Riyadh property markets continue to soften, says JLL

Riyadh’s real estate market continued to soften in Q2 2017 amid weaker performance across the board, real estate consultancy JLL said in a recent report.

“The market overall experienced a general slowdown in Q2, with the government looking to boost the hospitality and retail sectors through promising policies,” Jamil Ghaznawi, director and country head, JLL, KSA, said.

The market sentiment is likely to improve in the second half of the year, on crucial changes in the government, and foreign investment through trade deals signed during the visit of US President Donald Trump.

Riyadh’s residential sector witnessed slight declines in rentals and sale prices in the second quarter. However, the housing ministry has inked deals with six private developers to build more units and address growing demand for affordable housing.

Another slight decline was experienced by the retail market in the same period.

Vacancies increased by 2 percent to 9 percent over the past year, while rents remained broadly unchanged.

Meanwhile, the number of the point of sale transactions jumped by 35 percent with their value growing by 7 percent year-on-year in the first four months of 2017.

Riyadh’s hotel sector saw no major openings in Q2, but the pipeline for the second half of the year remains strong with major scheduled openings inclusive of the Crowne Plaza ITCC, Centro Waha and the Fraser Suites.

Macro-economic factors including low-oil prices have negatively affected the business dynamics in the capital, as the Riyadh hospitality market remains highly dependent on the government and corporate segments.

“Generally, all sectors of the real estate market are now in the downturn stage of their market cycle, with rents and prices decreasing,” the report added.

Meanwhile, boosted by the reinstatement of benefits to public sector workers in Q1, retailers have continued their expansion plans. Saudi Company for Hardware (SACO), Manoushah Street and Jarir Bookstore have plans for adding stores in Riyadh.

Retail property owners continued with their expansion plans with a key focus on ‘shoppertainment.’ While some owners are looking to encourage their tenants to operate cinemas for children, others are enhancing common areas within malls as a way of attracting greater footfall.