Riyadh property market remains flat in Q3 as rents decline: JLL

Real estate market in Riyadh remained relatively subdued across all asset classes during the third quarter of 2018, property consultant JLL said in a recent report.

The residential market in the Saudi capital witnessed little change during the period as average rents and sale prices remained largely stable on a quarterly basis. However, a three percent decline was registered on an annual basis, stated the report.

JLL pointed out that the total supply of residential units had reached 1.29 million units by Q3, with a further 7,000 units expected over the last quarter of the year.

“While the upcoming supply pipeline consists of high-end projects, it is likely to see more affordable housing project announcements, in line with the Ministry of Housing’s drive to provide accommodation for all,” JLL said.

In the commercial property market, JLL said it saw a few small project completions, which left the total office gross leasable area (GLA) in Riyadh largely unchanged at around 4.1 million square meters.

“Office rents declined 4 percent on an annual basis and 3 percent quarter-on-quarter (QoQ) on the back of a slowdown in economic conditions and business activity. Business activity focused on consolidation rather than expansion, which saw vacancy rates remain flat at 8 percent,” the report added.

Riyadh’s retail rental rates continued to soften as vacancy rates increased to registered 15 percent across all mall types.

“This comes at a time when the retail market remains under pressure, with landlords now looking to promote the concept of ‘Shoppertainment’ to differentiate their products and maintain footfall,” said JLL in its report.

In the hospitality market, the property expert said the activity remained subdued as no new hotel rooms were delivered over the third quarter.