Saudi Arabia’s real estate sector is booming with a rise in demand across key segments, including office spaces and residential properties. In its latest Saudi Arabia Real Estate Market Review Q2 2024, CBRE Middle East reveals that Riyadh’s residential market witnessed a 51.6 percent rise in sales transactions to 18,500.
In addition, Dammam experienced an annual growth of 22.4 percent with a total of 2,390 residential transactions. Meanwhile, Jeddah reported a notable year-on-year increase of 43.2 percent to 9,392 residential transactions.
Office segment flourishes
In addition to the surge in residential market sales, Riyadh witnessed increasing demand for quality spaces in the office sector as more international and local occupiers moved to the city. Rental averages have increased in prime, grade A, and grade B segments by 10.7 percent, 11.5 percent, and 14.6 percent year-on-year, respectively.
In terms of average occupancy rates, grade B office occupancy remained stable at 99.4 percent, while prime and grade A spaces saw respective upticks to 94.7 percent and full occupancy.
In Jeddah, average rental rates have improved in both Grade A and Grade B segments reaching 8.1 percent and 13.1 percent, respectively. Average occupancy in both grade A and grade B spaces also improved. The office market in Dammam also saw an increase in both market segments with Grade A and Grade B average rents increasing by 13.3 percent and 6.2 percent, respectively.
Apartment prices rise
Analyzing the residential market’s apartment segment, only Riyadh saw an increase in prices across the cities tracked by CBRE with average apartment price increasing by 6.6 percent. Average apartment prices, however, declined in Jeddah and Dammam by 0.9 percent and 0.6 percent, respectively.
In addition, the residential market’s villa segment in Riyadh and Jeddah registered annual expansions in average prices of 3.3 percent and 0.8 percent, respectively. Meanwhile, average villa prices in Dammam and Khobar contracted by 0.4 percent and 1.2 percent, respectively.
“Whilst we are seeing strong levels of activity within Saudi Arabia’s real estate market, which in turn is bolstering rental and price performance in the vast majority of market segments, the lack of available quality stock is somewhat hampering the potential of the market,” stated Taimur Khan, head of research, MENA in Dubai.
Read: Abu Dhabi’s residential rental contracts surge 102 percent to 49,135 in H1 2024
Industrial sector’s designated area expands
In Saudi Arabia’s industrial and logistics sector, the total area designated for logistical services within MODON rose to 4.8 million square meters in Q2. This falls under the National Industrial Development and Logistics Program’s efforts to attract both local and foreign investments to the sector.
In terms of rental performance, average rents rose in Riyadh by 2.8 percent year-on-year. Average rents in Khobar and Dammam witnessed an annual drop over the same period by 2.6 percent and 0.7 percent, respectively. In the year to Q2 2024, Jeddah’s average rent saw a yearly increase of 2.3 percent.
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