Retail may become the first sector in the Riyadh real estate market to recover, largely driven by the increased participation of women in the national economy, according to JLL’s new Q3 market overview report.
“The government’s agenda very much focuses on expanding the tourism and entertainment sector. As a result, government spending has increased in these areas, as shown by the launch of the entertainment company in September,” said Eng. Ibrahim Albuloushi, National Director and Country Head, JLL.
“Furthermore, while the development market has been subdued, there remains increased growth in investment across all real estate sectors. Two new REIT’s have been listed on the Saudi Arabian stock market during Q3, bringing up the total REIT’s listed to six. A number of these REIT’s are currently seeking to acquire additional properties in Saudi Arabia, which will aid in boosting the real estate sector,” he added.
According to JLL, the increased participation of Saudi women in the workforce – along with plans to permit them to drive beginning in 2018 – will likely increase their spending power and lead to more demand for retail space.
While total employment among Saudi females in Riyadh increased one percent quarter-on-quarter to nearly 397,000, unemployment remains high, at 28.5 percent.
Among expatriate women, employment levels remained unchanged Q-o-Q at nearly 105,000 workers, while unemployment increased 1.6 percent among expatriate women in Riyadh to nearly 5.5 percent in Q2 2017.
About 44,000 sqm of additional retail space were completed over Q3 2017, with the majority of this supply falling in the convenience, community and neighbourhood centre categories, which JLL says “marks a new trend in the market.”
By the end of the year, several additional notable completions are expected, including Elite (11,000 sqm) and Dheyafah (9,100 sqm).
The JLL report indicates that retail rents remained largely stable in Q3 2017, with rents declining marginally in both the community (-3 percent) and regional (-1 percent) sectors of the market. Given the large upcoming supply, vacancies are expected to increase over the course of the next year.
Retail sales, for their part, were on the rise, with data from the Saudi Arabian Monetary Authority (SAMA) showing a 32 percent year-to-date August increase in point of sales transactions, as well as a seven percent increase in the value of transactions over the course of the same time frame. According to JLL, the increase can be explained by a combination of public allowances reinstatement, summer holiday spending and rising competition among retailers.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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