Riyadh's real estate market continued to soften during the second quarter of 2017 with declines reported in the residential, office and retail sectors.
JLL's Q2 2017 Riyadh Real Estate Market report said that despite the slowdown, shopping centre owners remain positive and continued with expansion plans, with a sharp focus on ‘shoppertainment’.
While some owners are looking to encourage their tenants to operate cinemas for children, others are enhancing common areas within malls as a way of attracting greater footfall, JLL said.
“The market overall experienced a general slowdown in Q2, with the government looking to boost the hospitality and retail sectors through promising policies,” said MJamil Ghaznawi, country head, JLL, Saudi Arabia.
“With these crucial changes in the government, and foreign investment through trade deals signed during Trump’s historic visit, the market sentiment is likely to improve as we move into the second half of the year.”
The report said Riyadh's office sector witnessed completions including Elegance tower and Ghirnata Square, bringing the total office space up to 3.8 million sq m. With demand being limited, the office sector experienced increasing vacancies and a slight decline in rentals during Q2.
The residential sector experienced slight declines in both rentals and sale prices in Q2. However, the Ministry of Housing has collaborated with six private developers to increase the supply in order to address the growing demand for affordable housing.
The total stock of residential units in Riyadh stands at nearly 1,170,000 units, with the rate of supply expected to remain stable over the next three years, the report added.
JLL said the number of transacted apartments and villas fell by 19 percent and 41 percent respectively in Q2 compared to the same period in 2016. Marginal falls were recorded in both rents and sale prices in both the villa and apartment markets in Q2.
The report also showed that total mall based retail stock in Riyadh stands at nearly 1.7 million sq m, adding that projects delays are likely to affect at least one third of the proposed completions in the next three years.
The Riyadh retail market experienced a slight decline in Q2. Vacancies have increased 2 percent over the past 12 months to 9 percent, with a further increase in market wide vacancies expected over the next 12 months. Rents have remained largely unchanged over Q2.
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