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Riyadh : Sustained shortage of housing units - Q4 2013

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Reducing economic performance and robust population growth with expected GDP growth at 4.0% in 2013 and population stands at 28.8 million.

Official figures by The Ministry of Housing estimate the country’s demand of housing units over 1.25 million between 2010 and 2014, whilst we estimate that Riyadh will need additional 442,000 units between 2010 and 2020.

The crackdown of undocumented expatriate labours is expected to have a significant effect over infrastructure and construction plans in the country for the short to medium term, however this would help recruiting more KSA nationals.

Almost 60,000 housing units are confirmed in the pipeline supply from The 500K units plan ordered by King Abdullah in 2011, out of which 7,000 units will be built in Riyadh.

Fears of imbalance between supply and demand in commercial office sector expected in 2014 which could significantly hurt rental prices.

The expanding population is creating strong demand for residential property particularly apartments due to escalating sales prices.

Occupancy rates over Riyadh hotels have marginally dipped by almost 2.0% from Jan. to Nov. 2013 comparing to the same period of 2012, while RevPAR also declined by almost 1% for the same period.

The retail real estate market is expected to get affected by the crackdown of illegal expats which is obviously seen in the shutdown of many street line retail shops together with few retail outlets included in the city’s major shopping malls.

Source : DTZ (Groupe UGL)