Interest in quality Grade A floor space gathered pace in quarter three in Riyadh and Jeddah, according to JLL’s Q3 2021 Real Estate Market Overview report.
Demand for Grade A floor space was strongest from the government and banking sectors, with large floor spaces in northern Riyadh broadly being targeted. Grade B office rents in Riyadh and Jeddah, meanwhile, are expected to remain under downward pressure.
Enquiries in the capital were highest from the government and banking sectors in Q3
“There were signs that activity in Saudi Arabia picked up as summer holidays came to an end and travel restrictions eased,” said Khawar Khan, Head of Research for the Middle East, Africa & Turkey region at JLL. “This is positive news and shows that there is sustained growth in office demand, in particular for quality Grade A floor space in the major cities.”
Over the third quarter, Riyadh’s office market saw the delivery of 330,000m2 of office gross leasable area (GLA), increasing the capital’s total stock to 4.8 million square metres.
Over the third quarter, Riyadh’s office market saw the delivery of 330,000m2 of office gross leasable area (GLA)
An additional 170,000m2 and 2,000m2 of GLA is scheduled to be delivered in the final quarter of this year in Riyadh and Jeddah, respectively. The majority of this upcoming stock is Grade A floor space.
In the residential market, the delivery of units in both Riyadh and Jeddah continued apace in Q3 as the government made further progress in its aim to increase the percentage of Saudi families owning homes to 70% by 2030. In terms of performance, Riyadh’s residential prices registered an average annual increase of 5% for apartments and villas combined in Q3 2021. On the same basis, rents increased by 2%.
Jeddah saw the delivery of 132,000m2 of retail GLA in Q3
In retail, destinations in Q3 recorded an increase in footfall as the Saudi government began to ease restrictions on restaurants, cafes and cinemas. With the opening of Jeddah Park and other smaller retail centres, Jeddah saw the delivery of 132,000m2 of retail GLA in Q3. Over the same period, Riyadh saw the completion of 19,000m2.
The hospitality sector, meanwhile, saw no new projects completed in either city during the quarter. However, assuming no further delays, around 1,800 and 900 hotel keys are planned to be delivered in Riyadh and Jeddah, respectively, by the end of this year.