Arab News, Saturday, Aug 27, 2022 | Muharram 29, 1444
KSA records 21% growth in residential real estate transactions in Q2: CBRE
Saudi Arabia: Saudi Arabia recorded
SR36 billion ($9.58 billion) worth of transactions in the residential real
estate sector in the second quarter of 2022, recording a 21.4 percent increase
over the same period last year, the latest market report by the global real
estate adviser CBRE revealed.
While the volumes of residential transactions fell
by 19.9 percent to over 44,000 deals in the second quarter when compared to last
year, the Kingdom saw the overall value of translations increase due to a spike
in apartment prices.
The average apartment prices, on a per square
meter basis, across the Kingdom have increased by 6.2 percent in the year to the
second quarter of 2022.
This was led by Saudi city Alkhobar which
recorded a growth of 11.3 percent in apartment prices, followed by Jeddah and
Riyadh with a spike of 5 percent and 4.2 percent, respectively, in prices in the
However, aside from Alkhobar, all major cities
registered a sharp decline in the annual rate of price growth in the second
quarter of 2022, compared to the quarter earlier, revealed CBRE’s Saudi Arabia
Real Estate Market Review Q2 2022 report.
In line with the national trend, all the major
cities saw a fall in the number of residential transactions in the year to the
second quarter, with the Kingdom’s capital leading the chart with over a 33
percent fall compared to a year earlier. Jeddah and Dammam followed suit with a
drop of 6.2 percent and 3.4 percent respectively.
While Saudi Arabia’s economy has gone from
strength to strength recently, analysts at CBRE said the Kingdom’s real estate
market performance remains “fragmented” on a city and asset class level.
“Given the scale of the change that the Kingdom
is undergoing across all asset classes, this is to be expected,” said Taimur
Khan, head of research – MENA at CBRE.
However, he said their long-term outlook on Saudi
Arabia’s real estate sector remains “optimistic,” despite some of the short-run
The CBRE report said visitation to the workplace
in Saudi Arabia remains above its pre-pandemic baseline and now sits 19.3
percent above the baseline.
But, the capital city Riyadh continues to remain
at the center of commercial activities, where demand continues to significantly
outstrip supply, it said.
Riyadh has had limited new supply over the years,
resulting in average rental prices and occupancy levels staying on the higher
side. According to the CBRE report, Riyadh saw occupancy levels rising over the
last quarter by 0.7 percentage points to reach 98.1 percent on average in the
second quarter of 2022.
“Constrained supply levels have also continued to
support growth in rental rates, where in the year to the second quarter of 2022,
average Grade A and Grade B rents increased by 3.9 percent and 4.2 percent
respectively,” the CBRE said in the report.
In Jeddah, with the Grade A segment of the market
being landlord-favored, it said average rents have increased by 2.4 percent in
the 12 months to June 2022.
Amid a massive push to develop the country's
tourism and hospitality sectors, Saudi Arabia saw all the key performance
indicators of hotels improving in the second quarter, with the average occupancy
rate in the year to date to June 2022 increasing by 19 percentage points.
This helped hotels improve their average daily
rates, which increased by 13.5 percent, resulting in their revenue per available
room seeing massive growth of 72.8 percent over the same period last year,
according to the CBRE report.