Affordable housing driving Riyadh’s real estate market.
There has been little change in market conditions in Riyadh in Q2 2018, with all sectors of the market remaining in the late downturn stage of their cycle.
The government continues to launch ambitious new real estate projects in and around the capital. The latest such project, initiated by the Public Investment Fund (PIF) is Qiddiya, a proposed new entertainment, shopping and hospitality destination, situated 40 km away from Riyadh. Spanning over 334 sq km, the project includes an initial development footprint of 34 sq km, with the remaining area allocated for a wildlife safari and future expansion. Phase 1 (anchors) is expected to open in 2022, phase 2 (clusters) in 2025 and phase 3 (capacity growth) before 2035. The project aims to attract 17 million visitors to the entertainment sector, 12 million retail visits and 2 million hotel visitors by 2030. The project also includes a significant residential component with the potential to deliver 4,000 residential units by 2025, increasing to 11,000 units by 2030.
KPMG Saudi signed a contract to lease 11,000 sq m as its new main office in the Business Front by Kaden Investment, situated on King Khaled International Airport Road in Riyadh. KPMG will likely relocate to their new main office upon project completion expected in Q4 2018. The number of employees for KPMG in Riyadh is expected to increase from currently 800 to 1,500 in the upcoming 5 years.
The focus on providing more affordable housing continued in Q2 2018, with the Ministry of Housing announcing it distributed 15,618 affordable residential products in Riyadh during Q2 2018. This total comprises 8,153 off-plan residential units, 898 free land plots and 6,567 subsidized housing loans. The Ministry aims to further increase the supply of affordable housing and promote higher home ownership in coming years, through more PPP agreements.
The food and beverage (F&B) sector remains active Riyadh, in line with moves to expand the entertainment and dining options available across the Kingdom. Sidra Centre typifies this trend. This new project by Alshaya on Imam Abdullah Ibn Saud Ibn Abdulaziz Road, provides a strong F & B offering including Cheesecake Factory, P.F. Chang’s, Asha’s, Pinkberry, Texas Roadhouse, Shake Shack, IHOP, Raising Cane’s, Blaze Pizza, and Starbucks. Five of the restaurants situated in the Sidra Centre are making their entry into the Saudi market.
In response to the increased competition, the Hayat mall has expanded its food court from 5,000 sq m to 8,700 sq m and the seating capacity from 1,200 to 1,600. The expansion has been designed with the young customers in mind, offering free Wi-Fi and charging stations for smart phones, along with better facilities for disabled people.
The regulatory environment continued to be enhanced by the “Together Committed” program announced in May 2017 by the Saudi Commission for Tourism and National Heritage. This program seeks to ensure hotels remain committed to maintain service levels in line with their grade (number of stars). In February, a 5-star hotel in Riyadh received negative assessments and was asked to stay committed to the 5-star classification/ requirement or risk being relegated to the 4 or 3 star sector. The commitment of hotels to their star rating is considered crucial to the future growth and success of the tourism sector. While the new program is currently only being implemented in Riyadh, it is likely to be expanded to the Kingdom as a whole in the future.