Riyadh Real Estate Market Overview H2-2014

Transcription

1 Riyadh Real Estate Market Overview H2-2014

2 www. century21saudi.com

3 Riyadh Real Estate Market Overview H Research & Advisory Department

4 Message from General Manager 2014 was a vibrant year for KSA real estate sector. After a long debate, much awaited mortgage law is in implementation phase and we, at Century21Saudi are watching closely its impact on real estate market. Several mega projects in residential, commercial and hospitality sectors which were supposed to be completed in 2014 are delayed to -16. Much has changed over the last years in KSA real estate sector, since the inception of Century21Saudi. What has not changed though is our commitment to provide high quality real estate services to our valued clients. Our dedicated staff continually ensures that Century21Saudi stands heads above the rest with regard to the quality and value of our services. When it comes to service, value, convenience, and integrity, we want every client to have such a great experience with Century21Saudi that they include us in their preferred real estate partners list. This issue of Riyadh Real Estate Market Overview H will provide you a snapshot of real estate activities during We are confident that the report will enhance your knowledge, about city s real estate activities. As we look to the New Year() and beyond, we will continue to challenge the traditional business-as-usual model in the real estate industry and strive to create a better way to serve our customers. Finally, I want to thank each of our stakeholders for their tireless efforts and dedication that has helped Century21Saudi to be the best real estate partner of our clients. Al Waleed Bin Zoman General Manager

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6 Economy 6 RIYADH REAL ESTATE MARKET OVERVIEW KSA Economy - Overview The performance in 2014 came up at the lower end of expectations with a deficit of SR 54 billion despite comfortable level in both oil prices ($99.5 per barrel for Brent in 2014) and oil exports (year-to-october 7.1 million barrel per day). This first fiscal deficit since 2009 was mainly due to both falling revenues and rising expenditures. Total revenues slipped by over 9 percent compared to the previous year, yet remained above the SR1 trillion mark for the fourth year in a row. The growth in fiscal expenditures, at 12.7 percent, was the highest in the last three years, exceeding the SR 1 trillion mark for the first time. Preliminary economic data shows that 2014 was a healthy year for the economy with real GDP growth of 3.59 percent. Non-oil private sector maintained strong growth, at 5.7 percent year-onyear, with growth of construction, non-oil manufacturing, transport and communications sectors above 5 percent year-on-year. Elevated oil export revenues maintained a double digit current account surplus at 14.1 percent of GDP or $106.4 billion. to the overspending level in 2011 when spending. Revenue totaled SR 1,046 billion. It was 22 percent above the budgeted level, but 9.5 percent lower than their 2013 level. We estimated that the 2014 budget was based on a price for Saudi oil of $67 pb and production of 9.7 mbpd. Actual price of Saudi oil averaged $95.8pb in 2014, 8 percent lower than their level in 2013, but 43 percent higher than that used in the budget. Non-oil revenues were SR 115 billion, down around 5 percent on the 2013 total. KSA Budget ( ) 1, , , Expenditure amounted to SR 1,100 billion, 28.7 percent above the budgeted level and 12.7 percent higher than in The annual increase in 2014 was the highest since 2011 and compares to an average over the past two years of 8.7 percent. In nominal terms, the overspending amounted to SR 245 billion, second only SR (Billion) Year Revenue Expenditure Surplus/Deficit , , , ,046 1, ** All the numbers are in SR Billion

7 RIYADH REAL ESTATE MARKET OVERVIEW 7

8 Mortgage Law 8 RIYADH REAL ESTATE MARKET OVERVIEW KSA Mortgage Law In first quarter of 2013 the long-awaited mortgage law was circulated in order to cover several of the aspects particularly related with real estate mortgage. The mortgage law provides, among other things, a procedure for banks and others to become licensed to provide mortgage finance, and a maximum loan-to-value ratio of 70 per cent. The mortgage law comprised of Real Estate Financing Law Supervision of Finance Companies Law Financial Leasing Law Real Estate Mortgage Law Enforcement Law Rather than one law, what was approved is a package of five laws that will not only outline enforcement of mortgage contracts, but also cover mortgage registration and real estate financing companies. The Real Estate Refinancing Corporation may repurchase any of its debt securities at any time. The Real Estate Refinancing Company may obtain the written approval of SAMA, and the Capital Market Authority, prior to issue any financial derivatives. No one will be allowed to carry out any finance activity without a license from SAMA in accordance with the law and this regulation. The finance Companies will only be engage in activities for which it has been licensed and which are permitted by the finance laws and their regulations. Minimum paid up capital of the Finance Companies to carry out real estate finance activities will be SR 500 million. It was expected that implementation of mortgage law will stabilize the market in long run while it will take some time before the full benefits of the mortgage law are realized and that the initial impact will perhaps not be that significant. As per Century21Saudi expert s opinion it will take 1 to 2 years to test the effects of mortgage law on local market. The License shall be granted for a term of five years and may be renewed based on a request by the finance company. SAMA will charge SR 200,000 for issuing the license, SR 100,000 for license renewal, and SR 50,000 for any amendment in the license. Key Highlights SAMA will be in charge of regulating the sector and empower to carry out licensing the real estate finance companies and to encourage fair and effective competition between Real Estate finance companies. Real estate finance companies shall disclose in the annual reports the risks that can be hedged by insurance and how to deal with such risks. The minimum requirement for real estate funds will range from 10 million to 500 million, depending upon scope of business. As it was expected earlier that during initial phase the law will have some negative impacts on real estate market as the market needs some adjustments in order to implement the law properly. When compared with last quarter of 2013 Century21Saudi noticed a visible decline in the number of transactions

9 Mortgage Law RIYADH REAL ESTATE MARKET OVERVIEW 9 and value of transactions during the last quarter of the year When compared on Y-O-Y bases, in Riyadh the number of residential real estate transactions in 4th quarter reduced by 25% while the number of commercial real estate transactions reduced by 7%. In parallel, the values of residential real estate transactions in the 4th quarter reduced by 7% and commercial real estate reduced by 3% when compared Y-O-Y basses with the last quarter of The same effect has been noticed in the other major cities like Jeddah, Makkah, & Dammam/Al Khobar where the number and values of transactions reduced by a significant proportion. institutes, real estate developers, and investors. In parallel end users will also be benefitted as supply of new housing will increase in long term and more options will be available in the market to have mortgage services. The mortgage law is an obligatory step taken by the government to regularize the market. However, a proper implementation of the new regulations is critical; otherwise the market will not be fully benefited from its positive effects. Century21Saudi is watching the market very closely and will keep you posted on the developments through our regular market bulletins. It is expected that in the long term the mortgage law will have very positive impact on the market as the stabilize market will increase the level of trust for banks, financial

10 10 RIYADH REAL ESTATE MARKET OVERVIEW Riyadh Residential Market Overview Riyadh Residential Market Overview

11 Residential RIYADH REAL ESTATE MARKET OVERVIEW 11 Riyadh Residential Market Overview Residential market is characterized by an imbalance of housing, particularly at the low- and middle-income segments. Although the government is taking some serious steps to provide affordable housing to its nationals but supply-demand gap seem to be persisting in medium to long run. Work is ongoing on affordable housing project in Riyadh, Saudi Arabian Parsons Limited (SAPL) is doing full construction supervision of all infrastructures and landscaping. Demand for housing is mainly driven by population growth coupled with reduction in average household size and upsurge in disposable income. It is expected that implementation of mortgage law will regularize the market and more financing options will be available for potential buyers which ultimately will encourage developers to deliver more units in the market. Supply Around 35,000 residential units have been delivered during 2014, with this addition Riyadh housing stock has reached around 975,000 units. Most of the supply was from small to medium size developers. North of Riyadh was hub of residential development activities during 2014 and west saw the least residential development activities. Project Name Sunset Project Ritaj Villas Manazil Al Qurtuba (Phase-2) Bayt Al Hurr Masharif Hills (Phase-1) No of Units Expected Completion 2016 Most of the projects which were scheduled to deliver in 2014 are delayed and expected to be completed in coming years. One of the major reasons behind this delay was unavailability of suitable labor force, as after government crackdown on illegal workers, most of the contracting firms started facing labor shortage issues. Although a couple of mega projects are in planning phase by key developers but Century21Saudi did not witness any major project announcement during Demand Young and fast growing population, rapid urbanization and rising personal income are driving the demand. It is very obvious that real demand lies in middle income class as sufficient supply is available for high end residential units for upper middle class and VIPs. Government is playing their part to reduce demandsupply gap in the middle income group by constructing 500,000 affordable houses for Saudi nationals. Mega infrastructure projects like Riyadh Metro is also creating a demand for additional housing for their contractors and sub-contractor s expatriates employees. 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - Residential Units Demand Supply Matrix F Supply Demand Difference 30,000 25,000 20,000 15,000 10,000 5,000 -

12 Residential 12 RIYADH REAL ESTATE MARKET OVERVIEW Market Performance Riyadh residential market witnessed a mix trend during In the first half of 2014 the market witnessed a steady rise in the sale prices and rental rates of residential units. In the second half of 2014 after the implementation of loan-to-value ratio of 70% Century21Saudi witnessed relatively slower activities in the market. Several rumors are in the market about the reduction of sale prices and rentals of residential units but we are unable to verify them through valid numbers. In parallel we saw stability in the prices and rental rates without any further reduction or escalation. Villas The median prices of villas have increased across most districts of Riyadh by an average of 4% during first half of 2014 while second half did not witness any further increase in the prices. As usual the increase was most significant in north of Riyadh including Al Yasmin District, Sahafa District, and Khuzami District. Rental rates of villas mostly remained stable throughout the year without any major change during H Mulqa, Al Yasmin, Sahafa at Northern side, Khuzami at Western side and Qurtaba & Ishbiliyah at Eastern side are the most alluring locations for villas. In these districts average sale price of a small size villa/duplex ranges between 1.4 million to 1.8 million Saudi Riyals. Average Sale prices of Villas ( sq m) (SR, 000) 2,000 5% 1,800 4% 1,600 1,400 3% 1,200 Villas Prices 1,000 2% Variation 800 1% % Qurtaba Al Yarmook Ishbiliah Wadi Laban Arqa Al Nada Al Yasmeen Al Mulqa Al Aziziah Al Shifa Al Swaidi Al Nazha Al Izdhar Al Ta'awun -1% Apartments As a preferred mode of accommodation for expatriates due to affordability concern apartment s sale prices and rental rates increased with moderate ratio across most districts of Riyadh during first half of When compared with H1-2014, during second half of the year rental rates of apartments remained stable in most of the districts without any further increase or decline. (H2-2013) Average Sale Prices (H2-2014) Average Sale Prices Difference between (H2-2013) & (H2-2014) Prices Apartment sale prices have moderate increasing trend in northern and eastern parts of Riyadh while in south the prices remained stable throughout the year. Median sale price of medium size apartment (130 sqm to 160 sqm) is around SR 385,000 in southern districts and around SR 550,000 at northern Riyadh.

13 Residential RIYADH REAL ESTATE MARKET OVERVIEW 13 Average Sale Prices of Apartments ( sq m) (SR) 1,000,000 7% 900,000 6% 800,000 5% 700,000 Apartments Prices 600, , ,000 4% 3% 2% Variation 300,000 1% 200, ,000 0% 0 Al Hamra Al Yarmook Ishbiliah Wadi Laban Al Hada Arqa Al Ghadeer Al Yasmeen Al Mulqa Dar Albaiza Al Aziziah Al Shifa Al Ta'awun Al Sulaymania -1% (H2-2013) Apartment Sale Price (H2-2014) Apartment Sale Price Difference between (H2-2013) & (H2-2014) Price 60,000 Average Annual Rents for Apartments ( sq m) (SR) 8% 7% 50,000 6% 40,000 5% Apartments Rents 30,000 4% 3% Variation 20,000 2% 1% 10,000 0% 0-1% (H2-2013) Apartment Rents (H2-2014) Apartment Rents Difference between (H2-2013) & (H2-2014) Rents Riyadh Compound Market After opening of several mega compounds during last two years the demand-supply gap reduced with a reasonable proportion. The newly open compounds in 2014, including Al Reem Compound & Bonita Demand for compound accommodation increased by 10% to 15% during The major demand drivers for the compounds are Riyadh Metro Project and other infrastructural projects. Village Compound received a good response from the market and enjoying a good occupancy rates. Nakhla Compound is also one of the major openings during 2014; the compound is partially opened for lease as the work is still ongoing for some phases of the compound. Al Bustan Compound is the most successful compound Residential units within compounds are presenting the highest stratum of residential rental market. Median rent of a medium size villa ranges between SR 185,000 to SR 250,000, while average rent of a two bedroom apartment ranges between SR 110,000 to SR 155,000 among the newly opened compound and offering a very high class living environment for expatriates. Residential Market Trends Total Inventory (Units) Supply in Pipeline (Units) 975, ,000 75,000 Average 3 Bed Apartment Sale Price (SR) SR 450,000 to SR 550,000 Average Villa/Duplex Sale Price (SR) SR 1m to SR 1.3m Market Trends

14 Residential 14 RIYADH REAL ESTATE MARKET OVERVIEW Average Annual Rents for Apartments ( sq m) (SR) Area Min Max Riyadh East Qurtaba 29,000 32,640 Al Monisiyah 26,000 30,000 Gharnada & Alshahda 30,000 32,000 Al Hamra 30,000 35,700 Al Nazeem 20,000 25,000 Al Janadriah 22,000 25,000 Al Naseem (East) 23,000 26,000 Al Naseem (West) 20,000 24,000 Al Nahdha 23,000 26,000 Riyadh West Wadi Laban 22,000 25,000 Nakheel 45,000 60,000 Raed 45,000 55,000 Riyadh North Al Nafal 30,000 35,000 Al Yasmeen 30,000 36,750 Al Sahafah 30,000 35,000 Al Aqeeq 33,000 36,000 Al Mulqa 30,000 41,600 Riyadh South Dar Albaiza 18,500 22,500 Al Aziziah 20,500 24,000 Al Shifa 21,000 25,500 Badr 21,000 24,000 Al Marwah 18,000 24,000 Shabra 22,000 25,000 Al Swaidi 23,000 25,750 Al Zahrah 22,000 25,000 Al Areeja 18,500 22,500 Al Badiah 20,000 25,000 Al Hazm 20,000 25,000 Al Darehmiah 21,000 24,000 Riyadh Centeral Al Marooj 30,000 40,000 Al Nazha 35,000 41,600 Al Izdhar 30,000 35,700 Al Ta'awun 30,000 39,140 Al Museef 29,000 34,000 Average Sale Prices of Apartments ( sq m) (SR) Area Min Max Riyadh East Qurtaba 650, ,000 Al Monisiyah 500, ,000 Ishbiliah 500, ,000 Riyadh West Wadi Laban 400, ,000 Nakheel 750, ,000 Zahrah Laban 475, ,000 Riyadh North Al Yasmeen 650, ,000 Hateen 550, ,000 Al Mulqa 600, ,000 Riyadh South Dar Albaiza 300, ,000 Al Aziziah 350, ,000 Badr 300, ,000 Riyadh Centeral Al Ta'awun 750, ,000 Average Sale prices of Villas ( sq m) (SR) Area Min Max Riyadh East Qurtaba 1,400,000 1,600,000 Al Monisiyah 1,350,000 1,550,000 Al Rimal 1,450,000 1,650,000 Gharnada 1,600,000 1,800,000 Al Hamra 1,650,000 1,950,000 Al Quds 1,600,000 1,900,000 Al Yarmook 1,450,000 1,650,000 Al Qadsiah 1,350,000 1,550,000 Al Ma'eezlah 1,300,000 1,500,000 Ishbiliah 1,450,000 1,750,000 Riyadh West Wadi Laban 1,350,000 1,550,000 Riyadh North Al Yasmeen 1,700,000 2,200,000 Al Sahafah 1,500,000 1,700,000 Al Mulqa 1,800,000 2,500,000 Riyadh South Dar Albaiza 950,000 1,150,000 Al Aziziah 1,150,000 1,350,000 Al Shifa 1,000,000 1,250,000 Al Swaidi 1,150,000 1,350,000 Al Badiah 1,200,000 1,450,000 Riyadh Centeral Al Nazha 1,600,000 1,850,000 Al Izdhar 1,500,000 1,700,000 Al Ta'awun 1,500,000 1,800,000

15 RIYADH REAL ESTATE MARKET OVERVIEW 15 Riyadh Office Market Overview

16 Office 16 RIYADH REAL ESTATE MARKET OVERVIEW Riyadh Office Market Overview Characterized by oversupply, office market in Riyadh remained a tenant s market during 2014 while landlords faced tough time to maintain healthy occupancy rate. Higher vacancy rate in the city is not only attributed to the oversupply, as most of the office buildings with higher vacancy rates are not addressing the tenants requirements of car parking, smart utilization of office space and security services properly. Buildings with smart design, sufficient car parking space, and security services are enjoying better occupancy rates. Because of slow construction work mega projects like King Abdullah Financial District, ITCC, and Endowment Project did not deliver any office space during 2014 and it is expected that none of these project will deliver any office space during. Generally office rentals remained stable throughout the year in different districts of Riyadh while Century21Saudi witnessed several properties where landlords decreased their rentals to improve their occupancy level. Supply Supply outpaced demand during Other than mega projects like Olaya Towers, and King Abdulaziz Center for National Dialogue, couple of B class office buildings has been completed during 2014, collectively delivered around 200,000 sqm of office space. With the addition of this new supply Riyadh total office stock reached to around 2.4 million square meters. One million square meter of new supply is due to come during -17, which will further depress the market. Demand Other than public sector, the companies working for Riyadh Metro Project and other infrastructure project as contractors and sub-contractors remained the main demand generators of office space during Reflecting continued improvements in the business environment during 2014, the demand for quality office space from multinational companies started to increase as well. The most desirable size of the office in the market ranges between 250 sqm to 400 sqm and these office sizes are collecting better rentals from the market. Because of ongoing construction (Riyadh Metro Project) beside Olaya road, presently business owners prefer to have their office set ups beside King Fahad road, rather than Olaya road. Anticipated Supply Project Name GLA (sqm) Expected Completion KAFD 800, ITCC Endowment Project Majdoul Tower 230,000 95,000 70,

17 Office RIYADH REAL ESTATE MARKET OVERVIEW 17 Market Performance Overall office rentals remained stable during 2014 with a slight decline in B class Office space in some areas of Riyadh. A general increase in demand of office space has been noticed during 2014 but because of over supplied market the effect of that increase in demand was not significant enough to be noticed. The vacancy rate varies between 15% to 20% and there will be an upward pressure on vacancy rate with the completion of new supply during & Average H rental prices varied across different districts of Riyadh from a low of SR 350 per sqm in southern part to a high of SR 1,200 per sqm in CBD in grade A & B+ offices. After a good market acceptance of business parks project in Riyadh it will be interesting to see how over supplied market will treat the mega project completed during 2014 like Olaya Towers and king Abdulaziz Center for National Dialogue. 1,400 Office Rental Rates Rates (SR) H (Grade A & B B Class) 1,200 1,000 Office Rents (SR) Eastern Ring Khurais Northern Ring King Fahad (Center) Olaya (Center) Tahlia Oroba Street Al Mathar Street Dabbab Street King Abdullah H Min H Max

18 Office 18 RIYADH REAL ESTATE MARKET OVERVIEW Office Rental Rates - H (Grade A & B Class) (SR/SQM) Area Min Max Eastern Ring Khurais Sheik Hassan bin Hussain bin Ali Khalid Bin Waleed King Abdullah (East) King Fahad (North) Northern Ring 950 1,200 Anas bin Malik Abu Bakr Siddique Otman bin Affan Olaya (North) Al-Swaidi Al-Aam Ayesha bint Abu Bakkar King Fahad (Center) Olaya (Center) 800 1,000 Prince Mohammad bin Abdul Aziz (Tahlia) 850 1,100 Oroba Street Al Takhasusi Dabbab Street King Abdullah Moosa Bin Naseer Salah-U-Din Malaz Al Hasa Office Market Trends Total Inventory (sqm) Vacancy Rate Y-T-D completed Stock (sqm) Average Asking Rent (B Grade Offices in CBD) 2,400,000 15%-20% 150,000 SR 800 Market Trends

19 RIYADH REAL ESTATE MARKET OVERVIEW Riyadh Retail Market Overview 19

20 Retail 20 RIYADH REAL ESTATE MARKET OVERVIEW Riyadh Retail Market Overview The Capital`s Retail Real Estate Market witnessed a steady growth in the last six months of Century21Saudi observed that major expansions took place predominantely in the North of Riyadh. The sector was driven by expansions from major hypermarkets such as Panda and Tamimi, opening of new malls, Nakheel Mall with GLA of 53,251 sqm and Tala Mall rebranded from China Mart). While Alia Plaza, Sahafa Center and Balancia Bazar are some of the significant additions to the strip retail centers. Lastly, expansions by major food chains were the key elements that triggered the sector s growth. Ongoing construction of Riyadh Metro Project is creating lot of traffic issues in CBD (Olaya and King Fahad ) making these locations less desirable for retailer s expansion. Also Century21Saudi witnessed some retailers moving from Olaya road to Takhassusi Street, Urubah, and King Abdulaziz. Projects Completed during 2014 Project Name GLA (sqm) Nakheel Mall 53,251 Tala Mall 31,216 Balancia Bazaar 26,700 Khatwah Center 12,060 Sahafa Center 8,700 Alia Plaza 45,366 Yasmeen Center 15,270 Supply The H2 of 2014 ended with additions to the overall stock of retail area in Riyadh. New malls have been completed and opened to the public. The largest addition by area was the Nakheel Mall with a gross leasable area (GLA) of 53,251 sqm followed by Tala Mall (rebranded from China Mart) with a GLA of 31,216 sqm. Alia Plaza is also another major completion of H with the total GLA of 49,475 sqm. These new completions offer a diverse blend of international brands and retailers which include anchor tenants, hypermarket, food court, family entertainment area and a big parking space. Century21Saudi believes that the concept of traditional shopping malls in Riyadh has taken a new turn and the market has moved towards a new idea called Strip Retail Centers. Alia Plaza, Sahafa Center, Balancia Bazaar, Orchid Center are the new additions in strip retail centers in Riyadh. The completion time of the two major projects (KAFD and ITCC) in Riyadh has been extended to - 16 or beyond. These delays have resulted in their retail components being pushed forward into the future years. The aforementioned projects will contribute around 150,000 square meter of retail space. This will take the total stock of retail space in Riyadh over 3 million square meters. Some of the key & major projects under construction (such as Malaz Mall, The Boulevard, The Corner, Rekal Plaza, show a clear sign of growth and investment in the Riyadh Retail Market. Demand Century21Saudi observed that the most significant elements that triggered the retail sector in 2014 towards a steady pace are the vigorous economic conditions that contributed to the economic growth. The constant population growth rate and increase in disposable income among Saudis and Expats has kept the clock ticking in Riyadh Retail Market.

21 Retail RIYADH REAL ESTATE MARKET OVERVIEW 21 Project Name Malaz Mall The Boulevard The Corner Al Yarmouk Center Jardin Mall (Riyadh Park) Al Diriyah Festival City Mall Anticipated Supply GLA (sqm) 49,048 30,000 8,000 5,457 92, ,000 Expected Completion The changing life styles of Young Saudis boosted the Sector`s overall sales figures and is the most desirable sector especially in Riyadh. As approximately 70% of the population is below the age of 30 years, they have brand awareness which makes them the prime target market for businesses in the retail sector. the city while maximum in the north of Riyadh. City wide vacancy rate during 2014 was around 10% to 15%. Although a large supply is expected to be in the market during - 16 but by seeing the retailer s expansion trends and opening of news brands we can assume that the new supply will be absorbed in the market without any further pressure on vacancy rates. The Retail Market has been galvanized through rapid expansions by Hyper Markets and Food Chains. Lastly, the demand for luxury and designer brands is on the rise in Riyadh and this has exhilarated the idea of strip retail centers. Market Performance In the second half of 2014 the rental values of the retail sector remained stable with an increase in the north side of Riyadh due to major expansions. Average Rentals for traditional retail showrooms escalated by around 5% in different areas of the city. The shopping malls and strip retail center s rentals witnessed an overall increase of 7% to 10% in different areas of the city. This increase was minimal in south of Unified Real Estate is the most active developer in the city for modern strip retail centers while Panda and Tamimi Markets are anchor tenants with most active expansion plans. Danube is also expanding their network while The Farms newly entered in Riyadh market with further expansion plan. Median rental rates remained stable in most areas of the city, while a healthy increase in rentals have been witnessed in north and east of the city. Rental rates of strip retail ranges between SR 900 per square meter to SR 2,000 per square meter in Northern areas of Riyadh. Riyadh North and East will host most of the upcoming retail supply, while Western areas are lacking in good quality retail space. Retail Market Trends Current Retail Space (sqm) Vacancy Rate Future Supply (-2016) (sqm) Average per sqm Rents in Strip Retail Centers 2,700,000 10% - 15% 500,000 SR 1000 SR 2100 Market Trends

22 22 Retail RIYADH REAL ESTATE MARKET OVERVIEW Showroom Rental Rates (SR/sqm) (Outside Malls) 2,500 2,000 1,500 1, Min Max Showroom Rental Rates - H (SR/SQM) Area Min Max Riyadh East Eastern Ring 900 1,200 Khurais Dammam 700 1,100 Sheik Hassan bin Hussain bin Ali Khalid Bin Waleed Omar Bin Abdulaziz , ,100 King Abdullah 950 1,150 Imam Saud bin Abdul Aziz Prince Bandar Bin Abdulaziz Al Imam Asshafi Riyadh West Western Ring Al-Wadi Madina Al-Munawrah Prince Mashal bin Abdul Aziz Riyadh North 900 1, King Fahad 1,200 1,400 Northern Ring 1,100 1,350 Imam Saud bin Faisal Anas bin Malik 850 1,050 King Abdul Aziz 950 1,100 Abu Bakr Siddique 725 1,100 Otman bin Affan 750 1,100 Al Khair Olaya 900 1,500 Riyadh South Kharj Al-Aziziyah Dirab Southern Ring An Nasr Al-Swaidi Al-Aam Hamzah bin Abdul Mutlib Ayesha bint Abu Bakkar Riyadh Central King Fahad 1,600 2,200 Olaya 1,850 2,100 Prince Mohammad bin Abdul Aziz (Tahlia) 2,000 2,400 Oroba Street 1,200 1,400 Al Takhasusi 1,000 1,300 King Abdul Aziz 1,300 1,500 Dabbab Street 1,300 1,450 King Abdullah 1,075 1,350 Makkah 1,100 1,500 Prince Sultan Street 1,300 1,600 Imam Saud bin Abdul Aziz 1,100 1,300 Moosa Bin Naseer 1,000 1,200 Salah-U-Din Malaz 975 1,100 Al Hasa Al Nahda 900 1,100

23 RIYADH REAL ESTATE MARKET OVERVIEW 23 Riyadh Hospitality Market Overview

24 Hospitality 24 RIYADH REAL ESTATE MARKET OVERVIEW Riyadh Hospitality Market Overview As compared to other real estate sectors, KSA s hospitality sector is continuously growing. During 2014, hotels occupancy rate was around 58% and is expected to remain stable over the next year. However, a slight decrease of 5% has been noted for Average Daily Rates (ADR) in Riyadh. Based on recent reports, 17,135 rooms are under construction all over KSA out of which Riyadh holds 5,491 rooms with 32% share. Currently, Riyadh hold 5 % of total number of Furnished Apartment Units (FAU) and hotel rooms in KSA and a large number of hotels in 4 and 5 star classifications are under construction. The initiatives being taken by the government including plans of airport expansion & developments to boost overall passenger capacity; this will significantly increase business travellers and the flow of domestic tourists. Saudi Commission for Tourism and Antiquities (SCTA) has announced plans to expand the hospitality sector, with a further 35,000 hotel rooms planned across the Kingdom over the next five years. Supply Century21Saudi witnessed a supply increase in the hotel sector, however overall occupancy rates dropped slightly and average daily rates remain under downward pressure. Hotel supply was in a state of stability during 2013, however during 2014 the key additions in Riyadh were the opening of Holiday Inn Meydan and Hotel Kempenski (Burj Rafal; one of the tallest buildings in the city). Additionally, in next three years around 3,500 rooms will enter the Capital s hospitality market by well-known brands, includes Hilton, Ibis, Centro, and Radisson Blu etc. Wyndham Hotel Group also announced the opening of Super 8 hotel with the addition of 57 keys located in Thumamah. However, Nobu Hotel, & Park Inn hotel are expected to open in by a valuable addition of 135, and 168 rooms respectively. Major ongoing projects like Gran Melia, Fairmont, Centro & Hayat Regency are delayed and will be expected to deliver by Demand During the research, Century21Saudi observed that A recent report issued by the National Convention and Exhibition Program (NCEP) revealed that, there are 60 specialized companies planning to hold 226 trade exhibitions in in the Kingdom, 50% of which will be held in Riyadh. According to the report, 31% of exhibitions are scheduled to take place in hotels, thus these events will play a pivotal role in order to reshape the hospitality sector in Riyadh. The Riyadh metro project, the mega investment in large-scale railway development to realize the Capital s potential as a leading global transport hub. These investments in infrastructure are likely to boost the business tourism industry in Riyadh, which will directly have a positive impact on the hospitality industry.

25 Hospitality RIYADH REAL ESTATE MARKET OVERVIEW 25 Name of Hotel Fairmont hotel Movenpick Riyadh Hilton Riyadh Hotel & Residence Intercontinental Hotel (KAFD) Nobu Riyadh Hayat Regency Park Inn Centro Riyadh Gran Melia Aloft Anticipated Supply No. of Rooms Opening Year 2016 Market Performance Century21Saudi observed that the hotels occupancy i.e. SR 935 in 2014 as compared to last year which was SR 1,025. This caused a reduction in the overall rate remained at around 58% during Although RevPAR. there has been a slight decline compared to last year but the overall outlook of the industry is expected to More than 720 new keys have been added during 2014, remain stable over the next years. (Burj Rafal Hotel Kempinski with 349 rooms was the major openings of 2014). We observed a slight decrease in ADR Five Star Hotels 1,040 1,020 1, Riyadh Hotel Occupancy Rates & ADR (F) 62% 61% 60% 59% 58% 57% 56% ADR (SR) Occupancy Rate Hospitality Market Trends Total Inventory (Rooms) Occupancy Rate Supply in Pipeline (Rooms) Average Daily Rate (5 Star Hotels) 11,085 58% 5,000 7,200 SR 935 Market Trends

26 26 RIYADH REAL ESTATE MARKET OVERVIEW Riyadh Land Trading

27 Lands RIYADH REAL ESTATE MARKET OVERVIEW 27 Residential Land In H2-2014, total 24,748 transactions worth SR 37.4 billion have been done, with a decline of 8% when compared to H In the last quarter of 2014 (after implementation of 70% loan to value restriction) the number of residential land transactions reduced by 25% when compared Y-O-Y bases with Q Century21Saudi did not find any solid evidences to support the rumors of price decline in the market. When compared with H the residential land prices remained stable in most districts of Riyadh during second half of the year without having any decline. Month July August September October November December TOTAL RESIDENTIAL LAND (H VS H2-2014) No of Transactions ,564 3,751 2,816 3,477 4,706 5,102 4,100 2,691 6,174 4,960 6,260 4,767 26,620 24,748 Change % 32% 19% 8% -52% -24% -31% -8% 4000 Residential Land Sale Prices H ( SR/Sq m) Max Min

28 Lands 28 RIYADH REAL ESTATE MARKET OVERVIEW Average Sale Prices of Residential Lands H (SR/sq m) Area Min Max Riyadh East Qurtaba Al Monisiyah Al Rimal Gharnada & Alshahda Al Hamra Al Quds Al Yarmook Al Qadsiah Al Ma'eezlah Ishbiliah Al Nazeem Al Janadriah Al Salaam Al Naseem (East) Al Naseem (West) Al Manar Al Nahdha Al Sulai 1,300 1,600 Al Jazira 1,400 1,800 Al Sa'adah 1,200 1,600 Riyadh West Wadi Laban 1,700 2,200 Al Mahdiah 800 1,000 Al Hada 2,700 3,100 Arqa 1,800 2,100 Khuzami 3,300 3,800 Nakheel 3,000 4,000 Zahrah Laban 1,100 1,400 Riyadh North Al Aarz 1,200 1,500 Al Qeerwan 1,900 2,200 Al Ghadeer 3,000 3,300 Al Rabeeh 2,800 3,000 Al Nada 2,200 2,400 Al Nafal 2,100 2,500 Al Wadi 2,200 2,500 Al Yasmeen 2,200 2,500 Al Sahafah 2,200 2,800 Hiteen 3,000 3,800 Al Aqeeq 2,500 2,700 Al Mulqa 2,800 3,500 Area Min Max Riyadh South Dar Albaiza 900 1,100 Al Aziziah 1,000 1,300 Al Mansooriah 1,100 1,400 Al Shifa 1,000 1,250 Badr 900 1,100 Ahad Al Marwah 800 1,200 Shabra 1,100 1,500 Al Swaidi 1,300 1,500 Al Zahrah 1,300 1,600 Al Areeja 900 1,200 Al Badiah 1,100 1,400 Taweeq 900 1,200 Namar Al Hazm 1,000 1,300 Al Hair Al Darehmiah 1,100 1,300 Riyadh Center Al Olaya 2,400 3,000 Al Mazar 2,700 3,500 Al Marooj 2,500 3,000 King Fahad 2,500 3,000 Al Nazha 2,800 3,100 Al Izdhar 2,500 3,000 Al Ta'awun 2,400 3,000 Al Museef 2,200 2,800 Salahuddin 2,500 2,800 Al Mursalat 2,800 3,000 Al Sulaymania 2,500 3,200 Al Warud 2,500 3,000 Al Malaz 2,500 3,200 Jarir 2,300 2,900 Al Rahmaniyah 2,600 3,000 Al Mohammadiyah 3,500 4,000 Al Maghrazat 2,600 3,000

29 Lands RIYADH REAL ESTATE MARKET OVERVIEW 29 Commercial Land In H2-2014, total 3,381 transactions worth SR 24.5 billion have been done, with a growth of 8% when compared to H In the last quarter of 2014 (after implementation of 70% loan to value restriction) the number of residential land transactions reduced by 7% when compared Y-O-Y bases with Q Century21 did not find any solid evidences to support the rumors of price decline in the market. When compared with H the commercial land prices remained stable in most districts of Riyadh during second half of the year without having any decline. Month July August September October November December TOTAL COMMERCIAL LAND (H VS H2-2014) No of Transactions ,119 3,381 Change % 71% 10% 22% -13% -16% 6% 8% 25,000 Commercial Land Sale Prices H ( SR/Sq m) 20,000 15,000 10,000 5,000 0 Max Min

30 30 Lands RIYADH REAL ESTATE MARKET OVERVIEW Commercial Land Sale Prices H ( SR/Sq m) Area Min Max Riyadh East Eastern Ring 5,775 7,500 Khurais 5,000 6,500 Dammam 4,200 7,000 Al shaik Jaber Alahmed Alsabah Saad Bin Abdulrehman 3,675 4,200 4,200 4,725 King Abdullah 5,000 7,000 Imam Saud bin Abdul Aziz Hassan Bin Hussain Bin Ali Riyadh West 4,200 4,725 5,800 7,000 Western Ring 4,000 4,700 Madina Al-Munawrah Riyadh North 4,160 4,680 King Fahad 16,000 18,000 Northern Ring 9,000 11,000 Prince Saud bin Mohammad bin Muqrin 4,000 5,000 Anas bin Malik 6,800 7,500 Prince Salman bin Abdul Aziz King Abdul Aziz Abu Bakr Siddique Otman bin Affan 6,500 7,500 7,000 8,000 5,000 6,500 4,800 6,000 Al Khair 4,800 5,500 Salboukh 1,100 1,700 Area Min Max Riyadh South Kharj 1,850 2,500 Southern Ring 4,500 5,000 Hamzah bin Abdul Mutlib Ayesha bint Abu Bakkar Riyadh Center 3,600 4,500 4,000 4,800 King Fahad 17,000 22,000 Olaya 13,000 15,000 Prince Mohammad bin Abdul Aziz (Tahlia) 12,000 15,000 Oroba Street 8,000 10,000 Al Takhasusi 7,500 9,000 King Abdul Aziz 7,500 8,000 Dabbab Street 6,000 6,500 King Abdullah 10,000 13,000 Makkah 6,000 7,700 Prince Sultan Street 5,500 6,000 Imam Saud bin Abdul Aziz Moosa Bin Naseer Salah-U-Din Malaz 5,500 6,500 4,800 5,500 8,000 10,500 Al Hasa 4,900 5,500 Al Nahda 4,100 5,000

31 RIYADH REAL ESTATE MARKET OVERVIEW 31 About Us Century21 is one of the most recognized name in Real Estate Market with approximately 7,600 independently owned and operated franchised brokerage offices in 71 countries and territories worldwide and represented by more than 112,000 real estate experts. Cenury21 Saudi is official representative of Century21 in the Kingdom of Saudi Arabia since 2005; specialized in Real Estate Evaluation (Appraisal), Marketing and Leasing Services, Real Estate Research & Advisory and Property Management. Century21 Saudi s Research & Advisory Department (CRA) has been established in 2009 and has a proven track record of providing a variety of research-based services to the business arena all over KSA market. Services: Equipped with highly qualified analysts & researchers, Century21 Saudi is capable of responding all major segments of Real Estate market (Residential, Commercial, Industrial and Hospitality) with professional decorum. Our offered services are: Feasibility Studies Highest and Best Use Studies Strategy & Planning Advisory Pricing Strategies Market Research Analysis Studies Development Solutions Site Assessment Market Forecast Real Estate Market Review Contacts For Assistance in development & marketing decisions please contact: Al Waleed Hamd Bin Zoman General Manager alwaleed@century21saudi.com Mobile: Eng. Alaa Al-Thagafi Deputy General Manager alaat@century21saudi.com Mobile: Asif Iqbal Head of Research and Advisory asif@century21saudi.com Mobile: Disclaimer In order to prepare this report, Century21 Saudi collected the data from outside sources as well as by survey of Century21 Saudi research team. Century21 Saudi is confident about the reliability of published data. However, we do not guarantee the completeness and accuracy of the data. This report is prepared for information only. The assessments and values articulated in this report are subject to change without any notice. Therefore, no investment decision should be made based on the information presented in this report. Century21 Saudi will not be responsible for any loss that may be sustained as a result of the information enclosed in this report.