2 MESSAGE CENTURY21 SAUDI RIYADH Real Estate Market Overview Message from General Manager Century21Saudi is Saudi Arabia s largest real estate marketing and consultancy firm with five fully operational offices in different cities of KSA. We have long been engaged in business with customers all over KSA in real estate industry, including marketing, leasing, valuation, research, advisory and property management. We provide optimal solutions for all stages of real estate development - from initial feasibility to marketing and property management. 2015 marked the beginning of a significant change in real estate sector as Government took some important steps to regularize the real estate market. Implementation of 70% loan to value restriction for mortgage and announcement about land tax on white lands are the recent initiatives took by the government in this regard. Because of these new implementations the real estate market performed slowly during the first half of 2015 when compared Y-O-Y bases with 2014. The major reason behind the slow performance is the adjustment phase which the market is going through, as forecasted by Century21 Saudi. It is expected that the mortgage law and government initiative of land tax will impact the market positively in the long run and boost the real estate business. Al Waleed Binzouman General Manager During H1-2015 real estate prices generally remained stable in the market while a negative trend has been witnessed in some areas of Riyadh where per square meter prices went down by 3% to 5%. As part of our continued growth and strategy to exceed customer s expectations, Century21Saudi recently launched update version of our website. As a highly effective and convenient information platform, the website of Century21Saudi after the latest revision will play an even better role to meet your real estate needs. We really appreciate your continued support and help, and we will continue making greater efforts, sticking to our objectives, adhering to our faith, striving to make progress and support our clients through innovative services with our broad vision and pragmatic approach.
4 KSA MACROECONOMIC CENTURY21 SAUDI RIYADH Real Estate Market Overview KSA Macroeconomic Overview Economy performance in 2014 came up at the very low end of expectations with a deficit of SR54 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% 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% was the highest in the last three years, exceeding the SR1 trillion mark for the first time. During last couple of years, inflation in KSA has been stabilized at moderate level. In 2014, inflation was recorded at an average of 2.7% which reduced to 2.2% by June-2015. Expenditure for 2015 is budgeted at SR 860 billion while Revenue is at SR 715 billion. The current budget accounts for 89% of oil export/ revenue which still shows a dominating sector in spite of government efforts to diversify hydrocarbon based economy. Year Revenue Expenditure Surplus/Deficit Projected Actual Projected Actual Projected Actual 2011 540 1,110 580 804-40 206 2012 702 1,240 690 853 12 387 2013 829 1,131 820 925 9 206 2014 855 1,046 855 1,100 0-54.0 2015 715-860 - -145 **All the numbers are in SR Billion Government Revenues & Expenditures (2011-2015) 1,300 400 300 KSA Economic Profile 2013 2014 2015 F Nominal GDP (% Change) 4.8 1.1-2.3 Real GDP (% Change) 3.8 3.6 2.5 Inflation 3.5 2.7 2.6 GDP Per Capita ( SR) 93,221 91,421 86,771 SR ( Billion ) 975 650 325 0 2011 2012 2013 2014 2015 Budgeted 200 100 0-100 -200 Revenue Expenditure Surplus/Deficit KSA Demographic Profile 2013 2014 2015 F Population 29,195,895 30,770,375 31,800,000 Population Growth Rate 2.4% 2.5% Total Labor Force 10,997,856 11,600,424 Unemployment (Males) 12% 11.7%
CENTURY21 SAUDI RIYADH Real Estate Market Overview KSA MACROECONOMIC 5 KSA Macroeconomic Overview Oil Sector Overview H1 2015 Saudi Arabian crude production was up to 3.7% in Q2-2015 compared with the first quarter. The country continued its policy of protecting its oil market share by squeezing out high-cost producers via strong oil supply. Crude Oil Production in Saudi Arabia increased from 9,809 TB/D in Q1 2015 to 10,184 TB/D in Q2 2015.This raised up level of production is due to increasing domestic demand and a desire to hold market share. The drift in oil prices has influenced the pace of economic activity in Saudi Arabia. Activity has already slowed somewhat, and Century21 Saudi expect this trend to consolidate as the government trims the pace of capital spending. Non Oil Sector Overview H1 2015 The non-oil private sector grew by 3.3%. These figures confirm that construction, non-oil manufacturing, transport and communications, and wholesale and retail have shown marginal growth during H1-2015. Construction sector s growth was robust at 7.1% year-on-year. This is due to huge activity in building infrastructure, commercial and, increasingly residential projects. Non-oil manufacturing grew by 3.3% year-on-year, supported mainly by improved capacity and production levels for petrochemicals and plastic products. The wholesale and retail sector also recorded growth at 4.0% while growth in the finance sector was at 1.10%. NON Oil Sectors Construction Sector Non-Oil manufacturing Sector Finance Sector Whole Sale & Retail Sector Growth 7.1 % 3.3 % 1.10 % 4.0 % Market Trends
6 LAND TAX CENTURY21 SAUDI RIYADH Real Estate Market Overview Land Tax on Unused Urban Land in KSA The Concept & Idea The Unused Urban Land or a.k.a the White Land is a key driving force in meeting the growing housing demand in Kingdom of Saudi Arabia. In other words, these big land parcels can be used in order to meet the housing shortages for majority of Saudi nationals, who are currently residing in rented accommodation. Background story At the end of last Year, The International Monetary Fund (IMF) advised Saudi Arabia to implement a tax on vacant lands as a way to increase non-oil revenues. March 23, 2015 - a plan approved by Government of KSA to impose a tax on undeveloped land in urban areas Proposal submitted by: Newly formed Council for Economic and Development Affairs. Rate for the tax and the time frame for implementation not decided yet. The Council agreed that Ministry of Municipal and Rural Affairs will be in charge to issue the implementing regulations to control and organise the necessary mechanism to impose annual fees on such land that is located within the white urban scale. How this Tax will Impact? The introduction of such a tax will make the land trading market more regulated as sellers won t be able to hold the land for longer as they will be subject to tax. More supply of land in the market is most likely to impact the land prices and will trigger them down. The affordable housing project in the KSA market will get a big push in two ways: Firstly, more supply of Land in the market to build housing units. Secondly, cost of land is a major constraint in any construction project. Hence as a result of land tax, the land price is more likely to move downward. The new Tax will force the land owners to sell their respective land and this will increase the overall supply of land in the KSA market. The Demand & Supply will be narrowed down as increased supply will help to boost the current housing projects in pipeline and will provide room for new ones. This will also help to develop a more active real estate market in KSA as key property developers will actively get involve in starting new projects and hence increasing the overall real estate transactions by value and numbers. This will help to boost the new mortgage law being implemented as Banks will target the land owners and use their land as 30% equity to finance their mortgage. This will positively impact the banks business. Why there is a need for such a Tax? Fewer players trying to manipulate the KSA Land market i.e. vast areas of prime real estate being stockpiled by wealthy individuals and companies with no intention of developing the land but simply holding onto the land as a store of value and/or aiming to resell it at a profit. High demand for affordable housing is on the rise in KSA as more than half of citizens do not own their own homes, a high ratio for a rich country. Rising rents make it hard for even the middle class to afford housing; many Saudis do not meet qualifications for housing loans from banks. The New Mortgage law needs a strong push as this new Land tax regime will help to implement it in a better way both for the policy makers and financial institutions. Key Questions that need to be addressed: 1. How would you classify an unused land? What are the criteria? 2. Will there be minimum value criteria from which the tax would start to apply. Exempt value (if any) Taxable value 3. Will there be a time limit that will apply before tax is levied on the land owner?
Residential Market Overview
8 RESIDENTIAL CENTURY21 SAUDI RIYADH Real Estate Market Overview Riyadh Residential Market Overview Despite the rapid expansion of residential real estate market in KSA during the last year, the market is under supplied as the demand is constantly rising. Government estimates suggest that 60 percent of urban land in Riyadh is currently undeveloped; thus the development of these areas will definitely help to uplift the capital s housing crisis by increasing the stock of affordable housing. Ministry of Housing has announced 160 new housing projects across the Kingdom out of which Riyadh will contribute its maximum share by providing number of upcoming housing projects. Northern part of Riyadh is much active in terms of residential development activities as several residential developments of middle size are under progress especially at Al Malqa and Al Yasmeen districts. Earlier this year, Rafal Residence project by Rafal has announced the completion of concrete work on the top floor of 28 story building. This is another vertical residential project by Rafal Real Estate Development Co and will offer 172 luxurious residential apartments along with hotel suites. Another mega project Al Basateen is aggressively under construction and planning to deliver 900 villas in coming years. Currently, Phase 1 is under construction and will offer 61 villas at the initial stage. The project is strategically located beside King Khalid road (Northwest of Riyadh). 60% of Urban Land In Riyadh is Currently Undeveloped Supply Riyadh residential sector is being driven by small and medium sized developers and individuals as they are making around 80% of the supply. Century21Saudi has observed rapid development activities especially in the northern districts of the capital city. Several projects, including mega projects like Rafal Residence and Al Basateen project, are in different phases of development and will contribute some units to the supply in last quarter of 2015. Another dynamic product by Damac is in the pipeline by the name of Damac Esclusiva. Ewaan Global Residential Company has also initiated its first residential project in Riyadh which will offer around 300 villas mainly targeting upper middle class segment. Furthermore, there are numerous small developments in planning and execution phases, being developed by local developers and individuals which will help to bridge the gap between supply and demand. It is expected that under construction projects will deliver more than 2,500 units in coming six months. Riyadh Residential Projects Anticipated Supply Project Name No. of Units Expected Year of Completion Rafal Residence 172 2015 Masharif Hills (Phase-1) 169 2015 Illoura Villas 70 2015 Canary Villas 40 2015 Damac Esclusiva 216 2016 Al Jawan 300 2017 Antara Residential Complex 520 2016 Ritaj Residential Project 292 2015 Al Basateen 900 2020 Bayt ul Hurr 216 2015-16
CENTURY21 SAUDI RIYADH Real Estate Market Overview RESIDENTIAL 9 Demand Currently around 60% of Saudis living in Riyadh do not have their own houses due to higher population growth and hike in land prices. The rapid increase in population is the key element of rising demand especially in Riyadh residential market. Also among nationals, the living trend of joint families are now slowly ending up into nuclear families and thus putting more pressure on the demand for houses. Since the majority of Kingdom s population lies between the age of 25-30 years and marriages are occurring in a speedy ratio, therefore it gives a healthy push to demand in residential sector. Riyadh is contributing the second largest share of Saudi population (24.9%) which makes the residential sector as one of the most demanding in real estate market. 50% 38% 25% 13% 0% House Ownership Ratio in Riyadh Own Houses Rented Houses Employer Houses Other Houses Market Performance: When compared Y-O-Y bases with 2014, the residential real estate transactions have been reduced with a significant proportion during H1-2015, because of 70% loan to value restriction and new government announcement of Land Tax. Century21Saudi has observed that overall sale prices of residential units (villas/ apartments) have some negative trend as the prices went down by 5% to 12% in some areas of Riyadh. However, reduction in sales activities has given a push to rental market and rentals have been slightly increased between 5% to 7% in different areas of Riyadh. This rental increase has mainly been noted in apartments segment while villa rentals mostly remained unchanged during H1-2015. Apartments: Reduction in sales activities has slightly uplifted the rentals of mainly residential apartments. An increase of 3% to 5% in apartment rentals has been witnessed especially in northern and eastern districts of the capital while sale prices mostly remained unchanged as compared to 2014. Average rental rate of a 3 bedroom apartment varies between SR 40,000 to SR 50,000 per annum in the northern and eastern districts while SR 30,000 to 45,000 per annum in central Riyadh. Southern region of Riyadh is comparatively less desirable for living, here rental rates ranges between SR 16,000 to SR 24,000 per year. Villas: When compared with last year, the median prices of villas have seen a negative trend in some districts of Riyadh where the prices have gone down by 5% to 12% while prices remained stable in other districts with no upward trend.. Rental rates of Villas mostly remained stable in different districts of Riyadh. As Sahafa, Al Yasmin and Al Malqa districts in the northern side, while Ishbiliyah and Qurtabah districts at the eastern side are the most desirable locations for villas as mostly development progress has been noticed in these districts. Median sales price of an average sized villa/duplex in these districts ranges from SR 1.4 million to SR 1.8 million. No. of Units 70,000 52,500 35,000 17,500 0 Residential Units Demand Supply Matrix 2014 2015 2016 2017 2018 2019 2020 No. of Units 28,000 21,000 14,000 7,000 0 Supply Demand Difference
10 RESIDENTIAL CENTURY21 SAUDI RIYADH Real Estate Market Overview Average Sale Prices (SR) of Apartments (130-160 sqm) Area Min Max Riyadh East Qurtaba 600,000 700,000 Al Monisiyah 350,000 480,000 Ishbiliah 580,000 650,000 Riyadh West Wadi Laban 450,000 550,000 Nakheel 850,000 1,000,000 Zahrah Laban 725,000 850,000 Riyadh North Al Yasmeen 480,000 700,000 Hittin 550,000 850,000 Al Malqa 450,000 750,000 Riyadh South Dar Albaiza 250,000 400,000 Al Aziziah 350,000 450,000 Al Shifa 380,000 620,000 Riyadh Central Al Ta'awun 580,000 780,000 Average Sale prices (SR 000 ) of Villas (250-350 sqm) Area Min Max Riyadh East Qurtaba 1,900,000 2,300,000 Al Monisiyah 1,000,000 1,350,000 Al Rimal 1,000,000 1,250,000 Gharnada & Alshahda 1,300,000 1,500,000 Al Hamra 1,700,000 2,100,000 Ishbiliah 950,000 1,300,000 Riyadh West Wadi Laban 1,300,000 1,500,000 Riyadh North Al Yasmeen 1,700,000 2,000,000 Al Sahafah 950,000 1,200,000 Al Malqa 1,800,000 2,200,000 Riyadh South Al Aziziah 900,000 1,200,000 Al Shifa 950,000 1,250,000 Al Swaidi 1,000,000 1,300,000 Al Badiah 950,000 1,250,000 Riyadh Central Al Nazha 1,700,000 2,300,000 Al Izdhar 1,500,000 1,750,000 Al Ta'awun 1,750,000 1,900,000 Average Annual Rents (SR) for Apartments (130-160 sqm) Area Min Max Riyadh East Qurtaba 26,000 35,000 Al Monisiyah 25,000 30,000 Gharnada & Alshahda 30,000 35,000 Al Hamra 40,000 45,000 Al Nazeem 18,000 22,000 Al Naseem (East) 18,000 24,000 Al Naseem (West) 20,000 25,000 Al Nahdha 26,000 30,000 Riyadh West Wadi Laban 20,000 25,000 Nakheel 50,000 60,000 Raed 45,000 55,000 Riyadh North Al Nafal 55,000 65,000 Al Yasmeen 50,000 60,000 Al Sahafah 40,000 45,000 Al Aqeeq 39,000 42,000 Al Malqa 50,000 60,000 Riyadh South Dar Albaiza 18,000 20,000 Al Aziziah 20,000 25,000 Al Shifa 18,000 23,000 Badr 15,000 18,000 Al Marwah 20,000 22,000 Shabra 15,000 17,000 Al Swaidi 20,000 25,000 Al Zahrah 16,000 20,000 Al Areeja 15,000 18,000 Al Badiah 20,000 25,000 Al Hazm 16,000 20,000 Al Darehmiah 17,000 20,000 Riyadh Central Al Marooj 30,000 35,000 Al Nazha 35,000 40,000 Al Izdhar 38,000 45,000 Al Ta'awun 38,000 45,000 Al Museef 30,000 35,000
OFFICE Market Overview
12 OFFICE CENTURY21 SAUDI RIYADH Real Estate Market Overview Riyadh Office Market Overview Despite the brief recovery of rental rates in Riyadh office market during 2014 due to improved demand and delay in construction of mega projects, first half of 2015 saw a negative trend in office rentals. There are several underlying causes of this reduction but market oversupply will no doubt have major contribution along with ongoing construction of Riyadh Metro Project beside most of the major roads. A major decrease in office rental has been noticed beside Olaya road and King Fahad road as the CBD become less desirable area for the tenants looking for new office space, because of traffic issues created by ongoing construction work of Riyadh Metro Project. Supply Completion of some buildings in ITCC and some B grade office buildings added around 67,000 sqm in the office stock during first half of 2015. By considering the construction pace, it is expected that KAFD will not be able to deliver any office space during 2015. Other than mega projects like KAFD and ITCC some other high rise developments like Hamad Tower and Al Rajhi Tower will add considerable office space in the market. Demand Other than public sector, the companies working for Riyadh Metro Project and other infrastructure project as contractors and subcontractors remained the main demand generators of office space during 2015. Project Name Anticipated Supply GLA (sqm) Expected Completion KAFD 800,000 2016 ITCC 230,000 2015-16 Endowment Project 95,000 2016 Majdoul Tower 70,000 2016 Hamad Tower 31,000 2016 Government policy to diversify the oil based economy into non-oil sector growth is demand booster for office market. In the recent years, trend in banking sector to open new branches in newly developed retail centers is affecting the office space demand negatively.
CENTURY21 SAUDI RIYADH Real Estate Market Overview OFFICE 13 Market Performance Overall a decrease in office rental rates has been witnessed during H1-2015. The areas mainly affected by this negative trend are Olaya Road, King Fahad Road, Oroba Street, Takhasusi Road and South of Riyadh. The main reason behind this negative trend in CBD is ongoing construction of Riyadh Metro Project which created lot of traffic issues in peak morning and evening hours. This decrease in rentals ranges between 5% to 15% in different areas. Companies looking for new office space are mainly targeting north of Riyadh or moving along ring roads because of better and easy accessibility. During H1-2015 average rental rates varied across different districts of Riyadh and ranges between as low as SR 350 per sqm in southern part of Riyadh to as high as SR 1,100 in north of Riyadh. The average city rentals of B/B+ Class office buildings ranges between SR 550 to SR 850 per sqm. Prime A class office buildings are charging SR 1,700 per sqm without any decrease in rentals. 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 2015 & 2016. In parallel, office rentals in newly developed business gates and prime office towers like Kingdom and Al-Faisaliah remained stable with healthy occupancy. Office Rental Rates (H1-2015) - SR/Sqm Min Max 1,200 900 600 300 0 Eastern Ring Road Khurais Road Khalid Bin Waleed Road Northern Ring Road Anas bin Malik Road Ayesha bint Abu Bakkar Road King Fahad Road Olaya Road Tahlia Road Oroba Street Al Takhasusi Road Salah-U-Din Road Malaz
14 OFFICE CENTURY21 SAUDI RIYADH Real Estate Market Overview Office Rental Rates - H1-2015 (Grade B & B+ Class) (SR/sqm) Area Min Max Eastern Ring Road 650 750 Khurais Road 650 800 Sheik Hassan bin Hussain bin Ali Road 450 550 Khalid Bin Waleed Road 550 600 King Abdullah Road (East) 550 650 King Fahad Road (North) 750 850 Northern Ring Road 950 1,200 Anas bin Malik Road 550 700 Abu Bakr Siddique Road 550 650 Otman bin Affan Road 600 700 Olaya Road (North) 650 770 Al-Swaidi Al-Aam Road 380 450 Ayesha bint Abu Bakkar Road 350 400 King Fahad Road (Center) 900 1,150 Olaya Road (Center) 750 850 Prince Mohammad bin Abdul Aziz Road (Tahlia) 950 1,050 Oroba Street 750 850 Al Takhasusi Road 650 800 Dabbab Street 600 700 King Abdullah Road 700 800 Moosa Bin Naseer Road 650 700 Salah-U-Din Road Malaz 650 800 Al Hasa Road 550 650 Office Market Trends Total Inventory (sqm) Vacancy Rate Y-T-D completed Stock (sqm) Average Asking Rent (B Grade Offices in CBD) (SR/sqm) Total 2,950,000 15%-20% 65,000 850 Market Trends
Retail Market Overview
16 RETAIL CENTURY21 SAUDI RIYADH Real Estate Market Overview Riyadh Retail Market Overview Retail is top performing sector of Capital`s real estate Market because of steady growth we witnessed since last few years. Century21 Saudi observed that major expansions took place predominantely in the North of Riyadh where a lot of new retail malls are under construction with modern shopping concept. Retail growth is mainly driven by expansion plans from leading retailers, fast food chains, and fashion brands. Hyper Panda and Tamimi are expanding very aggressively while Danube is also increasing its presence in different areas of Riyadh. Ongoing construction of Riyadh Metro Project is creating lot of traffic issues in CBD (Olaya and King Fahad Road) making these location less desirable for retailer s expansion. Also, Century21 Saudi witnessed some retailers moving from Olaya road to Takhassusi Street, Urubah Road, and King Abdulaziz Road. Recently Completed Projects 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 During H1-2015 we witnessed several openings of community malls/ strip retail centers, Malqa Center and Telal Center are the two new openings of first half. Lot of high end retail projects are under development along Northern Ring Road in proximity of KAFD, Riyadh Park, Riyadh Walk, Nakheel Center and The Boulevard are some of the major upcoming developments. The concept of High End Retail Park is the idea retailers are going to test through these developments. By considering the retail market activity and pre booking status of these upcoming projects we can assume that this new supply will be easily absorbed in the market without creating any supply shock. The completion time of the two major projects (KAFD and ITCC) in Riyadh has been extended to 2016 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 3.2 million square meters. Demand High growth in discretionary spending along with growing young population are the key demand generators in retail sector. Retailers are fully aware of the market potential and are aggressively expanding to increase their presence to cover the market effectively. The constant population growth rate and increase in disposable income among Saudis and Expats has kept the box ticking in Retail Market. Project Name Anticipated Supply GLA (sqm) Expected Completion Malaz Mall 49,048 2016 The Boulevard 30,000 2015 The Corner 8,000 2016 Al Yarmouk Center 5,457 2015 Riyadh Park 92,000 2017 Al Diriyah Festival City Mall 250,000 2018 Khaleej Mall 43,028 2015 Al Makan Mall 23,357 2016 Al Hamra Mall 51,787 2015 Mall of Arabia 164,630 2018 Because of limited options of entertainment, fully air-conditioned shopping malls and hypermarkets have become the source of amusement and entertainment facilities for the residents and this factor is also playing a major role in increase the retail demand. 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 centres.
CENTURY21 SAUDI RIYADH Real Estate Market Overview RETAIL 17 Market Performance During H1-2015 the rental values of the retail sector remained stable with an increase in most areas of Riyadh. Average Rentals for traditional retail showrooms escalated by around 5% in different areas of the city. The shopping malls and strip retail centers rentals witnessed an overall increase of 5% to 10%. This increase was minimal in south of the city and beside Olaya and King Fahad Road while maximum in the north of Riyadh. City wide vacancy rate during H1-2015 was around 10%. Although a large supply is expected to be in the market during 2015-2016 but by seeing the retailer s expansion trends and opening of new brands we can assume that the new supply will be absorbed in the market without any further pressure on vacancy rates. Rental rates of community malls/strip retail centers ranges between SR 1,000 per square meter to SR 2,200 per square meter while regional and super regional malls are charging relatively higher rentals because of their elevated footfall. Northern Ring Road and Prince Turki Bin Abdulaziz Al Awal road are hosting most of the upcoming major retail developments. After completion of ongoing projects on these roads they will be transformed into major shopping hubs of Riyadh City. 2,400 Showroom Rental Rates (SR/sqm) (Outside Malls) 1,800 1,200 600 0 Eastern Ring Road Khurais Road Western Ring Road Madina Al-Munawrah Road King Fahad Road Northern Ring Road Olaya Road Tahlia Road Oroba Street Al Takhasusi Road Dabbab Street King Abdullah Road Makkah Road Prince Sultan Street Moosa Bin Naseer Road Salah-U-Din Road Malaz Al Hasa Road Al Nahda Road Min Max Retail Market Trends Current Retail Space (sqm) Vacancy Rate Future Supply (2015-2017) (sqm) Average per sqm Asking Rents in Modern Strip Retail Centers Total 2,850,000 10% 650,000 SR 1500 SR 2500 Market Trends
18 RETAIL CENTURY21 SAUDI RIYADH Real Estate Market Overview Retail Showrooms Rental Rates H1-2015 ( Line Shops -Outside Malls) - SR/Sq m Riyadh East Area Min Max Eastern Ring Road 1,000 1,200 Khurais Road 700 800 Dammam Road 1,000 1,300 Sheik Hassan bin Hussain bin Ali Road 700 850 Khalid Bin Waleed Road 1,000 1,300 Omar Bin Abdulaziz Road 950 1,200 King Abdullah Road 900 1,100 Imam Saud bin Abdul Aziz Road 750 900 Prince Bandar Bin Abdulaziz 650 750 Al Imam Asshafi Road 600 700 Riyadh West Western Ring Road 650 800 Al-Wadi Road 575 700 Madina Al-Munawrah Road 900 1,050 Prince Mashal bin Abdul Aziz Road Riyadh North 575 750 King Fahad Road 1,200 1,400 Northern Ring Road 1,100 1,350 Imam Saud bin Faisal Road 750 900 Anas bin Malik Road 900 1,200 King Abdul Aziz Road 1,100 1,400 Abu Bakr Siddique Road 900 1,100 Otman bin Affan Road 1,000 1,350 Al Khair Road 750 900 Olaya Road 900 1,200 Riyadh South Kharj Road 475 650 Al-Aziziyah Road 475 600 Dirab Road 450 500 Southern Ring Road 700 900 An Nasr Road 475 575 Al-Swaidi Al-Aam Road 525 600 Hamzah bin Abdul Mutlib Road 725 900 Ayesha bint Abu Bakkar Road 750 925 Riyadh Central Area Min Max King Fahad Road 1,500 2,200 Olaya Road 1,000 1,200 Prince Mohammad bin Abdul Aziz Road (Tahlia) 2,000 2,250 Oroba Street 1,200 1,400 Al Takhasusi Road 1,000 1,300 King Abdul Aziz Road 1,300 1,500 Dabbab Street 1,300 1,500 King Abdullah Road 1,200 1,500 Makkah Road 1,000 1,500 Prince Sultan Street 1,200 1,500 Imam Saud bin Abdul Aziz Road 1,000 1,200 Moosa Bin Naseer Road 1,000 1,200 Salah-U-Din Road Malaz 975 1,100 Al Hasa Road 850 1,000 Al Nahda Road 1,000 1,200
Hospitality Market Overview
20 HOSPITALITY CENTURY21 SAUDI RIYADH Real Estate Market Overview Riyadh Hospitality Market Overview Riyadh, the Capital City is a prime destination for business travellers & corporate tourism. Century21 Saudi witnessed that H1 2015 was a stable period for the hospitality sector. Although there were no major addition except Double Tree by Hilton but occupancy rate showed an upward trend and reached around 62% and is expected to remain stable over the remaining period of the year. 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. Hotels Delivered during H1-2015 Hotel Name No of Rooms Open Double Tree by Hilton 223 H1-2015 Branded Furnished Apartments Riyadh s branded furnished apartments sector is a key area for niche investment and expansion in the hospitality sector. Although the city is equipped with local furnished apartments across major districts but the market lacks major brand names. Marriott Executive Apartments are the only Branded and fully furnished apartments in the Capital. Hilton is currently developing a serviced apartment tower next to its Hilton Riyadh Hotel which is expected to enter the market by 2016. DAMAC Properties is currently developing its branded serviced residences called DAMAC Esclusiva which will enter in the market by 2016. (** Under-construction) Branded Furnished Apartments Hotel Name No of Apartments Marriott Executive Apartments 117 Hilton Residence Apartments 250** DAMAC Esclusiva -Branded Serviced Residences 100**
CENTURY21 SAUDI RIYADH Real Estate Market Overview HOSPITALITY 21 Supply Century21 Saudi witnessed a sluggish H1-2015 for hotel market supply. The Key addition during H1 2015 was Double Tree by Hilton. It added 223 keys and took the Capital s Hotel inventory to 11,308 keys. A major portion of supply is anticipated to be next year (2016). The upcoming additions in the Capital s hotel industry will be Nobu Hotel Riyadh with 134 keys. Upcoming Key Hotels in K.A.F.D Hotel Name No of Rooms Expected Completion Wyndham Hotel 210 2016 Indigo Intercontinental Hotel 225 2016 Riyadh Intercontinental Hotel 218 2016 The Inter-continental and Wyndham hotels in K.A.F.D. will add 653 keys. Also in the pipeline is Studio M Hotel (with 143 keys) by Waseel Properties and Millennium & Copthorne Hotels, which is to be located on King Fahd Road.
22 HOSPITALITY CENTURY21 SAUDI RIYADH Real Estate Market Overview Demand The Capital s financial hub and the new central business district will be the King Abdullah Financial District (K.A.F.D.). Century21 Saudi observed that major projects and expansions are around this area. During the research Century 21 Saudi observed that Major investments in infrastructure projects like K.A.F.D. and Riyadh Metro are the significant elements in boosting the business tourism industry in Riyadh, which will directly have a positive impact on the hospitality industry. The corporate sector was the driving force and also those travelling from different cities or countries to attend Exhibitions, Seminars & Conferences, which also attract local government officials and the private sector. Upcoming Key Hotels in Riyadh Hotel Name No of Rooms Expected Completion Studio M 145 2015 Le Meridien 231 2016 Nobu Hotel Riyadh 134 2016 Marriot Courtyard Hotel (Olaya) 229 2016 Swiss belhotel Riyadh 126 2016 Radisson Park Inn 168 2016 DAMAC TOWERS Paramount Hotel 215 2016 Al Faisaliah Resort & Spa 154 2016 Market Performance Century 21 Saudi observed that the hotels occupancy rate reached around 62% during H1 2015. The healthy occupancy is due to the increased corporate & business travel. As the market is becoming increasingly competitive it has put pressure on the hotel industry to offer more competitive rates. The average daily rate for a 5 star hotel is SAR 1,100 while for a 4 Star Hotel is SAR 700 respectively. The market outlook for the furnished apartments is promising and in high demand. The average rate for a one bedroom furnished apartment ranges between SAR 350 to SAR 450 depending upon the location. Apartments in the CBD are offered at higher prices than the market average. The occupancy rate for furnished apartments is currently at 70% in the Capital. The higher occupancy is due to their competitive rates compared to hotels. Hotels occupancy rate reached up to 62% in Riyadh Hospitality Market Trends Total Inventory (Rooms) Occupancy Rate Supply in Pipeline (Rooms) Average Daily Rate (4 & 5 Star Hotels) Total 11,308 62% 5,700 8,300 SR 950 Market Trends
Land Trading Market Overview
24 LAND TRADING CENTURY21 SAUDI RIYADH Real Estate Market Overview Riyadh Commercial Land Market Overview Overview: In H1-2015, total 4,692 transactions worth SR 24.6 billion have been done, with a decline of 26% when compared to H1-2014. Commercial land prices mostly remained stable in most areas of the Riyadh. Century21 Saudi tried to find a reference of commercial land prices decline, as rumored by some real estate sector experts, but unable to find any actual evidence where commercial land has been transacted with lower rate. Decline of 26% No. of Transactions COMMERCIAL LAND TRADING (H1-2014 Vs. H1-2015) Month No. of Transactions Value of Transactions 2014 2015 Change % 2014 2015 Change % Jan 906 833-9% 4,582,716,300 3,997,681,324-15% Feb 881 489-80% 4,534,428,461 5,168,800,688 12% Mar 840 672-25% 2,911,650,939 2,857,646,089 0% Apr 914 778-17% 3,482,889,049 2,824,821,405-23% May 1,135 929-22% 4,726,866,753 4,668,400,958-1% Jun 1,244 991-26% 5,819,243,675 5,139,277,774-13% Total 5,920 4,692-26% 26,057,795,177 24,656,628,238-6% 30,000 Commercial Land Sale Prices H1-2015 (SR/Sqm) Min Max 22,500 15,000 7,500 0 Eastern Ring Road Khurais Road Prince Saad Bin Abdul Rahman Western Ring Road Madinah Munawara Road Northern Ring Road Anas Bin Malik Road Kharj Road Southern Ring Road Ayesha Bint e Abu Bakar Road King Fahad Road Olaya Road Tahliah Street Urobah Street
CENTURY21 SAUDI RIYADH Real Estate Market Overview LAND TRADING 25 Commercial Land Sale Prices H1-2015 (SR/Sqm) Area H1-2015 Min Max Riyadh East Eastern Ring Road 7,000 9,000 Khurais Road 5,000 6,500 Dammam Road 5,000 7,000 Al shaik Jaber Alahmed Alsabah Road 4,200 5,000 Saad Bin Abdulrehman Road 4,500 5,500 King Abdullah Road 6,500 8,000 Imam Saud bin Abdul Aziz Road 5,000 6,500 Hassan Bin Hussain Bin Ali Road 4,500 6,000 Riyadh West Western Ring Road 5,000 6,500 Madina Al-Munawrah Road 4,160 4,680 Riyadh North King Fahad Road 12,000 15,000 Northern Ring Road 9,500 12,000 Prince Saud bin Mohammad bin Muqrin Road 5,000 6,500 Anas bin Malik Road 7,500 8,500 King Salman bin Abdul Aziz Road 7,500 8,000 King Abdul Aziz Road 7,500 9,000 Abu Bakr Siddique Road 5,500 6,500 Otman bin Affan Road 6,000 7,000 Al Khair Road 5,500 6,000 Salboukh Road 1,100 1,700 Olaya Road 9,000 12,000 Riyadh South Kharj Road 1,850 2,500 Southern Ring Road 5,000 5,500 Hamzah bin Abdul Mutlib Road 3,600 4,500 Ayesha bint Abu Bakkar Road 4,000 4,800 Riyadh Central King Fahad Road 17,000 22,000 Olaya Road 13,000 15,000 Prince Mohammad bin Abdul Aziz Road (Tahlia) 13,500 15,000 Oroba Street 8,500 10,000 Al Takhasusi Road 10,000 12,000 King Abdul Aziz Road 9,500 11,000 Dabbab Street 7,500 8,500 King Abdullah Road 10,000 13,000 Makkah Road 7,500 8,500 Prince Sultan Street 6,500 7,500 Imam Saud bin Abdul Aziz Road 7,000 7,500 Moosa Bin Naseer Road 6,000 7,000 Salah-U-Din Road Malaz 8,000 10,500 Al Hasa Road 5,000 6,000 Al Nahda Road 5,500 6,500
26 LAND TRADING CENTURY21 SAUDI RIYADH Real Estate Market Overview Riyadh Residential LAND Market Overview Overview: In H1-2015, total 25,564 transactions worth SR 24.2 billion have been done, with a decline of 33% when compared to H1-2014. Residential land prices generally remained stable in most areas of the Riyadh while some decline in residential land prices (5% to 10%) has been noticed in Southern and western parts of Riyadh. This decline is mainly attributed to the government announcement of land tax in first quarter of 2015. Curve down Price 10% in Southern & Western Region 5% TO RESIDENTIAL LAND TRADING (H1-2014 Vs. H1-2015) Month No. of Transactions Value of Transactions 2014 2015 Change % 2014 2015 Change % Jan 6,229 3,493-78% 6,433,454,678 3,202,039,374-101% Feb 5,464 3,487-57% 6,280,183,024 2,506,823,454-150% Mar 4,981 4,740-5% 7,420,407,407 5,153,314,075-44% Apr 5,121 3,774-36% 4,452,533,566 3,231,648,612-38% May 6,181 4,713-31% 5,348,936,553 4,502,142,593-19% Jun 5,950 5,357-11% 5,839,740,444 5,670,365,792-3% Total 33,926 25,564-33% 35,775,255,672 24,266,333,900-47% Average Sale Prices of Residential Lands (SR/sqm) Min Max 6,000 4,500 (SR/sqm) 3,000 1,500 0 Al Hamra Al Yarmook Ishbiliah Arqa Nakheel Al Ghadeer Al Yasmeen Al Malqa Al Aziziah Al Shifa Al Swaidi Al Badiah Al Olaya Al Murooj Al Sulaymania Al Warud
CENTURY21 SAUDI RIYADH Real Estate Market Overview LAND TRADING 27 Average Sale Prices of Residential Lands (SR/sqm) Area H1-2015 Min Max Riyadh East Qurtaba 2,600 2,800 Al Monisiyah 1,500 1,800 Al Rimal 900 1,250 Gharnada & Alshahda 3,200 3,500 Al Hamra 2,900 3,400 Al Quds 2,850 3,300 Al Yarmook 2,200 2,400 Al Qadsiah 1,800 2,000 Al Ma'eezlah 1,300 1,550 Ishbiliah 2,000 2,300 Al Nazeem 850 1,200 Al Janadriah 1,100 1,300 Al Salaam 2,600 3,000 Al Naseem (East) 1,300 1,850 Al Naseem (West) 1,350 2,000 Al Manar 1,300 1,550 Al Nahdha 850 1,000 Al Sulai 1,600 1,750 Al Jazira 1,800 2,000 Al Sa'adah 1,500 1,650 Riyadh West Al Mahdiah 1,000 1,200 Al Hada 3,700 4,300 Arqa 3,100 3,500 Khuzami 4,300 4,600 Nakheel 4,000 4,500 Zahrah Laban 1,500 1,800 Riyadh North Al Aarz 1,450 1,750 Al Qeerwan 2,000 2,200 Al Ghadeer 3,800 4,500 Al Rabeeh 3,000 3,500 Al Nada 2,800 3,300 Al Nafal 2,750 3,000 Al Wadi 2,600 3,000 Al Yasmeen 2,200 2,600 Hittin 3,800 4,500 Al Aqeeq 2,800 3,500 Al Malqa 3,500 3,850 Area H1-2015 Min Max Riyadh South Dar Albaiza 950 1,150 Al Aziziah 1,200 1,500 Al Mansooriah 1,500 1,700 Al Shifa 1,500 1,700 Badr 750 950 Ahad 650 800 Al Marwah 1,250 1,550 Shabra 1,650 1,800 Al Swaidi 1,500 1,700 Al Zahrah 1,500 1,700 Al Areeja 950 1,150 Al Badiah 1,050 1,250 Taweeq 950 1,100 Namar 1,100 1,250 Al Hazm 950 1,100 Al Hair 250 450 Al Darehmiah 1,100 1,500 Riyadh Central Al Olaya 3,500 4,000 Al Mazar 3,500 4,000 Al Murooj 2,650 3,000 King Fahad 2,500 2,750 Al Nazha 3,200 3,700 Al Izdhar 2,700 3,000 Al Ta'awun 2,700 3,000 Al Museef 2,200 2,700 Salahuddin 3,800 4,200 Al Mursalat 2,800 3,300 Al Sulaymania 3,000 3,500 Al Warud 3,750 4,200 Al Malaz 2,700 3,000 Jarir 2,700 3,000 Al Rahmaniyah 3,300 3,700 Al Mohammadiyah 3,700 4,000 Al Maghrazat 2,500 2,750
About Us About Century21 Century21 is one of the most recognized name in Real Estate Market with approximately 6,700 independently owned and operated franchised brokerage offices in 75 countries and territories worldwide and represented by more than 102,000 real estate experts. Century21 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 Binzouman General Manager alwaleed@century21saudi.com Mobile: 0555 194 919 Eng. Alaa Al-Thagafi Deputy General Manager alaat@century21saudi.com Mobile: 0558 199 194 Asif Iqbal Head of Research and Advisory asif@century21saudi.com Mobile: 0555 177 076 Abdulaziz Al-Mohaiza Marketing Manager abdulaziz@century21saudi.com Mobile: 0505 983 926 Riyadh - Main Office P.O. Box : 300374 Riyadh : 11372 - Tel: +966 (11) 4000 360 - Fax: +966 (11) 485 7338 - www.century21saudi.com 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.