Dammam is home to the King Salman Energy Park mega-development
The office market in Saudi Arabia’s Dammam Metropolitan Area (DMA) is likely to witness a positive long-term impact from the government’s efforts to diversify and develop high growth industries, according to real estate advisory JLL.
Among the projects are the King Salman Energy Park (Spark) being designed by Saudi Aramco. The project was inaugurated in December 2018, with the first phase expected to be complete in 2021.
“Megaprojects of this scale are shaping the future performance of Saudi Arabia’s overall real estate market, driving non-oil economic growth as part of Vision 2030,” said Dana Salbak, JLL MENA associate.
“The development of the new energy project is a major step towards increasing economic contribution from different sectors in the industrial and logistics hub of the kingdom,” she added.
Dammam is one of the largest single contributors to Saudi Arabia’s oil GDP, with diversification in the area a key to attracting foreign investment and creating development opportunities.
Spark, for its part, is expected to contribute SAR 22 billion ($5.86 billion) to the kingdom’s GDP by 2035 and to create job opportunities and demand for offices.
“The office market is a key real estate sector set to benefit from the large scale investments across the DMA,” Salbak added. “While rents remained under pressure in 2018 because of limited occupier demand this is expected to change in the long-term on the back of Vision 2030 and the government’s commitment to expanding key industrial sectors.”
With 80,000 sq m of gross leasable area over the next two years, rents are expected to remain under pressure.
Vacancy rates remained relatively stable in 2018, registering 31 percent at year-end.
According to JLL, rates are expected to increase further as the supply enters the market.