Professional Documents
Culture Documents
Q1 2020
The property clock is a graphical tool developed by JLL to illustrate where a market sits within its individual rental cycle at a
point in time. These positions are not necessarily representative of investment or development market prospects. It is important
to recognize that markets move at different speeds depending on their maturity, size and economic conditions. Markets will not
always move in a clockwise direction, they might move backwards or remain at the same point in their cycle for extended periods.
The KSA Real Estate Market Q1 2020 The KSA Real Estate Market Q1 2020
Office Residential
Riyadh Riyadh
Y-o-Y
Grade A & B
4.4m 74K 7.5K 1.3m -6% -2%
Average Average
Total stock Expected Headline rents Completed stock in Total stock sale prices rental rates
deliveries across office space Q1 2020
in 9M
Jeddah Jeddah
Y-o-Y
Grade A & B
1.1m 49K 1.8K 827K
-7% -5%
sq m GLA
GLA
sq m GLA
Y-
-5% units units
Y-o-Y Y-o-Y
Average Average
Total stock Expected Headline rents Completed stock in Total stock sale prices rental rates
deliveries across office space Q1 2020
in 9M
The drop in oil prices combined with shifts in the work In the short-to-medium term, corporate demand is likely The delivery of residential units in both Riyadh and In the short-to-mid term, demand remains supported by
environment (towards remote working practices) has to focus on smaller, fitted out and shared units, with Jeddah remains active, as the government continues its the Sakani program and the various mortgage products
resulted in a slowdown in demand for office space. minimal capital requirements. More specifically, we see drive towards increasing homeownership in the Kingdom launched over the past couple of years. However, in light
activity in the co-working space as operators take to 60% by 2020 and 70% by 2030. of the current conditions and with no specific stimulus
This reflected on the performance of office spaces in advantage of the slowdown in rental rates and strong package in support of the residential market, we can
Riyadh and Jeddah, resulting in declines of 1%-5% across negotiating position. In Riyadh, a total of 7,500 units were delivered in Q1 2020. expect a slowdown in demand.
both Grade A and Grade B spaces. Meanwhile, in Jeddah, approximately 1,800 units were
To support and sustain the growth of the private sector, handed over in the same period.
To date, the Saudi economy remains reliant on oil as a the government announced two stimulus packages
contributor to overall GDP. Despite non-oil GDP rising amounting to SAR 120 billion. This is set to ensure As with other sectors of the market, residential projects in
4.3% in Q3 2019, the economy contracted by -0.5% as a business continuity and alleviate any risks to cash-flow. the supply pipeline and currently under construction are
result of oil output declines, according to the Saudi This comes as the government looks to increase the expected to witness delays in handover.
General Authority for Statistics (GSTAT). private sector’s contribution to GDP from 40% to 65%
(Saudi Vision 2030).
The KSA Real Estate Market Q1 2020 The KSA Real Estate Market Q1 2020
Retail Hospitality
Riyadh Riyadh YT Feb 2020
Occupancy
Rate 74%
RevPar’s
Total stock Expected Average rental rates Total stock Expected
deliveries in regional and deliveries USD131
in 9M 2020 community malls in 9M 2020
RevPar’s
Total stock Expected Average rental rates Total stock Expected USD89
deliveries in super regional deliveries
in 9M 2020 and regional malls in 9M 2020
While the retail sector enjoyed an uptick in performance By contrast, demand for retail-driven warehousing is As with other global markets, the hospitality industry in Meanwhile, in Jeddah occupancy rates in the YT Feb 2020
over the past year, particularly in the better quality retail expected to be active. This comes as restrictions on Saudi Arabia was negatively impacted by the imposed registered 58%, while ADR’s and RevPar’s registered SAR
centers incorporating various entertainment outlets, Q1 movement and trade have led to a shift in consumer travel restrictions. 577 (USD 154) and SAR 336 (USD 89)
2020 saw rental rates come under pressure. behavior, with online shopping (e-commerce) becoming respectively.
more popular. While YT February 2020 data shows healthy performance
In the short-to-medium term, and depending on the levels, these were quick to turn around as flight With the suspension of the Umrah season and uncertainty
gradual ease of lockdown and mobility, we might see a This aligns with some of the strategic goals of Visions 2030 suspensions only came into effect on March 15th. In around the Hajj pilgrimage (which begins in late July),
prolonged period of lower consumer appetite for (Financial Sector Development Programme), which aim to Riyadh, and compared to the same period last year, YT the performance of the tourism and hospitality market in
shopping in physical retail spaces out of health concerns. increase the proportion of online payments from a target Feb 2020 occupancy rates registered 74%, while average 2020 is likely to remain sluggish, particularly in Jeddah,
This also includes a limited appetite for socializing in of 28% in 2020, to 70% in 2030. daily room rates (ADR’s) and revenue per available room’s which is considered a transit city for pilgrimages to the
public spaces which could impact the F&B and (RevPar’s) recorded SAR 668 (USD 178) and SAR 494 (USD Holy Cities.
entertainment sectors. 131) respectively.
The KSA Real Estate Market Q1 2020 The KSA Real Estate Market Q1 2020
Definitions and methodology
Future Supply Retail
JLL estimates of future supply is updated on a quarterly basis and is based on primary research (physical Supply
inspections) and secondary research (discussions with developers). The future supply is reflective of projects The classification of retail centres is based on the Urban Land Institute (ULI) definition and based on
actively under construction. It excludes projects that have been announced, where ground works have not started. their Gross Leasable Area (GLA):
We remain cautious of the ability of some projects to meet their stated completion deadlines, with significant
delays in project delivery leading to a low materialization rate. Super Regional Malls have a GLA of above 90,000 sq m
Regional Malls have a GLA of 30,000 - 90,000 sq m
Office Community Malls have a GLA of 10,000 - 30,000 sq m
Supply Neighborhood Malls have a GLA of 3,000 - 10,000 sq m
The current supply of completed office GLA is based on a comprehensive list of office buildings that have been Convenience Malls have a GLA of less than 3,000 sq m
handed over for immediate occupation. This includes standalone office buildings and office space within mixed-use
buildings: The current supply of completed retail GLA is based on a comprehensive list of mall-based retail that have been
handed over for immediate occupation. Our project list excludes street retail and retail within mixed-use buildings.
• In Riyadh, the areas covered include: CBD, North and East Ring Roads, Khurais, Mazer, and
Sitteen Streets. Performance
• In Jeddah, the areas covered include: Prince Sultan, Tahlia, King Road, Ibrahim Al Jaffali, Average rents are based on estimates from the JLL Retail team. It reflects the rents across a basket of primary and
Amanah Street, Madinah, King Abdullah and Rawdah Streets. secondary retail centres. Primary and secondary retail centres are identified based on their turnover levels. Primary
Malls are the best performing malls with highest levels of turnover. Secondary Malls are the average performing
Performance malls with lower levels of turnover. Average rents represent the top open market net rent expected for a standard in
The weighted average rent (WAR) is based on estimates from the JLL Offices and Business Space team. It reflects line unit shop of 100 sq m in a basket of regional and super regional centres. Given the variation in rentals, we quote
the WAR across a basket of Grade A buildings in theCBD. percentage change for retail rents rather than actual figures. Vacancy rate is based on estimates from the JLL Retail
Grade A buildings are defined as high quality office spaces, well located, with good access to infrastructure (metro) team. It reflects the average rate across a basket of super regional and regional centres.
and amenities including F&B and retail.
The WAR of Grade A buildings represents the top open-market, net rent (exclusive of service charge and incentives) Hotels
for a new lease that could be expected for a notional office unit. Supply
Vacancy rate is based on estimates from the JLL Offices and Business Space team. It reflects the weighted average The current supply of hotel rooms is based on data from our quarterly surveys, reflecting hotel rooms that have been
rate across a basket of buildings. handed over for immediate occupation. Our project list includes all graded supply and includes serviced apartments
Residential Performance
Supply STR performance data is based on a monthly survey conducted by STR Global on a sample of international standard
The current supply of completed residential buildings is based on the National Housing Census 2010, and quarterly midscale and upscale hotels. Average Daily Rates (ADR) and Revenue Per Available Room (Rev Par) are the key
surveys of major projects and standalone developments in Riyadh and Jeddah. It is reflecting residential units that performance metrics.
have been handed over for immediate occupation. Our definition of residential units includes apartments and villas
Performance
Residential performance is based on two separate baskets, one for rental rates and the other for sale prices of villas
and apartments. The two baskets cover properties in selected locations across the cities.
Disclaimer: the Covid-19 pandemic has created a material uncertainty in real estate investment market performance.
Across MENA, there is considerable variation in the extent of the human tragedy implications unfolding and its
impact on economic activity, including the trajectory, duration and extent of these impacts on all real estate sectors.
With varying recent and ongoing policy response across the region and the mitigating implications differing by market
and sector, it is too early for us to provide a quantitative and robust assessment of value impact at 31st March, our
survey date. In this context, the JLL Q1 2020 real estate performance indices have been held at Q4 2019 values,
except where there has been sufficient evidence at sector and market level to make appropriate any reliable
adjustments to figures. We will talk to the evolution of the market throughout Q1 in our reporting and will be
continually monitoring market movements as the situation evolves, to inform our ongoing view of pricing. We will be
updating our forecasts, albeit these will be directional at this time, broadly reflecting any meaningful changes to the
underlying fundamentals. Please feel free to contact us if we can assist.
The KSA Real Estate Market Q1 2020 The KSA Real Estate Market Q1 2020
Jeddah Riyadh Al Khobar
Jameel Square South Tower, 17th Floor Level 21, Al Khobar Gate Tower
Level 2, Suite 209 Tawuniya Towers King Fahed Road
Tahliya & Andalus Streets Junction King Fahd Road Al Khobar 31952
PO Box 2091 PO Box 13547 PO Box 32348
Jeddah 8909 – 23326 Riyadh 11414 Saudi Arabia
Saudi Arabia Saudi Arabia Tel: +966 13 330 8401
Tel: +966 12 660 2555 Tel: +966 11 2180 303 Tel: +966 13 330 8402
Fax: +966 12 669 4030 Fax: +966 11 2180 308 Tel: +966 13 330 8403
For questions and enquiries about the KSA real estate market, please contact:
Shahd AlMehdar
Senior Research Analyst, KSA
shahd.almehdar@eu.jll.com
www.jll-mena.com