A specialized real estate report predicts that the supply of residential units in Riyadh will remain stable over the next three years, with 77,000 units expected to be completed (an average of 26,000 units per year).
Sales prices for apartments and villas in Riyadh fell by 3 % during the second quarter of 2017 compared to the same period the previous year, according to the Riyadh Real Estate Market Performance Report issued by JLL, a global real estate investment and consulting firm.
Inventory: 11,900 hotel rooms
The report noted that the overall trend for residential units remains discouraging over the 12-month period, as prices and rents are expected to see further declines. Regarding hotel rooms, “JLL” stated that Riyadh did not see the opening of any major hotels during the second quarter of 2017, and the total room inventory remained stable at 11,900 premium hotel rooms.
It added that the second quarter also saw no major openings in the serviced apartment sector; only the Bodel Airport project opened, adding approximately 160 serviced apartments during the second quarter, Approximately 1,900 rooms are expected to open during the second half of this year, including the Crowne Plaza ICT Complex, Centro Al Waha, and Fraser Suites projects in the serviced apartment market.
Decline in the Hospitality Sector
Regarding total supply by the end of 2019, the report states that the number of rooms could exceed 16,000, noting the possibility of further delays in project completion.
The company said that pressure on the hospitality sector in Riyadh continued during the second quarter of 2017, and performance remained weak compared to last year, with occupancy rates falling from 63 % to 59 % from the beginning of the year through May, while the average daily rate declined from 821 riyals to 724 riyals.
Macroeconomic factors, such as falling oil prices, have negatively impacted business activity in the capital, as the hospitality market in Riyadh remains heavily dependent on the government and institutional sectors.
3.8 million square meters of office space
It noted that the total inventory of office space currently stands at approximately 3.8 million square meters, noting that the second quarter of 2017 saw the completion of the Elegance Tower, which added 24,000 square meters near the intersection of the Northern Ring Road and King Fahd Road.
Smaller projects were also completed in the administrative space section of Granada Square, adding about 3,000 square meters.
The company said that the office space sector in Riyadh recorded a slight decline in performance during the second quarter, as the vacancy rate rose from 3 % to 16 % compared to the second quarter of 2016, while rents fell by 3 % from 1,272 to 1,240 riyals. The overall trend over the 12-month period remains weak, and market conditions are expected to continue favoring tenants.
