Sign in
The Saudi real estate market is expected to “maintain its upward momentum” into the second half of this year, continuing its growth trajectory following its post-covid recovery, according to Kuwait-based asset manager and investment bank Markaz’s KSA Real Estate Report (pdf). “Based on our [Markaz] assessment of various macroeconomic factors, we believe that the real estate sector in Saudi Arabia remains in the accelerating phase in 1H 2024 and will continue to accelerate in 2H 2024.”
What gives? The domestic real estate market’s strong position is buoyed by steady growth in the non-oil sector, robust performance in the hospitality industry, and increased government spending in infrastructure projects, according to Markaz.
Recovery in turnover: The 1Q figures show a recovery in turnover from real estate transactions and average prices, highlighting the strong performance of the office sector, with rising rents in both Grade A and Grade B markets across Riyadh, Jeddah, and Dammam, Markaz notes.
Bullish outlook: The Kingdom’s score in Markaz’s real estate macro index — which factors in the projected performance of several key macro indicators — shows a forecasted uptick to 3.6 points in 2H of this year, up from 3.55 over the same period last year. This score suggests the market is currently in an “accelerating” phase. A score of 4.3-5.0 would indicate the market has peaked and is in due for a slowdown.
Pundits are all bullish about the sector: Real estate services provider Savills Research said, last month, that Riyadh’s office market remained strong in 2Q, supported by growth in the non-oil sector. London-based real estate consultant Knight Frank also highlighted the growing demand for office space in its summer review.
REMEMBER- Real estate prices across Saudi Arabia rose 1.7% y-o-y in 2Q 2024, driven by rising costs of residential real estate and agricultural land plots. Meanwhile, Riyadh’s office market stayed strong last quarter on the back of growth in the non-oil sector.
Real estate loans rose 11.5% y-o-y to SAR 767.3 bn at the end of 4Q 2023, Markaz reports, while mortgages dipped 2.9% y-o-y during the quarter to SAR 22.1 bn. These financing portfolios could rise in the back half of the year as interest rates start coming down, which “could act as a catalyst for the acceleration of loan origination growth rates,” Markaz says.
REMEMBER- Last Friday, the US Federal Reserve announced it plans to begin cutting interest rates as of next month. The SAR is pegged to the USD and the Saudi Central Bank (SAMA) mirrors the Fed’s rate changes.
IN OTHER REAL ESTATE NEWS-
PIF unit + BlackRock partner to boost Saudi real estate financing: PIF-owned Saudi Real Estate Refinance (SRC) signed an MoU with the world’s biggest asset manager BlackRock to launch real estate refinancing programs in the Kingdom, state news agency SPA reported. The agreement also seeks to drum up investments in the domestic fixed-income market.
SRC is on a roll: SRC inked a similar MoU last week with King Street Capital Management, another US asset manager, to boost liquidity and diversify financing solutions for the Saudi secondary real estate market, seeking to attract foreign investors to the sector.
#2- Egyptian real estate developer Palm Hills Developments is looking into a number of projects in both the real estate and education sectors in the Kingdom, Co-CEO Hazem Badran told Asharq Business, adding that both the higher education and K-12 sectors are on the company’s radar (watch, runtime: 6:02). The company is eyeing projects in Jeddah, Riyadh, and in the north of the country. Palm Hills set up a Saudi branch earlier this month, joining Talaat Moustafa Group and other Egyptian real estate players that have recently entered the local market.
