RIYADH: Saudi Arabia’s retail sector witnessed an increase in retail space and a strong recovery in domestic demand following the relaxation of COVID-19 restrictions in the first half of 2022, according to the head of global real estate services firm Jones Lang LaSalle.
The underlying demand for residential properties in Riyadh remains strong, and it is expected to continue to strengthen in the longer term as the government fuels its ambitious target to make the city one of the 10th largest in the world by 2030, said a senior JLL official.
In an exclusive interview with Arab News, Thierry Delvaux, CEO, Middle East, Africa and Turkey at JLL, said: “The real estate is reviving. Since the relaxation of the restrictions, we are seeing a greater movement of people.
“We are also seeing a comeback from firms that planned to open new offices.”
As a result, the demand for office real estate is rising — reflected in growing occupancy rates, which for Grade A buildings are nearly full, pointed out Delvaux.
Agreeing that the property market has reached the pre-pandemic level, the JLL CEO said: “The office rates are very high at the moment. And when it comes to rents, we are seeing significant growth.”
Demand for retail shops is also increasing. Delvaux said that retail centers are reporting high levels of footfall, especially malls.
Commenting on residential properties witnessing strong demand in Riyadh, Delvaux said: “Rents and prices for residential real estate in Riyadh is growing, and we are seeing single-digit growth for both.”
The northward trend is not just limited to Riyadh but also other major cities such as Jeddah.
“If you talk about Jeddah, we are seeing limited supply. Demand is growing, resulting in a significant impact on residential rents and prices,” added Delvaux.
Improving growth outlook
On the growth rate of the real estate market this year compared to last year, he said: “It depends from sector to sector.
“For example, the residential sector is seeing single-digit growth in terms of rents.
“Offices are also seeing very healthy rental growth due to higher demand levels and quite scarce supply for office space.”
The outlook for the Saudi real estate market in the second half of 2022 remains encouraging.
“In the short to medium term, we expect the population of Riyadh to grow in line with the Vision 2030 program to double its population and increase homeownership to 70 percent by 2030, suggesting that the demand will continue to grow.”
Riyadh aims to increase its residents from 7.5 million today to between 15 million and 20 million in 2030 under ambitious plans unveiled by Crown Prince Mohammed bin Salman at the Future Investment Initiative summit held in the Saudi capital last year.