Riyadh apartment, villa rents drop 5% in Q1 2018

Rent prices of apartments and villas in Riyadh dropped by 5.1 percent year-on-year (YoY) in the first quarter of 2018, real estate consultancy JLL said in its latest report for the capitol city.

Meanwhile, selling prices for apartments and villas fell 3.2 percent YoY and 6 percent YoY, respectively in Q1.

The imposition of the value-added tax (VAT) and the tax levy on foreigners has forced many expats to repatriate family members and move into smaller apartments, the report added.

Saudi families may also seek smaller villas, as with time, many won’t need houses with a separate room for the driver, since women will be allowed to drive starting June 2018.

Applying the unified rent contracts might increase the ability to collect rent and promote demand for investing in residential assets across the Kingdom.

The report predicts strong demand on units in Sulaymaniah, Al-Wurud, Salah Al-Din and Al-Waha neighborhoods, where a New Central Park is set to be built after turning the old airport into Riyadh Central Park.
 

Residential supply in Riyadh increased by around 7,500 units to 1.26 million units in Q1, the report showed.

Future supply is predicted to reach 22,000 in 2018 and 29,000 units in 2019.

Office rent in Riyadh remained unchanged in Q1 compared to a year earlier, as it stood at SAR 1,298 per square-meter per year.

The administrative space market is expected to relatively remain stable in the short-term in Riyadh, after vacancies dropped to 9 percent in Q1 versus 15 percent in the same quarter last year.

The total office space is expected to reach 4 million square meters by the end of this year, the report said, adding that the most important upcoming office space project is King Abdullah Financial District, which has the capacity to be a game-changer.

As for retail market supply, Q1 didn’t witness major retail projects, reaching 2.1 million square-meters in Q1.

In the hospitality market, the total supply of Riyadh’s top hotel rooms reached 12.300 keys in Q1, with a capacity for 4.5 million guests per year.

Around 5,000 rooms are expected to enter the market by 2020, accounting for the number of rooms added in the last three years, which is set to boost competitiveness and curb price increase, the report said.

Future supply may see some delay, as more than 1,000 rooms are likely to be finished after 2020.

The average daily price per room in Riyadh reached $198 from the beginning of the year until the end of February, up 3 percent YoY.