The ongoing mega-project announcements and improvements to government regulations are expected to boost demand for, and enhance the long-term performance of Riyadh real estate sector, highlights JLL’s Q1 market overview.
Reforms focused on increasing transparency, enhancing the logistics sector and improving the overall quality of living for Riyadh’s citizens are expected to accelerate the implementation of Vision 2030, it said.
Earlier in the year, the government announced a project of SR86 billion ($23 billion) to revamp public spaces in Riyadh, aiming to improve the quality of life for the city’s residents. King Salman Park will promote urban development with green spaces and will include recreational areas for the benefit of the communities and citizens in Riyadh. Along with government initiatives to boost home ownership, this is expected to promote demand for residential units in the long-run and promote Riyadh real estate sector as well.
In addition, the Saudi Arabian Ministry of Housing launched a rental price index aimed at enhancing market regulation and providing more transparency. This is expected to reflect positively on the Riyadh real estate sector as it could lead to an increase in the volume of transactions.
The kingdom’s National Industrial Development and Logistics Program (NIDLP), which aims to attract SR1.6 trillion of foreign investment by 2030 into various industries, is also expected to bode well for the commercial sector.
In Q1 demand for office space remained limited but is expected to rise in the long term as government initiatives encourage private sector participation in the economy. There is a particular focus on SMEs, which will boost demand for smaller, flexible office usage.
In the hotel sector, it is expected that the growing demand for domestic tourism and the kingdom’s continuous efforts to enhance the supporting infrastructure will positively reflect on Riyadh’s hotel performance. In Q1, the revenue per available room in Riyadh was the highest in comparison to other cities in the kingdom, although the ADRs, in general, have witnessed a significant decline.