Real Estate
From The Report: Saudi Arabia 2013
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Having avoided the major boom and bust cycles of its Gulf neighbours, Saudi Arabia’s real estate sector is considered relatively stable. For several years, and certainly since the global financial crisis, the sector has been viewed as a safe haven for local capital; prices in the market have held firm and returns have been solid. With demographic trends and a solid economic base supporting a sustainable housing market, Riyadh and Jeddah remain strong, with rental prices growing between 8% and 15% in 2011, making these yields some of the highest in the world. Changing preferences among the under-30 segment, which makes up 60% of the local population, are reshaping the local housing market. At the same time, the government is attempting to energise the mortgage market with a new law offering legal guarantees and recourse for lenders. With greater confidence in foreclosure procedures, banks are also more likely to support the sector.

Articles from this Chapter

Overview

Meeting demand: Growing from a solid base, property developers must now address the housing shortage
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Having avoided the major boom and bust cycles of its Gulf neighbours, Saudi Arabia’s real estate sector is considered relatively stable. For several years, and certainly since the global financial crisis, the sector has been viewed as a safe haven for local capital. Prices in the market have held firm and returns have been solid. The reasons for this are not hard to discern. As the biggest market in the region with a growing economy and population, the demand across all segments of the sector has…

Analysis

Office space: High demand and strong prospects must be balanced out against supply
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Given the strong demand for housing in Saudi Arabia, other segments of the real estate market are often overlooked. However, as with the residential market, the fundamental demand conditions seem to favour growth across all segments of the market. While it has been a tough 24 months for the office sector, long-term development prospects look extremely healthy. Indeed, Saudi Arabia’s strong economy is one reason many analysts remain confident in the longer-term investment potential of commercial…

Analysis

An attractive alternative: There are opportunities on offer in the retail segment
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While most of the attention on Saudi Arabia’s property market focuses on the residential segment, the country’s retail real estate sector is quietly presenting itself as an attractive alternative. Indeed, many of the factors that have made the residential sector a widely discussed opportunity also apply to retail development. A burgeoning economy, favourable demographic growth projections and undersupply all suggest that retail investments in the Kingdom should offer handsome returns. Number…

Analysis

From the ground up: The new economic cities will provide housing and jobs
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The story of the Gulf over the last decade has been one of transformation, with skyscrapers developing so quickly that they appear like an apparition, whole neighbourhoods arising in a matter of years. The incredible boon and subsequent danger this trend has engendered for the regional real estate industry is well documented. However, it appears that the time for Saudi Arabia to shine has arrived. The Kingdom intends to seriously capitalise on its potential, with plans to build four new cities in…

Analysis

An underserved market: Making affordable housing attractive to investors
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One of the biggest domestic issues facing Saudi Arabia at the moment is the supply of affordable housing. It presents both a challenge and an opportunity. It is a challenge because the housing shortfall is substantial and shows little sign of diminishing, but it also presents an opportunity in that a whole new market can be created for developers providing a much needed supply of quality housing stock to the low- and middle-income segment of the market. To achieve this, the state is not only embarking…

Analysis

Industrial lead: Demand for warehousing services is on the rise
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Although little noted, the environment for industrial real estate has been improving rapidly over the last five years. While it is less glamorous than its residential and commercial cousins, warehousing and industrial real estate is set to be increasingly important for Saudi Arabia as the economy continues to grow and diversify. Logistics Growth Indeed, a GDP growth rate of 6.77% in 2011 alone should suggest that the demand for warehouse services in the country is on the rise. In 2011 exports of…