40 2015

DamacEsclusiva 216 2016

AlJawan 300 2017

AntaraResiden2alComplex

520 2016

RitajResiden2alProject 292 2015

AlBasateen 900 2020

BaytulHurr 216 2015-16

House Ownership Ratio in Riyadh

0%

13%

25%

38%

50%

Own Houses Rented Houses Employer Houses Other Houses

Residential Units Demand Supply Matrix

0

7,000

14,000

21,000

28,000

No.

of U

nits

0

17,500

35,000

52,500

70,000

No. of Units

2014 2015 2016 2017 2018 2019 2020


Riyadh City Population (2014-2020F)

Po

pu

lati

on

(M

ln)

5.9

6.2

6.5

6.7

7.0

2014 2015 2016 2017 2018 2019 2020

6.86.7

6.6

6.46.3

6.2

6.0

Table 2


2011 1110 804 206

2012 1240 853 387

2013 1131 925 206

2014 1046 1100 -54

2015 Budgeted 715 860 -145


-200

-100

0

100

200

300

400

0

325

650

975

1300

2011 2012 2013 2014 2015 Budgeted


10 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewRESIDENTIAL

Area Min Max

Riyadh EastQurtaba 26,000 35,000

Al Monisiyah 25,000 30,000

Gharnada & Alshahda 30,000 35,000

Al Hamra 40,000 45,000

Al Nazeem 18,000 22,000

Al Naseem (East) 18,000 24,000

Al Naseem (West) 20,000 25,000

Al Nahdha 26,000 30,000

Riyadh WestWadi Laban 20,000 25,000

Nakheel 50,000 60,000

Raed 45,000 55,000

Riyadh NorthAl Nafal 55,000 65,000

Al Yasmeen 50,000 60,000

Al Sahafah 40,000 45,000

Al Aqeeq 39,000 42,000

Al Malqa 50,000 60,000

Riyadh SouthDar 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

Riyadh CentralAl 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

Area Min Max


Al Monisiyah 350,000 480,000

Ishbiliah 580,000 650,000

Riyadh WestWadi Laban 450,000 550,000

Nakheel 850,000 1,000,000

Zahrah Laban 725,000 850,000

Riyadh NorthAl Yasmeen 480,000 700,000

Hittin 550,000 850,000

Al Malqa 450,000 750,000

Riyadh SouthDar Albaiza 250,000 400,000

Al Aziziah 350,000 450,000

Al Shifa 380,000 620,000

Riyadh CentralAl Ta'awun 580,000 780,000

Area Min Max

Riyadh EastQurtaba 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

Riyadh WestWadi Laban 1,300,000 1,500,000

Riyadh NorthAl Yasmeen 1,700,000 2,000,000

Al Sahafah 950,000 1,200,000

Al Malqa 1,800,000 2,200,000

Riyadh SouthAl 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

Riyadh CentralAl Nazha 1,700,000 2,300,000

Al Izdhar 1,500,000 1,750,000

Al Ta'awun 1,750,000 1,900,000

Average Annual Rents (SR) for Apartments (130 - 160 sqm)Average Sale Prices (SR) of Apartments (130 - 160 sqm)

Average Sale prices (SR 000’) of Villas (250 - 350 sqm)

OFFICEMarket Overview

12 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewOFFICE

SupplyCompletion 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.

DemandOther than public sector, the companies working for “Riyadh Metro Project” and other infrastructure project as contractors and sub-contractors 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.

Riyadh Office Market Overview

Despite 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”.

Anticipated Supply

Project Name 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

13CENTURY21 SAUDI® RIYADH Real Estate Market Overview OFFICE

Market PerformanceOverall 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.

In parallel, office rentals in newly developed business gates and prime office towers like “Kingdom” and “Al-Faisaliah” remained stable with healthy occupancy.

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.

Office Rental Rates (H1-2015) - SR/Sqm

0

300

600

900

1,200

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Min Max

14 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewOFFICE

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 TrendsTotal 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

RetailMarket Overview

16 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewRETAIL

SupplyDuring 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.

The completion time of the two major projects (KAFD and ITCC) in Riyadh has been extended to 2016 or beyond. These delays have 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 retail space in Riyadh over 3.2 million square meters.

DemandHigh growth in discretionary spending along with growing young population are the key demand generators in retail sector. Retailers are fully aware of the market potential and are aggressively expanding to increase their presence to cover the market effectively.

The constant population growth rate and increase in disposable income among Saudis and Expats has kept the box ticking in Retail Market.

Because of limited options of entertainment, fully air-conditioned shopping malls and hypermarkets have become the source of amusement and entertainment facilities for the residents and this factor is also playing a major role in increase the retail demand.

The Retail Market has been galvanized through rapid expansions by Hyper Markets and Food Chains. Lastly, the demand for luxury and designer brands is on the rise in Riyadh and this has exhilarated the idea of strip retail centres.

Riyadh Retail Market Overview

Retail 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.

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.

Anticipated Supply

Project Name 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

Al Hamra Mall 51,787 2015

Mall of Arabia 164,630 2018

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

17CENTURY21 SAUDI® RIYADH Real Estate Market Overview RETAIL

Market PerformanceDuring 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

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.

Retail Market TrendsCurrent 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

Showroom Rental Rates (SR/sqm) (Outside Malls)

0

600

1,200

1,800

2,400

East

ern

Ring

Roa

d

Khur

ais

Road

Wes

tern

Rin

g Ro

ad

Mad

ina

Al-M

unaw

rah

Road

King

Fah

ad R

oad

North

ern

Ring

Roa

d

Ola

ya R

oad

Tahl

ia R

oad

Oro

ba S

treet

Al T

akha

susi

Road

Dabb

ab S

treet

King

Abd

ulla

h Ro

ad

Mak

kah

Road

Prin

ce S

ulta

n St

reet

Moo

sa B

in N

asee

r Roa

d

Sala

h-U-

Din

Road

Mal

az

Al H

asa

Road

Al N

ahda

Roa

d

Min Max

18 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewRETAIL

Area Min Max

Riyadh EastEastern Ring Road 1,000 1,200


Dammam Road 1,000 1,300Sheik Hassan bin Hussain bin Ali Road 700 850

Khalid Bin Waleed Road 1,000 1,300

Omar Bin Abdulaziz Road 950 1,200

King Abdullah Road 900 1,100Imam Saud bin Abdul Aziz Road 750 900

Prince Bandar Bin Abdulaziz 650 750

Al Imam Asshafi Road 600 700

Riyadh WestWestern Ring Road 650 800

Al-Wadi Road 575 700

Madina Al-Munawrah Road 900 1,050Prince Mashal bin Abdul Aziz Road 575 750

Riyadh NorthKing 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

Abu Bakr Siddique Road 900 1,100

Otman bin Affan Road 1,000 1,350

Al Khair Road 750 900

Olaya Road 900 1,200

Area Min Max

Riyadh CentralKing Fahad Road 1,500 2,200

Olaya Road 1,000 1,200Prince Mohammad bin Abdul Aziz Road (Tahlia) 2,000 2,250

Oroba Street 1,200 1,400

Al Takhasusi Road 1,000 1,300

King Abdul Aziz Road 1,300 1,500

Dabbab Street 1,300 1,500

King Abdullah Road 1,200 1,500

Makkah Road 1,000 1,500

Prince Sultan Street 1,200 1,500Imam Saud bin Abdul Aziz Road 1,000 1,200

Moosa Bin Naseer Road 1,000 1,200

Salah-U-Din Road Malaz 975 1,100

Al Hasa Road 850 1,000

Al Nahda Road 1,000 1,200

Retail Showrooms Rental Rates H1-2015 ( Line Shops -Outside Malls) - SR/Sq m

Riyadh SouthKharj 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 600Hamzah bin Abdul Mutlib Road 725 900

Ayesha bint Abu Bakkar Road 750 925

HospitalityMarket Overview

20 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewHOSPITALITY

Branded Furnished ApartmentsRiyadh’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.

(** Under-construction)

Riyadh Hospitality Market Overview

Riyadh, 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 No of Rooms Open

Double Tree by Hilton 223 H1 - 2015

Branded Furnished Apartments

Hotel Name No of Apartments

Marriott Executive Apartments 117

Hilton Residence Apartments 250**

DAMAC Esclusiva -Branded Serviced Residences 100**

21CENTURY21 SAUDI® RIYADH Real Estate Market Overview HOSPITALITY

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.

Upcoming Key Hotels in K.A.F.D

Hotel Name No of Rooms Expected Completion

Wyndham Hotel 210 2016

Indigo Intercontinental Hotel 225 2016

Riyadh Intercontinental Hotel 218 2016

22 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewHOSPITALITY

Market PerformanceCentury 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.

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

DemandThe 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.

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.

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.

Upcoming Key Hotels in Riyadh

Hotel Name No of Rooms

Expected Completion

Studio M 145 2015

Le Meridien 231 2016

Nobu Hotel Riyadh 134 2016

Marriot Courtyard Hotel (Olaya) 229 2016

Swiss belhotel Riyadh 126 2016

Radisson Park Inn 168 2016

DAMAC TOWERS Paramount Hotel 215 2016

Al Faisaliah Resort & Spa 154 2016

62%Hotelsoccupancy rate reached up to

in Riyadh

Land TradingMarket Overview

24 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewLAND TRADING

Overview: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.

Riyadh Commercial Land Market Overview

COMMERCIAL LAND TRADING (H1-2014 Vs. H1-2015)

MonthNo. 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)

0

7,500

15,000

22,500

30,000

Easte

rn R

ing R

oad

Khur

ais R

oad

Princ

e Sa

ad B

in Ab

dul R

ahm

an

Wes

tern

Ring

Roa

d

Mad

inah

Mun

awar

a Ro

ad

North

ern

Ring

Roa

d

Anas

Bin

Mali

k Roa

d

Khar

j Roa

d

Sout

hern

Ring

Roa

d

Ayes

ha B

int e

Abu

Bak

ar R

oad

King

Fah

ad R

oad

Olay

a Ro

ad

Tahli

ah S

treet

Urob

ah S

treet

Min Max

26%

Decline of

No. of Transactions

LAND TRADING 25CENTURY21 SAUDI® RIYADH Real Estate Market Overview

AreaH1-2015

Min Max

Riyadh EastEastern Ring Road 7,000 9,000Khurais Road 5,000 6,500Dammam Road 5,000 7,000Al shaik Jaber Alahmed Alsabah Road 4,200 5,000Saad Bin Abdulrehman Road 4,500 5,500King Abdullah Road 6,500 8,000Imam Saud bin Abdul Aziz Road 5,000 6,500Hassan Bin Hussain Bin Ali Road 4,500 6,000Riyadh WestWestern Ring Road 5,000 6,500Madina Al-Munawrah Road 4,160 4,680Riyadh NorthKing Fahad Road 12,000 15,000Northern Ring Road 9,500 12,000Prince Saud bin Mohammad bin Muqrin Road 5,000 6,500Anas bin Malik Road 7,500 8,500King Salman bin Abdul Aziz Road 7,500 8,000King Abdul Aziz Road 7,500 9,000Abu Bakr Siddique Road 5,500 6,500Otman bin Affan Road 6,000 7,000Al Khair Road 5,500 6,000Salboukh Road 1,100 1,700Olaya Road 9,000 12,000Riyadh SouthKharj Road 1,850 2,500Southern Ring Road 5,000 5,500Hamzah bin Abdul Mutlib Road 3,600 4,500Ayesha bint Abu Bakkar Road 4,000 4,800Riyadh CentralKing Fahad Road 17,000 22,000Olaya Road 13,000 15,000Prince Mohammad bin Abdul Aziz Road (Tahlia) 13,500 15,000Oroba Street 8,500 10,000Al Takhasusi Road 10,000 12,000King Abdul Aziz Road 9,500 11,000Dabbab Street 7,500 8,500King Abdullah Road 10,000 13,000Makkah Road 7,500 8,500Prince Sultan Street 6,500 7,500Imam Saud bin Abdul Aziz Road 7,000 7,500Moosa Bin Naseer Road 6,000 7,000Salah-U-Din Road Malaz 8,000 10,500Al Hasa Road 5,000 6,000Al Nahda Road 5,500 6,500


26 CENTURY21 SAUDI® RIYADH Real Estate Market OverviewLAND TRADING

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.

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.

Riyadh Residential LAND Market Overview

RESIDENTIAL LAND TRADING (H1-2014 Vs. H1-2015)

MonthNo. of Transactions 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)

(SR/

sqm

)

0

1,500

3,000

4,500

6,000

Al H

amra

Al Y

arm

ook

Ishbil

iah Arqa

Nakh

eel

Al G

hade

er

Al Y

asm

een

Al M

alqa

Al A

ziziah

Al S

hifa

Al S

waidi

Al B

adiah

Al O

laya

Al M

uroo

j

Al S

ulaym

ania

Al W

arud

Min Max

Table 1

Min Max

Eastern Ring Road

7000 9000


Prince Saad Bin Abdul Rahman

4500 5500

Western Ring Road

6500 5000

Madinah Munawara Road

4680 4160

Northern Ring Road

9500 12000

Anas Bin Malik Road

7500 8500

Kharj Road 1850 2500

Southern Ring Road

5000 5500

Ayesha Bint e Abu Bakar Road

4000 4800

King Fahad Road 17000 22000

Olaya Road 13000 15000

Tahliah Street 12000 15000

Urobah Street 8000 10000


0

7500

15000

22500

30000

Easte

rn R

ing R

oad

Khur

ais R

oad

Princ

e Sa

ad B

in Ab

dul R

ahm

an

Wes

tern

Ring

Roa

d

Mad

inah

Mun

awar

a Ro

ad

North

ern

Ring

Roa

d

Anas

Bin

Mali

k Roa

d

Khar

j Roa

d

Sout

hern

Ring

Roa

d

Ayes

ha B

int e

Abu

Bak

ar R

oad

King

Fah

ad R

oad

Olay

a Ro

ad

Tahli

ah S

treet

Urob

ah S

treet

Min Max

10%5% TO

Curve down Price

in Southern & Western Region

LAND TRADING 27CENTURY21 SAUDI® RIYADH Real Estate Market Overview

AreaH1-2015

Min Max


Al Monisiyah 1,500 1,800

Al Rimal 900 1,250

Gharnada & Alshahda 3,200 3,500

Al Hamra 2,900 3,400

Al Quds 2,850 3,300

Al Yarmook 2,200 2,400

Al Qadsiah 1,800 2,000

Al Ma'eezlah 1,300 1,550

Ishbiliah 2,000 2,300

Al Nazeem 850 1,200

Al Janadriah 1,100 1,300

Al Salaam 2,600 3,000

Al Naseem (East) 1,300 1,850

Al Naseem (West) 1,350 2,000

Al Manar 1,300 1,550

Al Nahdha 850 1,000

Al Sulai 1,600 1,750

Al Jazira 1,800 2,000

Al Sa'adah 1,500 1,650

Riyadh WestAl Mahdiah 1,000 1,200

Al Hada 3,700 4,300

Arqa 3,100 3,500

Khuzami 4,300 4,600

Nakheel 4,000 4,500

Zahrah Laban 1,500 1,800

Riyadh NorthAl Aarz 1,450 1,750

Al Qeerwan 2,000 2,200

Al Ghadeer 3,800 4,500

Al Rabeeh 3,000 3,500

Al Nada 2,800 3,300

Al Nafal 2,750 3,000

Al Wadi 2,600 3,000

Al Yasmeen 2,200 2,600

Hittin 3,800 4,500

Al Aqeeq 2,800 3,500

Al Malqa 3,500 3,850

AreaH1-2015

Min Max

Riyadh SouthDar Albaiza 950 1,150

Al Aziziah 1,200 1,500

Al Mansooriah 1,500 1,700

Al Shifa 1,500 1,700

Badr 750 950

Ahad 650 800

Al Marwah 1,250 1,550

Shabra 1,650 1,800

Al Swaidi 1,500 1,700

Al Zahrah 1,500 1,700

Al Areeja 950 1,150

Al Badiah 1,050 1,250

Taweeq 950 1,100

Namar 1,100 1,250

Al Hazm 950 1,100

Al Hair 250 450

Al Darehmiah 1,100 1,500

Riyadh CentralAl Olaya 3,500 4,000

Al Mazar 3,500 4,000

Al Murooj 2,650 3,000

King Fahad 2,500 2,750

Al Nazha 3,200 3,700

Al Izdhar 2,700 3,000

Al Ta'awun 2,700 3,000

Al Museef 2,200 2,700

Salahuddin 3,800 4,200

Al Mursalat 2,800 3,300

Al Sulaymania 3,000 3,500

Al Warud 3,750 4,200

Al Malaz 2,700 3,000

Jarir 2,700 3,000

Al Rahmaniyah 3,300 3,700

Al Mohammadiyah 3,700 4,000

Al Maghrazat 2,500 2,750

Average Sale Prices of Residential Lands (SR/sqm)

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.

ContactsFor Assistance in development & marketing decisions please contact:

Eng. Alaa Al-Thagafi Deputy General [email protected]: 0558 199 194

Asif IqbalHead of Research and [email protected]: 0555 177 076

Abdulaziz Al-MohaizaMarketing [email protected]: 0505 983 926

Al Waleed Hamd BinzoumanGeneral [email protected]: 0555 194 919

DisclaimerIn 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.

About Us

Riyadh - Main OfficeP.O. Box : 300374 Riyadh : 11372 - Tel: +966 (11) 4000 360 - Fax: +966 (11) 485 7338 - www.century21saudi.com

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