RIYADH: Saudi Arabia’s commercial real estate sector is witnessing a boom, according to a new report by the Royal Institution of Chartered Surveyors, as the Kingdom’s plans to diversify its economy continue to boost demand in the overall property market. .
This continues to defy the broader global macro narrative, as solid market conditions in the Middle East and Africa region continue to defy the global commercial property monitor, according to the firm’s Global Commercial Property Monitor.
Occupier and investor demand is on the rise across all sectors, with expectations of rental and capital value increases leading to a particularly enthusiastic response in Saudi Arabia, the UAE and Nigeria, the RICS report said.
The report found that 81 percent of respondents based in Saudi Arabia believe the market is bullish as the Kingdom is currently experiencing a boom in the real estate sector, driven by infrastructure, housing and entertainment.
As per the report, the overall commercial property occupier demand growth was down to 43 per cent from 60 per cent posted in the third quarter. But it also added that the figure matches the 43 per cent posted in the fourth quarter of 2021, reflecting a steady rate of strong growth over the past year.
“Like most sectors in the Ministry of Foreign Affairs, the firm’s trend is visible across all segments of the Saudi Arabian market, with office sector results being more positive than those in the retail and industrial sectors,” the RICS report said.
The report said that Saudi Arabia’s office sector registered a reading of 59 per cent, slightly lower than the 64 per cent recorded in the third quarter. It added that retail and industrial are still posting strong growth readings with 32 per cent and 38 per cent respectively.
The RICS report showed that international investment demand has picked up in the last three quarters, with all sectors witnessing a pick-up during this stretch. Going forward, it said Saudi Arabia attracted strong growth in foreign buyer interest in the fourth quarter, with a net balance of 49 percent.
Overall, the report’s findings highlight that the Saudi Arabian commercial property market, like its neighboring UAE, holds a firm foundation for future growth, even as it adapts to the global economic downturn.
The report further states that the UAE’s commercial property market also remains strong despite global challenges as nearly two-thirds of respondents feel that the market is growing. It added that during the fourth quarter of 2022, the growth in tenant demand in the UAE accelerated across all segments of the market.
The RICS report states that the outlook for the UAE’s commercial real estate market remains positive as 12-month capital value expectations continue to rise.