Real estate reports indicate that the residential sector saw an increase in supply and a decline in the number of real estate transactions this quarter, while the retail sector remained stable, and the office and hotel sectors saw slight growth, according to a report on the performance of the Riyadh real estate market during the third quarter of this year issued by JLL.

Residential Sector

In the third quarter of this year, the Riyadh market added 4,000 residential units to the current supply of 984,000 residential units. Despite the abundance of supply, the number of transactions and sales – according to Ministry of Justice statistics – fell by 10.1%. Experts attributed this to several factors, most notably mortgage regulations that curtailed real estate market activity, as well as rising prices and a shortage of supply suitable for those with limited incomes, This is in addition to the routine slowdown that accompanies the month of Ramadan and the period following it. In contrast, rental prices continued to rise across all sectors, as demand remains strong for residential units available for rent. and the market is expected to continue this performance through the end of 2016.

Office Sector

The office segment saw modest activity, as the two mega commercial projects (the Information and Communications Technology Park and the King Abdullah Financial District) continue to face delays, and neither is expected to provide additional supply before 2016, while the retail segment remained stable. Meanwhile, the hotel segment saw occupancy rates that remained relatively low, though the average daily rate recorded a year-over-year improvement of 31% through August, due to limited new supply.

Retail Sector

There was no significant change in rental rates recorded in the retail sector in the third quarter of this year, as no new retail projects were completed, leaving the total leasable area on offer at 1.4 million square meters. An additional 44,000 square meters of total leasable retail space is expected to be delivered in the fourth quarter of this year, but the opening of the retail sector to foreign investment is expected to boost future demand for retail space, as foreign retailers will now be allowed to own 100% of their businesses and companies.

Hotel Sector

The hotel sector saw marginal growth through August, with occupancy rates rising marginally by 1% to reach 60%, while the average daily rate improved by approximately 2% from last year through August, reaching $236, and the average revenue per available room improved by 3% to $140 for the same period.