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Riyadh leads Saudi Arabia’s real estate market boom: Registers 77% increase in sales transaction in Q1 2024

The average apartment prices in Riyadh, Dammam, and Khobar saw an increase of 8.4%, 0.9%, and 0.4% respectively, compared to the previous year

Riyadh leads Saudi Arabia’s real estate market boom: Registers 77% increase in sales transaction in Q1 2024

Saudi Arabia’s residential market continued on a path of sustained growth in Q1 2024, revealed a new report titled–Saudi Arabia real estate market review and outlook | Q1 2024’ by CBRE. In Riyadh, the number of sales transactions reached 23,900, marking a significant year-on-year increase of 77%, with a total value of $8.72 billion (SAR 32.7 billion). Jeddah also experienced a substantial rise in residential transactions, with a 92.9% increase to reach 14,400 transactions valued at $4.77 billion (SAR 17.9 billion). Dammam saw a year-on-year increase of 28.0% in the number of residential transactions, totalling 3,044 with a value of $881.1 million (SAR 3.3 billion).

The average prices of villas in Riyadh, Jeddah, and Khobar saw an increase of 3.6%, 0.2%, and 3.1%, respectively, reaching SAR 5,808, SAR 5,658, and SAR 3,626 per square metre. However, the average sales rate of villas experienced a slight decrease of 0.5% to reach SAR 3,573 per square metre by Q1 2024.

On the other hand, the average apartment prices in Riyadh, Dammam, and Khobar saw an increase of 8.4%, 0.9%, and 0.4% respectively, compared to the previous year. The average sales rates reached SAR 4,939, SAR 2,813, and SAR 3,397 per square metre in these cities. Conversely, average apartment prices in Jeddah decreased by 1.1% during the same period, reaching SAR 3,952 per square metre as of Q1 2024.

Taimur Khan, head of research MENA, shares, “Whilst we have seen strong performance across commercial sectors within Saudi Arabia in the recent past, something which continues to date, we are now beginning to see the residential sector also register a significant surge in demand. This is, in turn, underpinning performance in the sector.”

The office sector

During the first quarter of 2024, the office market in Riyadh witnessed significant transactions. Two leading global firms acquired 3,000 square meters in the King Abdullah Financial District and 22,000 square meters in Laysen Valley. These transactions reflect the ongoing trend of global firms establishing their presence in Saudi Arabia as part of an initiative. Additionally, the repurposing of commercial real estate continued in Q1 2024, with several developments converting retail space into office space to meet the strong demand. Looking ahead, key future developments such as Misk City and Diriyah Gate are expected to add approximately 380,000 square meters and 1,200,000 square meters, respectively.

Additionally, in the first quarter, there has been a slowdown in the rate of rental growth across all market segments. Prime rents in the occupier market increased by 14.5% year-on-year, reaching SAR 2,767 per square metre. Grade A rents also saw an 11.8% increase, reaching SAR 1,975 per square metre, while Grade B rents reached SAR 1,600 per square metre, a 10.3% increase from the previous year. The average occupancy rates for Prime, Grade A, and Grade B segments were 93.8%, 99.7%, and 99.4% respectively as of Q1 2024.

The hospitality sector

The Saudi hospitality sector has shown strong performance in the first quarter of the year, driven by high visitation rates. In 2023, the number of air passengers in the kingdom increased by 26.0% to 112 million, with international travellers growing by 46.0% to 61 million. A total of 27.4 million international visitors were recorded during this period, with nearly half of them being religious tourists.

From the year leading up to March 2024, the average occupancy rate saw a slight increase of 0.1 percentage point year-on-year. Additionally, the Average Daily Rate (ADR) rose by 11.8%, resulting in a 12.0% increase in the average Revenue per Available Room (RevPAR).