{"id":76777,"date":"2025-04-18T17:26:53","date_gmt":"2025-04-18T14:26:53","guid":{"rendered":"https:\/\/amlak.net.sa\/?p=76777"},"modified":"2025-11-25T22:39:07","modified_gmt":"2025-11-25T22:39:07","slug":"%d8%aa%d9%82%d8%b1%d9%8a%d8%b1-%d9%86%d8%b8%d8%b1%d8%a9-%d9%85%d8%aa%d9%81%d8%a7%d8%a6%d9%84%d8%a9-%d9%84%d9%82%d8%b7%d8%a7%d8%b9-%d8%a7%d9%84%d8%b9%d9%82%d8%a7%d8%b1%d8%a7%d8%aa-%d8%a7%d9%84%d8%aa","status":"publish","type":"post","link":"https:\/\/amlak.net.sa\/en\/76777\/","title":{"rendered":"Report: Saudi Arabia's commercial real estate outlook remains optimistic despite challenges"},"content":{"rendered":"

Between growth ambitions and growing pressures, the Commercial real estate<\/a><\/strong> In Saudi Arabia, the country's economy has attracted attention amid bets on domestic demand and tourism amid fears of oversupply and market volatility.<\/p>\n

The agency has shown \u201cS&P Global<\/a><\/strong>\u201d An optimistic outlook on the future Commercial real estate<\/a><\/strong> in Saudi Arabia in 2025 and 2026, based on strong catalysts, most notably population growth, increasing numbers of tourists, and changing consumption patterns. However, the agency did not fail to mention a number of challenges that may restrict the growth of the sector and affect the profitability of companies operating in the sector.<\/p>\n

Vision 2030 and Market Transformation<\/span><\/h4>\n

Saudi Arabia's commercial real estate sector is undergoing a fundamental transformation, driven by the Kingdom's Vision 2030 initiatives and diversification efforts, as well as an evolving consumer landscape that is witnessing a change in shopper preferences and trends, S&P Global said in its report.<\/p>\n

On the other hand, the report warned of challenges such as the risk of an oversupply of commercial space and the growth of new retail formats such as e-commerce, which could put pressure on rental prices and reduce the profitability of real estate owners, especially with the high capital expenditure required to develop new projects.<\/p>\n

Oil prices and the volatility of the global economy<\/span><\/h4>\n

Despite the general optimism, the agency warned that oil price fluctuations, global trade tensions, and geopolitical division could dampen the pace of government spending and negatively impact the growth of the non-oil economy, which could have a direct impact on the performance of the commercial real estate sector.<\/p>\n

According to the report, Saudi consumer behavior could be affected if oil prices decline, which could lead to a decline in consumer spending and market sentiment, something real estate developers should take into account when planning their new projects.<\/p>\n

High Costs Pressure Profitability<\/span><\/h4>\n

S&P confirmed that the development costs of commercial projects in Saudi Arabia are a real challenge, especially those related to large-scale retail centers, which could put pressure on the credit quality of real estate companies if they do not achieve expected rental yields.<\/p>\n

In addition to implementation risks, companies may face difficulties in controlling operating expenses and achieving satisfactory profit margins, especially in the face of increasing competition and changing consumer behavior.<\/p>\n

\u201cSenomy Centers under scrutiny<\/span><\/h4>\n

The report highlighted Sinomi Centers as a prime example of the challenges and opportunities facing developers in the Saudi market. The agency expects the company's capital expenditure to range between SAR 2.4-2.6 billion through 2025, as part of its expansion plan to increase its leasable area by 44% to 1.4 million square meters by 2027.<\/p>\n

The company is currently working on six projects, most notably Jewel Riyadh and Jewel Jeddah, which are expected to be completed by the end of 2025 or the beginning of 2026.<\/p>\n

S&P expects the EBITDA margin to improve to more than 70% by 2026, after the company's profitability was affected during the COVID-19 crisis (2020-2021) and declined in the following years due to higher costs and impairment of receivables.<\/p>\n

A look into the future: Efficiency and Adaptation<\/span><\/h4>\n

The agency confirmed that Sinomi Centers has begun taking steps to improve cost efficiency and control operating expenses through structural reforms, which could contribute to enhancing its profitability in the coming period.<\/p>\n

The report concluded by emphasizing that the sector has strong fundamentals to continue to grow, provided that the challenges are dealt with intelligently, especially in terms of changing consumer behavior, digital transformation in shopping patterns, and the risk of oversupply.<\/p>\n

 <\/p>","protected":false},"excerpt":{"rendered":"

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