When it comes to economic power in the Middle East, Saudi Arabia has a firm place on the top of the list. Between 2011 and 2014, Saudi Arabia’s GDP experienced tremendous growth. But, since the decrease in the price of oil in 2014, GDP was affected by more than one filed. One of those fields is the real estate sector, increasingly influenced by this economic decline. However, this was not necessarily a bad thing. Even though some short-term predictions were associated with a pessimistic attitude, on the long-term it turns out to be quite beneficial. Seeing the opportunity, the government felt the need to restructure the economic situation by bringing two “cards” into the play: The National Transformation Program and “Vision 2030”. They are tailored to minimize the economic dependence on the oil. Real Estate Trends in Riyadh are showing a long-term vision into future diversification.
2019 Real Estate Trends in Riyadh
Riyadh, the capital of Saudi Arabia, with a population of 6.5 million. Both the location and its economy are making it an attractive destination for business people. Not only for local businessmen and residents but for foreigners as well. Even though there was a slight decrease in the real estate market performance during the first quarter of the year, it doesn’t mean it is the following trend. The results, being the interesting mix of highs and lows, are promising. For those who need a residential sector, the prices are showing a decline. On the contrary, in the retail sector there is an increase, mostly in the prime locations. In spite of how it looks, a lot of people are showing interest. Mainly because it is possible to find appropriate estate whether you are looking to run a business, or you are looking for a place to live.
Office Real Estate Trends in Riyadh
Entrepreneurship and small-to-medium businesses are getting the necessary involvement in the economy. The government is encouraging this kind of economic growth which will lead to increased demand. Especially for the smaller, compact office spaces. It is a perfect opportunity for investors since it leads toward investment-driven economy instead of oil-driven. Which, all these years was the main orientation. Four Winds Saudi Arabia, among many other major companies, is a type of companies which follow trends and provide their services for incoming investors and entrepreneurs.
Following the recent trend, rents are going down in order to keep the competitiveness. On the other hand, it provides increasing interest in vacancies which will turn around and back in the coming years. A simple rule of estate market where you need to “catch” the right moment if you are starting your business. For the moment, 2019 year is the right year for this. The things are shifting in the long run and predictions look quite optimistic for business owners. However, prime locations, locations with excellent traffic accessibility, and others are already showing a slight increase in the second quarter of 2019.
Residential Real Estate Trends
The supply of the residential units is heading in the right direction. Over 7,000 residential units are delivered in the first quarter, and more than 50,000 are in the plan by the end of 2020. This is a perfect opportunity for younger people since most of those apartments and houses are convenient for them. Also, improvement plans include reorganization of public places, parks, other green spaces, and recreational areas. In general, everything that improves the quality of life. Saudi Arabia safe and affordable storage facilities are among many services available for future residents. It’s a definite prediction that the number of residents will most certainly increase in the long-run.
The prices of residential property, along with rental rates, are showing a small decline in the first two quarters. However, it is a plan to stimulate demand of the residential place through injection of fresh units in the real estate market. The expectations are such that with the government’s help the residential estate market performance will be corrected by 2020. Thus, providing more than enough time for future owners to decide where to invest.
Retails with technological trends
The retail space is a particularly interesting part of Riyadh. Even though a pretty large part of retail space is under construction, another category is emerging. The internet, as it is today, is becoming a very important part of the economy. The digital space provides the opportunity for any kind of e-commerce to evolve into something bigger. It helps overcome the “physical” part of owning a store and delivers more than one solutions for already existing retails. Last year, more than 50% of online users are engaging in some kind of online shopping. As for 2019, these numbers are going to grow.
The performance in this part of the market highly depends on the location and the quality of vacancies for renting. For those who plan to rent in prime locations, they can expect to pay more. On the other hand, the price can be significantly lower in mall centers outside of the prime and popular locations. Furthermore, future government investment plans may easily lead to an increase in the popularity of less popular retails. Partially, because of the new residential owners to come, and partially because of the increased number of tourists.
Hotels facts and predictions
Saudi Arabia is truly a convenient ground for hotelier and tourism. In general, it is nothing new. However, with continuous planning for future development in these fields, the latest expectations are highly optimistic. In fact, predictions are that a new wave of quite large projects is in motion. Projects that will attract tourists from various places, and provide affordable options to the much wider specter of people.
The performance in hotels is going through a turbulent period. Even though the number of occupants is decreasing, the prices are showing a slight increase. In the short term, this is going to cause some minor problems with cost and demand balance. However, looking at the long-term prediction, demand will increase and positively reflect upon performance of hotelier services. Again, thanks to the government programs that tend to reorient economic situation in the kingdom, starting with real estate trends in Riyadh.
Lisa Roberts is a long-time real estate expert. For the past two decades, Jack has worked for a large real estate company and he is an expert when it comes to investing in rental real estate. Currently, he lives in Brooklyn with his stay at home wife and two daughters. On the weekends, he prefers to spend time with his family, since on workdays he works long hours. Jack’s plan is to invest in rental real estate and retire early.