Fragmented performance across Saudi Arabia’s real estate sector in Q1 2022
Saudi Arabia’s real estate sector has started the year with fragmented performance and activity levels across the Kingdom’s regions.
Looking at Saudi Arabia’s office sector figures, visitation to the workplace has since late September 2021 remained above its pre-pandemic baseline and now sits 19.7% above the baseline, with the majority of occupier activity continuing to be very much skewed towards Riyadh. As a result, we have seen average rents in Riyadh’s Grade A segment increase by 8.6% and Grade B rents by 6.0% in Q1 2022. These market fundamentals also mean that landlords are seldom offering incentives. In Jeddah, despite the lack of activity and with limited availability in the Grade A segment, Grade A rents rose by 10.8% in the first quarter, whereas Grade B rents continued to soften and fell by 4.3%. Grade A rents in Dammam and Khobar increased by 4.0% and 2.6% respectively, with Grade A rents in both locations now above their pre-pandemic levels.
Residential transaction volumes in Saudi Arabia fell by 23.4% in Q1 2022, compared to a year earlier, while the total value of transactions fell marginally by 1.9%. During this period, the number of transactions totaled 60,336 and the value of transactions reached SAR40.41 billion. In Riyadh, the total number of transactions in Q1 2022 fell by 21.6%, and it also fell in the Damam Metropolitan Area (DMA) by 31.8%. Jeddah on the other hand saw transactions volumes increase by 5.4% in the 12 months to Q1 2022. Over the same period, average apartment prices in Saudi Arabia have increased by 9.6%, with prices in Riyadh, Khobar, Dammam and Jeddah increasing by 13.2%, 11.3%, 9.6% and 4.5% respectively.
Looking at Saudi Arabia’s hospitality sector, the average occupancy rate in the first quarter increased by 23.4 percentage points compared to a year earlier. Over the same period, despite the ADR falling marginally by 0.3%, RevPAR, on average, increased by 66.2%. In the year to date to March 2022, compared to the sameperiodin2019,whilstoccupancy sits 2.3 percentage points lower, the ADR and average RevPAR increased by 12.0% and 7.8% respectively.
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