Real estate in Saudi Arabia has “blossomed,” and “further exponential growth” can be expected from the sector, according to the latest report from Knight Frank.
Noting that 2021 marked five years since the launch of Saudi Arabia’s Vision 2030, Faisal Durrani, partner and head of middle east research at Knight Frank said that the impact of the national agenda was reflected strongly in real estate in Saudi Arabia.
“What we’ve seen happen over the last five years has been nothing short of incredible,” Durrani said. “The lightning speed at which reforms are being implemented and the pace at which giga real estate projects are rising is just the tip of the iceberg.”
1.3 MILLION RESIDENTIAL UNITS TO BE ADDED TO REAL ESTATE IN SAUDI ARABIA
Nearly USD 1 trillion worth of projects were announced in infrastructure and real estate in Saudi Arabia during the period. It represents just a third of the total planned spending of USD 3.2 trillion, the report said. Projects include eight mega projects and super cities, such as Saudi’s USD 500 billion planned city NEOM, and a USD 20 billion Diriyah Gate neighbourhood in Riyadh.
Further, residential mortgages issued in the first half of the year grew 10x in number, as compared to H1 2016, the year in which Vision 2030 was launched. A total of 150,000 residential mortgages were issued in H1 2021, Durrani said.
In the same vein, the demand for advisory services for real estate in Saudi Arabia has also grown. Harmen de Jong, partner, real estate strategy and consulting at Knight Frank Saudi Arabia, said that the surge in residential mortgages correlated with increased demand for real estate advisory services, which have surpassed pre-pandemic levels in 2018 and 2019.
“We are beginning to see increased appetite from private sector real estate developers in the form of public-private-partnership initiatives with large scale government led projects. This is a key trend which will further support the realisation of Vision 2030,” de Jong added.
Prime office rates in Riyadh have also grown sufficiently to reach pre-pandemic levels, with growing demand, even though headline rents in national office markets were “clearly impacted” due to COVID-19, the report said.
Meanwhile, foreign business investment licenses reached record levels this year. In Q1 2021, newly issued foreign business investment licenses reached the highest number ever.
Real estate in Saudi Arabia will also see the completion of over 1.3 million residential units, more than 3 million square metres of new office space, and over 100,000 hotel keys, the report suggested.
Photo credit: https://www.constructionweekonline.com/business/266451-saudi-arabias-diriyah-is-the-jewel-of-the-kingdom
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