RAFAL records 88% hotel occupancy rate in Q1: CEO

Elias Abou Samra, CEO of RAFAL Real Estate Development Co.

RAFAL Real Estate Development Co. recorded an occupancy rate of nearly 88% in the first quarter of 2023, marking the highest level of demand for hotels, said CEO Elias Abou Samra.

The company's market value exceeds SAR 2 billion, Abou Samra told Argaam on the sidelines of the Saudi Housing Finance Conference hosted by Euromoney Saudi Arabia.

The top executive noted that RAFAL focuses its projects on Riyadh, due to burgeoning demand and population density in the region, adding that the company is implementing a number of projects this year.

The developer launched the Alegria project at a total cost of more than SAR 300 million in Al Narjis neighborhood this month, Abou Samra said, adding that the project includes 130 apartments and nearly 115 villas.

This is the first project in which apartments and villas are integrated in a homogeneous environment.

The CEO expected demand in Riyadh to drop to 80-75% in the third quarter as a result of travel and holidays, adding that the annual hotel occupancy rate is expected to reach 85%.

Asked about the impact of interest rates on the market, Abou Samra said the middle class and below were affected due to the dependence on housing subsidies, but the product worth more than SAR 2 million was not impacted due to the method of financing and not relying on housing subsidies.

The market is witnessing a rapid shift in demand for apartments, as the company recorded an 80% leap in demand and sales during the last two years.

The real estate market is witnessing a strong momentum for all sectors, especially office properties in Riyadh, due to the efforts of the Royal Commission in Riyadh City and the Public Investment Fund (PIF) to attract foreign offices.

Demand for rent increased, which led to pressure on real estate revenues. This, accordingly, contributed to raising prices.

The top executive expected that foreign ownership of real estate would cause a major change in the sector through the method of demand and type of product.

He indicated that RAFAL has two different products for the local market and foreigners, whether hotels or rental apartments, as demand for villas is currently in parallel with demand for apartments at 50%, compared to 80% for villas and 20% for apartments over the last five years.

Abu Samra indicated that RAFAL plans to list its shares on the Saudi market, and this may take place in three to five years.

He concluded that the developer first seeks to achieve sustainability in cash flows and dividends.