riyadh real estate market overview h2- 2014 · reduction of sale prices and rentals of residential...

Riyadh Real EstateMarket OverviewH2- 2014

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Riyadh Real EstateMarket OverviewH2- 2014

Research & Advisory Department

Message from General Manager

2014 was a vibrant year for KSA real estate sector. After a long debate, much awaited mortgage law is in implementation phase and we, at Century21Saudi are watching closely its impact on real estate market. Several mega projects in residential, commercial and hospitality sectors which were supposed to be completed in 2014 are delayed to 2015 -16. Much has changed over the last years in KSA real estate sector, since the inception of Century21Saudi. What has not changed though is our commitment to provide high quality real estate services to our valued clients. Our dedicated staff continually ensures that Century21Saudi stands heads above the rest with regard to the quality and value of our services. When it comes to service, value, convenience, and integrity, we want every client to have such a great experience with Century21Saudi that they include us in their preferred real estate partners list.This issue of Riyadh Real Estate Market Overview H2- 2014 will provide

you a snapshot of real estate activities during 2014. We are confident that the report will enhance your knowledge about city s real estate activities.As we look to the New Year(2015) and beyond, we will continue to challenge the traditional business-as-usual model in the real estate industry and strive to create a better way to serve our customers.Finally, I want to thank each of our stakeholders for their tireless efforts and dedication that has helped Century21Saudi to be the best real estate partner of our clients.

Al Waleed Bin ZomanGeneral Manager

,

6 RIYADH REAL ESTATE MARKET OVERVIEW

The performance in 2014 came up at the lower end of expectations with a deficit of SR 54 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 percent 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 percent, was the highest in the last three years, exceeding the SR 1 trillion mark for the first time. Preliminary economic data shows that 2014 was a healthy year for the economy with real GDP growth of 3.59 percent. Non-oil private sector maintained strong growth, at 5.7 percent year-on-year, with growth of construction, non-oil manufacturing, transport and communications sectors above 5 percent year-on-year. Elevated oil export revenues maintained a double digit current account surplus at 14.1 percent of GDP or $106.4 billion.

Expenditure amounted to SR 1,100 billion, 28.7 percent above the budgeted level and 12.7 percent higher than in 2013. The annual increase in 2014 was the highest since 2011 and compares to an average over the past two years of 8.7 percent. In nominal terms, the overspending amounted to SR 245 billion, second only

KSA Economy - Overview

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2068041,1102011

3878531,2402012

2069251,1312013

-541,1001,0462014

** All the numbers are in SR Billion

to the overspending level in 2011 when spending.

Revenue totaled SR 1,046 billion. It was 22 percent above the budgeted level, but 9.5 percent lower than their 2013 level. We estimated that the 2014 budget was based on a price for Saudi oil of $67 pb and production of 9.7 mbpd.

Actual price of Saudi oil averaged $95.8pb in 2014, 8 percent lower than their level in 2013, but 43 percent higher than that used in the budget. Non-oil revenues were SR 115 billion, down around 5 percent on the 2013 total.

Economy

RIYADH REAL ESTATE MARKET OVERVIEW 7


In first quarter of 2013 the long-awaited mortgage law was circulated in order to cover several of the aspects particularly related with real estate mortgage. The mortgage law provides, among other things, a procedure for banks and others to become licensed to provide mortgage finance, and a maximum loan-to-value ratio of 70 per cent.The mortgage law comprised of Real Estate Financing Law Supervision of Finance Companies Law Financial Leasing Law Real Estate Mortgage Law Enforcement Law

Rather than one law, what was approved is a package of five laws that will not only outline enforcement of mortgage contracts, but also cover mortgage registration and real estate financing companies.

It was expected that implementation of mortgage law will stabilize the market in long run while it will take some time before the full benefits of the mortgage law are realized and that the initial impact will perhaps not be that significant. As per Century21Saudi expert’s opinion it will take 1 to 2 years to test the effects of mortgage law on local market.

Key Highlights SAMA will be in charge of regulating the sector and empower to carry out licensing the real estate finance companies and to encourage fair and effective competition between Real Estate finance companies.

Real estate finance companies shall disclose in the annual reports the risks that can be hedged by insurance and how to deal with such risks.

KSA Mortgage Law The Real Estate Refinancing Corporation may repurchase any of its debt securities at any time.

The Real Estate Refinancing Company may obtain the written approval of SAMA, and the Capital Market Authority, prior to issue any financial derivatives.

No one will be allowed to carry out any finance activity without a license from SAMA in accordance with the law and this regulation.

The finance Companies will only be engage in activities for which it has been licensed and which are permitted by the finance laws and their regulations.

Minimum paid up capital of the Finance Companies to carry out real estate finance activities will be SR 500 million.

The License shall be granted for a term of five years and may be renewed based on a request by the finance company.

SAMA will charge SR 200,000 for issuing the license, SR 100,000 for license renewal, and SR 50,000 for any amendment in the license.

The minimum requirement for real estate funds will range from 10 million to 500 million, depending upon scope of business.

As it was expected earlier that during initial phase the law will have some negative impacts on real estate market as the market needs some adjustments in order to implement the law properly.

When compared with last quarter of 2013 Century21Saudi noticed a visible decline in the number of transactions

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and value of transactions during the last quarter of the year 2014.

When compared on Y-O-Y bases, in Riyadh the number of residential real estate transactions in 4th quarter reduced by 25% while the number of commercial real estate transactions reduced by 7%. In parallel, the values of residential real estate transactions in the 4th quarter reduced by 7% and commercial real estate reduced by 3% when compared Y-O-Y basses with the last quarter of 2013.

The same effect has been noticed in the other major cities like Jeddah, Makkah, & Dammam/Al Khobar where the number and values of transactions reduced by a significant proportion.

It is expected that in the long term the mortgage law will have very positive impact on the market as the stabilize market will increase the level of trust for banks, financial

institutes, real estate developers, and investors. In parallel end users will also be benefitted as supply of new housing will increase in long term and more options will be available in the market to have mortgage services.

The mortgage law is an obligatory step taken by the government to regularize the market. However, a proper implementation of the new regulations is critical; otherwise the market will not be fully benefited from its positive effects.

Century21Saudi is watching the market very closely and will keep you posted on the developments through our regular market bulletins.

M o r t g a g e L a w


Riyadh Residential Market Overview

Riyadh Residential Market Overview


Riyadh Residential Market OverviewResidential market is characterized by an imbalance of housing, particularly at the low- and middle-income segments. Although the government is taking some serious steps to provide affordable housing to its nationals but supply-demand gap seem to be persisting in medium to long run. Work is ongoing on affordable housing project in Riyadh, Saudi Arabian Parsons Limited (SAPL) is doing full construction supervision of all infrastructures and landscaping.

Demand for housing is mainly driven by population growth coupled with reduction in average household size and upsurge in disposable income.

It is expected that implementation of mortgage law will regularize the market and more financing options will be available for potential buyers which ultimately will encourage developers to deliver more units in the market.

SupplyAround 35,000 residential units have been delivered during 2014, with this addition Riyadh housing stock has reached around 975,000 units. Most of the supply was from small to medium size developers. North of Riyadh was hub of residential development activities during 2014 and west saw the least residential development activities.

Most of the projects which were scheduled to deliver in 2014 are delayed and expected to be completed in coming years. One of the major reasons behind this delay was unavailability of suitable labor force, as after government crackdown on illegal workers, most of the contracting firms started facing labor shortage issues.

Although a couple of mega projects are in planning phase by key developers but Century21Saudi did not witness any major project announcement during 2014.

DemandYoung and fast growing population, rapid urbanization and rising personal income are driving the demand. It is very obvious that real demand lies in middle income class as sufficient supply is available for high end residential units for upper middle class and VIPs. Government is playing their part to reduce demand-supply gap in the middle income group by constructing 500,000 affordable houses for Saudi nationals.

Mega infrastructure projects like “Riyadh Metro” is also creating a demand for additional housing for their contractors and sub-contractor’s expatriates employees.

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2013 2014 2015-F 2016 2017 2018 2019 2020

Residential Units Demand Supply Matrix

Supply Demand Difference

Expected Completion

No of UnitsProject Name

2015300Sunset Project2015292Ritaj Villas20151300Manazil Al Qurtuba

(Phase-2)2016216Bayt Al Hurr2015172Masharif Hills

(Phase-1)

Residential


Market Performance Riyadh residential market witnessed a mix trend during 2014. In the first half of 2014 the market witnessed a steady rise in the sale prices and rental rates of residential units. In the second half of 2014 after the implementation of loan-to-value ratio of 70% Century21Saudi witnessed relatively slower activities in the market. Several rumors are in the market about the reduction of sale prices and rentals of residential units but we are unable to verify them through valid numbers. In parallel we saw stability in the prices and rental rates without any further reduction or escalation.

VillasThe median prices of villas have increased across most districts of Riyadh by an average of 4% during first half of 2014 while second half did not witness any further increase in the prices. As usual the increase was most significant in north of Riyadh including Al Yasmin District, Sahafa District, and Khuzami District. Rental rates of villas mostly remained stable throughout

the year without any major change during H2- 2014.Mulqa, Al Yasmin, Sahafa at Northern side, Khuzami at Western side and Qurtaba & Ishbiliyah at Eastern side are the most alluring locations for villas. In these districts average sale price of a small size villa/duplex ranges between 1.4 million to 1.8 million Saudi Riyals.

ApartmentsAs a preferred mode of accommodation for expatriates due to affordability concern apartment’s sale prices and rental rates increased with moderate ratio across most districts of Riyadh during first half of 2014.

When compared with H1- 2014, during second half of the year rental rates of apartments remained stable in most of the districts without any further increase or decline.

Apartment sale prices have moderate increasing trend in northern and eastern parts of Riyadh while in south the prices remained stable throughout the year.Median sale price of medium size apartment (130 sqm to 160 sqm) is around SR 385,000 in southern districts and around SR 550,000 at northern Riyadh.

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Qurtaba Al Yarmook Ishbiliah Wadi Laban Arqa Al Nada Al Yasmeen Al Mulqa Al Aziziah Al Shifa Al Swaidi Al Nazha Al Izdhar Al Ta'awun

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Average Sale prices of Villas (250 - 350 sq m) (SR, 000)

(H2-2013) Average Sale Prices (H2-2014) Average Sale Prices Difference between (H2-2013) & (H2-2014) Prices

Residential


Riyadh Compound Market After opening of several mega compounds during last two years the demand-supply gap reduced with a reasonable proportion. The newly open compounds in 2014, including “Al Reem Compound” & “Bonita Village Compound” received a good response from the market and enjoying a good occupancy rates. “Nakhla Compound” is also one of the major openings during 2014; the compound is partially opened for lease as the work is still ongoing for some phases of the compound. “Al Bustan Compound” is the most successful compound among the newly opened compound and offering a very high class living environment for expatriates.

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Al Hamra Al Yarmook Ishbiliah Wadi Laban Al Hada Arqa Al Ghadeer Al Yasmeen Al Mulqa Dar Albaiza Al Aziziah Al Shifa Al Ta'awun AlSulaymania

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Demand for compound accommodation increased by 10% to 15% during 2014. The major demand drivers for the compounds are “Riyadh Metro Project” and other infrastructural projects.

Residential units within compounds are presenting the highest stratum of residential rental market. Median rent of a medium size villa ranges between SR 185,000 to SR 250,000, while average rent of a two bedroom apartment ranges between SR 110,000 to SR 155,000

Residential

Residential Market Trends

Total Inventory (Units) Supply in Pipeline (Units) Average 3 Bed Apartment

Sale Price (SR)Average Villa/Duplex

Sale Price (SR)

975,000 100,000 – 75,000 SR 450,000 to SR 550,000 SR 1m to SR 1.3m

Market Trends


Area Min Max

Riyadh East

Qurtaba 29,000 32,640

Al Monisiyah 26,000 30,000

Gharnada & Alshahda 30,000 32,000

Al Hamra 30,000 35,700

Al Nazeem 20,000 25,000

Al Janadriah 22,000 25,000

Al Naseem (East) 23,000 26,000

Al Naseem (West) 20,000 24,000

Al Nahdha 23,000 26,000

Riyadh West

Wadi Laban 22,000 25,000

Nakheel 45,000 60,000

Raed 45,000 55,000

Riyadh North

Al Nafal 30,000 35,000

Al Yasmeen 30,000 36,750

Al Sahafah 30,000 35,000

Al Aqeeq 33,000 36,000

Al Mulqa 30,000 41,600

Riyadh South

Dar Albaiza 18,500 22,500

Al Aziziah 20,500 24,000

Al Shifa 21,000 25,500

Badr 21,000 24,000

Al Marwah 18,000 24,000

Shabra 22,000 25,000

Al Swaidi 23,000 25,750

Al Zahrah 22,000 25,000

Al Areeja 18,500 22,500

Al Badiah 20,000 25,000

Al Hazm 20,000 25,000

Al Darehmiah 21,000 24,000

Riyadh Centeral

Al Marooj 30,000 40,000

Al Nazha 35,000 41,600

Al Izdhar 30,000 35,700

Al Ta'awun 30,000 39,140

Al Museef 29,000 34,000

Area Min Max

Riyadh East

Qurtaba 650,000 700,000

Al Monisiyah 500,000 600,000

Ishbiliah 500,000 675,000

Riyadh West

Wadi Laban 400,000 550,000

Nakheel 750,000 950,000

Zahrah Laban 475,000 600,000

Riyadh North

Al Yasmeen 650,000 900,000

Hateen 550,000 750,000

Al Mulqa 600,000 825,000

Riyadh South

Dar Albaiza 300,000 400,000

Al Aziziah 350,000 450,000

Badr 300,000 375,000

Riyadh Centeral

Al Ta'awun 750,000 850,000

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

Area Min Max

Riyadh East

Qurtaba 1,400,000 1,600,000

Al Monisiyah 1,350,000 1,550,000

Al Rimal 1,450,000 1,650,000

Gharnada 1,600,000 1,800,000

Al Hamra 1,650,000 1,950,000

Al Quds 1,600,000 1,900,000

Al Yarmook 1,450,000 1,650,000

Al Qadsiah 1,350,000 1,550,000

Al Ma'eezlah 1,300,000 1,500,000

Ishbiliah 1,450,000 1,750,000

Riyadh West

Wadi Laban 1,350,000 1,550,000

Riyadh North

Al Yasmeen 1,700,000 2,200,000

Al Sahafah 1,500,000 1,700,000

Al Mulqa 1,800,000 2,500,000

Riyadh South

Dar Albaiza 950,000 1,150,000

Al Aziziah 1,150,000 1,350,000

Al Shifa 1,000,000 1,250,000

Al Swaidi 1,150,000 1,350,000

Al Badiah 1,200,000 1,450,000

Riyadh Centeral

Al Nazha 1,600,000 1,850,000

Al Izdhar 1,500,000 1,700,000

Al Ta'awun 1,500,000 1,800,000

Average Sale prices of Villas (250 - 350 sq m) (SR)

Residential


Riyadh Office MarketOverview


Riyadh Office Market OverviewCharacterized by oversupply, office market in Riyadh remained a tenant’s market during 2014 while landlords faced tough time to maintain healthy occupancy rate.Higher vacancy rate in the city is not only attributed to the oversupply, as most of the office buildings with higher vacancy rates are not addressing the tenants requirements of car parking, smart utilization of office space and security services properly. Buildings with smart design, sufficient car parking space, and security services are enjoying better occupancy rates.Because of slow construction work mega projects like “King Abdullah Financial District”, ITCC, and “Endowment Project” did not deliver any office space during 2014 and it is expected that none of these project will deliver any office space during 2015.Generally office rentals remained stable throughout the year in different districts of Riyadh while Century21Saudi witnessed several properties where landlords decreased their rentals to improve their occupancy level.

SupplySupply outpaced demand during 2014. Other than mega projects like Olaya Towers, and King Abdulaziz Center for National Dialogue, couple of B class office buildings has been completed during 2014, collectively delivered around 200,000 sqm of office space.

With the addition of this new supply Riyadh total office stock reached to around 2.4 million square meters.

One million square meter of new supply is due to come

during 2015 -17, which will further depress 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 2014. Reflecting continued improvements in the business environment during 2014, the demand for quality office space from multinational companies started to increase as well.

The most desirable size of the office in the market ranges between 250 sqm to 400 sqm and these office sizes are collecting better rentals from the market.Because of ongoing construction (Riyadh Metro Project) beside Olaya road, presently business owners prefer to have their office set ups beside King Fahad road, rather than Olaya road.

Anticipated Supply

Expected CompletionGLA (sqm)Project Name

2016800,000KAFD

2015230,000ITCC

201695,000Endowment Project

201670,000Majdoul Tower

Office


Market PerformanceOverall office rentals remained stable during 2014 with a slight decline in B class Office space in some areas of Riyadh. A general increase in demand of office space has been noticed during 2014 but because of over supplied market the effect of that increase in demand was not significant enough to be noticed. The vacancy rate varies between 15% to 20% and there will be an upward pressure on vacancy rate with the

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Dabbab Street King AbdullahRoad

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Office Rental Rates H2-2014 (Grade A & B Class)

H2-2014 Min H2-2014 Max

completion of new supply during 2015 & 2016.

Average H2 - 2014 rental prices varied across different districts of Riyadh from a low of SR 350 per sqm in southern part to a high of SR 1,200 per sqm in CBD in grade A & B+ offices.After a good market acceptance of business parks project in Riyadh it will be interesting to see how over supplied market will treat the mega project completed during 2014 like “Olaya Towers” and “king Abdulaziz Center for National Dialogue.

Office

Office Rental Rates (SR) H2 - 2014 (Grade A & B Class)


Area Min Max

Eastern Ring Road 550 750

Khurais Road 650 825

Sheik Hassan bin Hussain bin Ali Road

450 550

Khalid Bin Waleed Road

550 650

King Abdullah Road (East)

550 665

King Fahad Road (North)

750 900

Northern Ring Road 950 1,200

Anas bin Malik Road 550 750

Abu Bakr Siddique Road

550 650

Otman bin Affan Road

550 600

Olaya Road (North) 750 850

Al-Swaidi Al-Aam Road

380 450

Ayesha bint Abu Bakkar Road

380 450

King Fahad Road (Center)

700 925

Olaya Road (Center) 800 1,000

Prince Mohammad bin Abdul Aziz Road (Tahlia)

850 1,100

Oroba Street 700 850

Al Takhasusi Road 750 850

Dabbab Street 650 775

King Abdullah Road 750 850

Moosa Bin Naseer Road

650 750

Salah-U-Din Road Malaz

750 800

Al Hasa Road 650 750

Office Rental Rates - H2 2014 (Grade A & B Class) (SR/SQM)

Office Market Trends

Total Inventory(sqm) Vacancy Rate Y-T-D completed Stock

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Average Asking Rent (B Grade Offices in CBD)

2,400,000 15%-20% 150,000 SR 800

Market Trends

Office


Riyadh Retail MarketOverview


Riyadh Retail Market OverviewThe Capital`s Retail Real Estate Market witnessed a steady growth in the last six months of 2014. Century21Saudi observed that major expansions took place predominantely in the North of Riyadh.

The sector was driven by expansions from major hypermarkets such as Panda and Tamimi, opening of new malls, Nakheel Mall with GLA of 53,251 sqm and Tala Mall rebranded from China Mart). While Alia Plaza, Sahafa Center and Balancia Bazar are some of the significant additions to the strip retail centers. Lastly, expansions by major food chains were the key elements that triggered the sector’s growth.

Ongoing construction of “Riyadh Metro Project” is creating lot of traffic issues in CBD (Olaya and King Fahad Road) making these locations less desirable for retailer’s expansion. Also Century21Saudi witnessed some retailers moving from Olaya road to Takhassusi Street, Urubah Road, and King Abdulaziz Road.

SupplyThe H2 of 2014 ended with additions to the overall stock of retail area in Riyadh. New malls have been completed and opened to the public. The largest addition by area

was the Nakheel Mall with a gross leasable area (GLA) of 53,251 sqm followed by Tala Mall (rebranded from China Mart) with a GLA of 31,216 sqm. Alia Plaza is also another major completion of H2- 2014 with the total GLA of 49,475 sqm. These new completions offer a diverse blend of international brands and retailers which include anchor tenants, hypermarket, food court, family entertainment area and a big parking space.

Century21Saudi believes that the concept of traditional shopping malls in Riyadh has taken a new turn and the market has moved towards a new idea called Strip Retail Centers. Alia Plaza, Sahafa Center, Balancia Bazaar, Orchid Center are the new additions in strip retail centers in Riyadh.

The completion time of the two major projects (KAFD and ITCC) in Riyadh has been extended to 2015 - 16 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 million square meters. Some of the key & major projects under construction (such as Malaz Mall, The Boulevard, The Corner, Rekal Plaza, show a clear sign of growth and investment in the Riyadh Retail Market.

DemandCentury21Saudi observed that the most significant elements that triggered the retail sector in 2014 towards a steady pace are the vigorous economic conditions that contributed to the economic growth. The constant population growth rate and increase in disposable income among Saudis and Expats has kept the clock ticking in Riyadh Retail Market.

Projects Completed during 2014

GLA (sqm)Project Name

53,251Nakheel Mall

31,216Tala Mall

26,700Balancia Bazaar

12,060Khatwah Center

8,700Sahafa Center

45,366Alia Plaza

15,270Yasmeen Center

Retail


The changing life styles of Young Saudis boosted the Sector`s overall sales figures and is the most desirable sector especially in Riyadh.

As approximately 70% of the population is below the age of 30 years, they have brand awareness which makes them the prime target market for businesses in the retail sector.

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 centers.

Market PerformanceIn the second half of 2014 the rental values of the retail sector remained stable with an increase in the north side of Riyadh due to major expansions.

Average Rentals for traditional retail showrooms escalated by around 5% in different areas of the city. The shopping malls and strip retail center’s rentals witnessed an overall increase of 7% to 10% in different areas of the city. This increase was minimal in south of

the city while maximum in the north of Riyadh.

City wide vacancy rate during 2014 was around 10% to 15%. Although a large supply is expected to be in the market during 2015 - 16 but by seeing the retailer’s expansion trends and opening of news brands we can assume that the new supply will be absorbed in the market without any further pressure on vacancy rates. “Unified Real Estate” is the most active developer in the city for modern strip retail centers while “Panda” and “Tamimi Markets” are anchor tenants with most active expansion plans. “Danube” is also expanding their network while “The Farms” newly entered in Riyadh market with further expansion plan.

Median rental rates remained stable in most areas of the city, while a healthy increase in rentals have been witnessed in north and east of the city.

Rental rates of strip retail ranges between SR 900 per square meter to SR 2,000 per square meter in Northern areas of Riyadh.

Riyadh North and East will host most of the upcoming retail supply, while Western areas are lacking in good quality retail space.

Anticipated SupplyExpected CompletionGLA (sqm)Project Name

201649,048Malaz Mall

201530,000The Boulevard

20168,000The Corner20155,457Al Yarmouk Center201792,000Jardin Mall (Riyadh Park)2018250,000Al Diriyah Festival City Mall

Retail Market Trends

Current Retail Space (sqm) Vacancy Rate Future Supply

(2015-2016) (sqm)

Average per sqm Rents in Strip Retail

Centers

2,700,000 10% - 15% 500,000 SR 1000 – SR 2100

Market Trends

Retail

22 RIYADH REAL ESTATE MARKET OVERVIEWRetail

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

Min Max

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Riyadh East

Eastern Ring Road 900 1,200

Khurais Road 700 875

Dammam Road 700 1,100

Sheik Hassan bin Hussain bin Ali Road

650 800

Khalid Bin Waleed Road

800 1,000

Omar Bin Abdulaziz Road

900 1,100

King Abdullah Road 950 1,150

Imam Saud bin Abdul Aziz Road

750 900

Prince Bandar Bin Abdulaziz

650 750

Al Imam Asshafi Road 600 700

Riyadh West

Western Ring Road 675 900

Al-Wadi Road 575 700

Madina Al-Munawrah Road

900 1,050

Prince Mashal bin Abdul Aziz Road

575 750

Riyadh North

King Fahad Road 1,200 1,400

Northern Ring Road 1,100 1,350

Imam Saud bin Faisal Road

675 850

Anas bin Malik Road 850 1,050

King Abdul Aziz Road 950 1,100


725 1,100

Otman bin Affan Road 750 1,100

Al Khair Road 750 825

Olaya Road 900 1,500

Riyadh South

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


750 925

Riyadh Central

King Fahad Road 1,600 2,200

Olaya Road 1,850 2,100

Prince Mohammad bin Abdul Aziz Road (Tahlia)

2,000 2,400

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 1,450

King Abdullah Road 1,075 1,350

Makkah Road 1,100 1,500

Prince Sultan Street 1,300 1,600

Imam Saud bin Abdul Aziz Road

1,100 1,300

Moosa Bin Naseer Road 1,000 1,200

Salah-U-Din Road Malaz 975 1,100

Al Hasa Road 800 950

Al Nahda Road 900 1,100

Showroom Rental Rates - H2 2014 (SR/SQM)


Riyadh Hospitality MarketOverview


Riyadh Hospitality Market OverviewAs compared to other real estate sectors, KSA’s hospitality sector is continuously growing. During 2014, hotels occupancy rate was around 58% and is expected to remain stable over the next year. However, a slight decrease of 5% has been noted for Average Daily Rates (ADR) in Riyadh.

Based on recent reports, 17,135 rooms are under construction all over KSA out of which Riyadh holds 5,491 rooms with 32% share. Currently, Riyadh hold 5 % of total number of Furnished Apartment Units (FAU) and hotel rooms in KSA and a large number of hotels in 4 and 5 star classifications are under construction.

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. Saudi Commission for Tourism and Antiquities (SCTA) has announced plans to expand the hospitality sector, with a further 35,000 hotel rooms planned across the Kingdom over the next five years.

Supply

Century21Saudi witnessed a supply increase in the

hotel sector, however overall occupancy rates dropped slightly and average daily rates remain under downward pressure. Hotel supply was in a state of stability during 2013, however during 2014 the key additions in Riyadh were the opening of Holiday Inn Meydan and Hotel Kempenski (Burj Rafal; one of the tallest buildings in the city).

Additionally, in next three years around 3,500 rooms will enter the Capital’s hospitality market by well-known brands, includes Hilton, Ibis, Centro, and Radisson Blu etc.

Wyndham Hotel Group also announced the opening of “Super 8 hotel” with the addition of 57 keys located in Thumamah Road. However, Nobu Hotel, & Park Inn hotel are expected to open in 2015 by a valuable addition of 135, and 168 rooms respectively. Major ongoing projects like Gran Melia, Fairmont, Centro & Hayat Regency are delayed and will be expected to deliver by 2015 - 2016.

Demand

During the research, Century21Saudi observed that “A

recent report issued by the National Convention and Exhibition Program (NCEP) revealed that, there are 60 specialized companies planning to hold 226 trade exhibitions in 2015 in the Kingdom, 50% of which will be held in Riyadh. According to the report, 31% of exhibitions are scheduled to take place in hotels, thus these events will play a pivotal role in order to reshape the hospitality sector in Riyadh”. The Riyadh metro project, the mega investment in large-scale railway development to realize the Capital’s potential as a leading global transport hub. These investments in infrastructure are likely to boost the business tourism industry in Riyadh, which will directly have a positive impact on the hospitality industry.

Hospitality


Anticipated SupplyOpening YearNo. of RoomsName of Hotel

2015287Fairmont hotel

2015445Movenpick Riyadh

2015830Hilton Riyadh Hotel & Residence

2016218Intercontinental Hotel (KAFD)

2015135Nobu Riyadh

2015261Hayat Regency

2015168Park Inn2015160Centro Riyadh2015252Gran Melia2015281Aloft

Century21Saudi observed that the hotels occupancy

rate remained at around 58% during 2014. Although

there has been a slight decline compared to last year

but the overall outlook of the industry is expected to

remain stable over the next years.

We observed a slight decrease in ADR Five Star Hotels

i.e. SR 935 in 2014 as compared to last year which was SR 1,025. This caused a reduction in the overall RevPAR.

More than 720 new keys have been added during 2014, (Burj Rafal Hotel Kempinski with 349 rooms was the major openings of 2014).

Market Performance

20112012201320142015 (F)

56%

57%

58%

59%

60%

61%

62%

860880900920940960980

1,0001,0201,040

2011 2012 2013 2014 2015 (F)

Riyadh Hotel Occupancy Rates & ADR

ADR (SR) Occupancy Rate

Hospitality Market Trends

Total Inventory(Rooms) Occupancy Rate Supply in Pipeline

(Rooms)Average Daily Rate

(5 Star Hotels)

11,085 58% 5,000 – 7,200 SR 935

Market Trends

Hospitality


Riyadh Land Trading


In H2- 2014, total 24,748 transactions worth SR 37.4

billion have been done, with a decline of 8% when

compared to H2- 2013.

In the last quarter of 2014 (after implementation of 70%

loan to value restriction) the number of residential land

transactions reduced by 25% when compared Y-O-Y

bases with Q4- 2013.

Century21Saudi did not find any solid evidences to

support the rumors of price decline in the market. When

compared with H2 - 2014 the residential land prices

remained stable in most districts of Riyadh during second

half of the year without having any decline.

Residential Land

RESIDENTIAL LAND (H2- 2013 VS H2- 2014)No of Transactions

Change %20142013Month32%3,7512,564July

19%3,4772,816August8%5,1024,706September

-52%2,6914,100October-24%4,9606,174November-31%4,7676,260December-8%24,74826,620TOTAL

0

500

1000

1500

2000

2500

3000

3500

4000

Residential Land Sale Prices H2-2014 ( SR/Sq m)

Max Min

Lands


Area Min MaxRiyadh EastQurtaba 2200 2400Al Monisiyah 1700 2000Al Rimal 1450 1500Gharnada & Alshahda

2200 2600

Al Hamra 2350 2950Al Quds 2800 3200Al Yarmook 1800 2000Al Qadsiah 1600 1800Al Ma'eezlah 1250 1450Ishbiliah 2200 2400Al Nazeem 900 1100Al Janadriah 1100 1200Al Salaam 1800 2200Al Naseem (East) 1000 1400Al Naseem (West) 900 1100Al Manar 1600 2000Al Nahdha 1600 1900Al Sulai 1,300 1,600Al Jazira 1,400 1,800

Al Sa'adah 1,200 1,600Riyadh WestWadi Laban 1,700 2,200Al Mahdiah 800 1,000Al Hada 2,700 3,100Arqa 1,800 2,100Khuzami 3,300 3,800Nakheel 3,000 4,000Zahrah Laban 1,100 1,400Riyadh NorthAl Aarz 1,200 1,500Al Qeerwan 1,900 2,200Al Ghadeer 3,000 3,300Al Rabeeh 2,800 3,000Al Nada 2,200 2,400Al Nafal 2,100 2,500Al Wadi 2,200 2,500Al Yasmeen 2,200 2,500Al Sahafah 2,200 2,800Hiteen 3,000 3,800Al Aqeeq 2,500 2,700Al Mulqa 2,800 3,500

Dar Albaiza 900 1,100Al Aziziah 1,000 1,300Al Mansooriah 1,100 1,400Al Shifa 1,000 1,250Badr 900 1,100Ahad 700 900Al Marwah 800 1,200Shabra 1,100 1,500Al Swaidi 1,300 1,500Al Zahrah 1,300 1,600Al Areeja 900 1,200Al Badiah 1,100 1,400Taweeq 900 1,200Namar 750 950Al Hazm 1,000 1,300Al Hair 400 600Al Darehmiah 1,100 1,300Riyadh Center Al Olaya 2,400 3,000Al Mazar 2,700 3,500Al Marooj 2,500 3,000King Fahad 2,500 3,000Al Nazha 2,800 3,100Al Izdhar 2,500 3,000Al Ta'awun 2,400 3,000Al Museef 2,200 2,800Salahuddin 2,500 2,800Al Mursalat 2,800 3,000Al Sulaymania 2,500 3,200Al Warud 2,500 3,000Al Malaz 2,500 3,200Jarir 2,300 2,900Al Rahmaniyah 2,600 3,000Al Mohammadiyah 3,500 4,000Al Maghrazat 2,600 3,000

Area Min MaxRiyadh South

Lands

Average Sale Prices of Residential Lands H2-

2014 (SR/sq m)

RIYADH REAL ESTATE MARKET OVERVIEW 29Lands

In H2 - 2014, total 3,381 transactions worth SR 24.5

billion have been done, with a growth of 8% when

compared to H2 - 2014.

In the last quarter of 2014 (after implementation of 70%

loan to value restriction) the number of residential land

transactions reduced by 7% when compared Y-O-Y

bases with Q4- 2013.

Century21 did not find any solid evidences to support the

rumors of price decline in the market. When compared

with H1- 2014 the commercial land prices remained

stable in most districts of Riyadh during second half of

the year without having any decline.

Commercial Land

COMMERCIAL LAND (H2- 2013 VS H2- 2014)No of Transactions

Change %20142013Month71%571333July

10%342310August22%718587September-13%399456October-16%622743November6%729690December8%3,3813,119TOTAL

0

5,000

10,000

15,000

20,000

25,000

Commercial Land Sale Prices H2-2014 ( SR/Sq m)

Max Min

30 RIYADH REAL ESTATE MARKET OVERVIEWLands

Area Min MaxRiyadh EastEastern Ring Road 5,775 7,500Khurais Road 5,000 6,500Dammam Road 4,200 7,000Al shaik Jaber Alahmed Alsabah Road

3,675 4,200

Saad Bin Abdulrehman Road

4,200 4,725

King Abdullah Road 5,000 7,000Imam Saud bin Abdul Aziz Road

4,200 4,725

Hassan Bin Hussain Bin Ali Road

5,800 7,000

Riyadh WestWestern Ring Road 4,000 4,700Madina Al-Munawrah Road

4,160 4,680

Riyadh NorthKing Fahad Road 16,000 18,000Northern Ring Road 9,000 11,000Prince Saud bin Mohammad bin Muqrin Road

4,000 5,000

Anas bin Malik Road 6,800 7,500Prince Salman bin Abdul Aziz Road

6,500 7,500

King Abdul Aziz Road

7,000 8,000


5,000 6,500

Otman bin Affan Road

4,800 6,000

Al Khair Road 4,800 5,500Salboukh Road 1,100 1,700

Kharj Road 1,850 2,500Southern Ring Road 4,500 5,000Hamzah bin Abdul Mutlib Road

3,600 4,500


4,000 4,800

Riyadh Center King Fahad Road 17,000 22,000Olaya Road 13,000 15,000Prince Mohammad bin Abdul Aziz Road (Tahlia)

12,000 15,000

Oroba Street 8,000 10,000Al Takhasusi Road 7,500 9,000King Abdul Aziz Road

7,500 8,000

Dabbab Street 6,000 6,500King Abdullah Road 10,000 13,000Makkah Road 6,000 7,700Prince Sultan Street 5,500 6,000Imam Saud bin Abdul Aziz Road

5,500 6,500

Moosa Bin Naseer Road

4,800 5,500

Salah-U-Din Road Malaz

8,000 10,500

Al Hasa Road 4,900 5,500Al Nahda Road 4,100 5,000

Area Min MaxRiyadh South

Commercial Land Sale Prices H2-

2014 ( SR/Sq m)


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[email protected]

Mobile: 0555 177 076

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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.

riyadh real estate market overview h2- 2014 · reduction of sale prices and rentals of residential...

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