CBRE - Saudi Arabia Real Estate Market Review Q4 2022

February 6, 2023

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  • Saudi Arabia’s GDP has closed the year with an estimated growth of 7.9%.
  • In the year to Q3 2022 saw extended growths in Oil-related GDP by 14.2% and 6.0% for non-oil GDP.
  • Headline GDP is forecasted to sustain further growth in 2023 to a lesser extent by recording an increase of 2.5% in 2023.
  • Saudi Arabia’s Purchasing Managers’ Index (PMI) provided the highest score of the year in November of 58.5 before settling at 56.9 in December.
  • Upturns in Saudi and non-Saudi employments led to an annual increase of 14.8% in Total employment during the second half of 2022.
  • Office market in Saudi Arabia has maintained its improvements during Q4 2022 by establishing increases in Grade A rents across the major cities.
  • Riyadh’s Grade B achieved an annual increase of 1.5%, as Grade A offices average rents improved by 5.8%.
  • Jeddah’s Grade A office market has rallied during Q4 2022 by incurring a 7.4% growth year-on-year, as Grade B market persisted around the same level.
  • Within the Dammam Metropolitan Area (DMA), both Dammam and Khobar have recorded improvements in Grade A average rents by 7.9% and 6.2% respectively.
  • Grade B office market in DMA has remained stationary in terms of average rents without any changes.
  • Saudi Arabia’s residential transactions volume continued falling in the Q4 2022 with a 24.5% decline over the previous year.
  • To a similar extent, the number of mortgage contracts issued has diminished by 23.4%.
  • In terms of residential market performance, Saudi Arabia’s villas average prices performed better in Riyadh, Jeddah and Dammam during the fourth quarter with rises of 6.2%, 6.7% and 17.4%.
  • The latter months of 2022 witnessed less promising movement in terms of average apartment prices with Riyadh being the only city to muster a growth of 17.4%.  
  • Real estate in the industrial sector produced mixed results during Q4 2022. Warehouses average rents increased in Riyadh and Dammam by 3.7% and 6.1% each, while Jeddah and Khobar declined by 9.4% and 21% respectively.
  • In hospitality, Saudi Arabia sustained improvements through Q4 2022 across hospitality indices with 17.6% in occupancy rates, 17.9% in Average Daily Rate (ADR) and 67.2% in Revenue Per Average Room (RevPAR).
  • The fourth quarter of 2022 saw Riyadh and Madinah outperforming their pre-COVID benchmark for ADR and average occupancy rate.