Riyadh Retail Real Estate Market Outlook to 2021 - Oversupply and Downward Stress on Rental Rates to Trigger Cautions Outlook

Riyadh Retail Real Estate Market Outlook to 2021 - Oversupply and Downward Stress on Rental Rates to Trigger Cautions Outlook


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Executive Summary

The report titled "Riyadh Retail Real Estate Market Outlook to 2021 - Oversupply and Downward Stress on Rental Rates to Trigger Cautions Outlook" provides a comprehensive analysis of the retail real estate sector in Riyadh. The report covers current and future retail demand and supply on the basis of gross leasing area. Retail mall categories along with their annual rental rates have also been presented in the report. In addition, current and future supply gap along with upcoming retail projects have also been showcased in the report. This report will help industry consultants, real estate and construction companies, potential entrants and other stakeholders to align their market centric strategies according to the ongoing and expected trends in the future.

Introduction
Evolution of the retail sector has transformed the Kingdom's landscape from small unorganized retail outlets and line shops to the development of large scale shopping malls with international brands, entertainment zones and world class hypermarkets. The primary reason for this trend is because retailers have realized the higher footfall from regional and super regional malls as a result of integrated spaces and shift in consumer shopping experience towards leisure and entertainment.

Retail Demand and Supply
The total retail supply in Riyadh inclined from ~ million square meters during 2012 to ~ million square meters of gross leasing area during 2016, registering a CAGR of ~% during the same period. Conversely, total occupied retail space inclined to ~ million square meters of gross leasing area during 2016 from approximately ~ million square meters during 2012, achieving a CAGR of ~% during the same period. The labor ministry signed an agreement to allow women to work at lingerie shops, thus increasing employment and income level of Saudi women in the retail sector. Apart from the rising tourism in Riyadh, more domestic households opting to stay within the country during vacations have resulted in higher retail earnings. Saudi Arabian General Investment Authority (SAGIA) had announced during 2015 to allow 100% foreign ownership in retail businesses. This move is expected to increase demand for retail space by international brands in the coming years.

Retail Mall Categories
The retail real estate market in Riyadh comprises of various small and large scale developmental projects. Retail mall categories comprise of regional, super regional and community centers. Super regional and regional malls accounted for nearly ~% of the overall retail supply in Riyadh during 2016. Conversely, community centers comprise of standalone retail outlets, supermarket and hypermarket and have accounted for ~% of overall retail supply in the city during 2016.

Average Rental Rates
The rental rate charged by mall developers varies across different mall categories in Riyadh. It is evident that rental rates for regional and super regional mall are much higher in comparison to community centers and stand alone stores because of better location, potential to get international brands and reputed anchor stores to the mall and robust infrastructure facilities. Within these regional and super regional malls however, rental rates differ based on area, location within the mall and brand power. The annual average rental rate increased to a high of SAR ~ per Sq M during 2015 from SAR ~ per Sq M during 2012. However, downward pressure on rental rates caused this figure to decline to SAR ~ per Sq M during 2016.

Future Retail Demand and Supply
The total retail supply in Riyadh is estimated to incline to ~ thousand Sq M of GLA by 2021 from ~ thousand Sq M during 2016, registering a CAGR of ~% during the same period. Conversely, retail demand is projected to augment from ~ thousand Sq M during 2016 to ~ thousand Sq M of occupied space by 2021, achieving a CAGR of ~% during the same period. Saudi Vision 2030 with respect to feminization in the retail sector has targeted women participation in the workforce to increase from the current 22% to 30%. Increased female participation in the retail sector will positively impact and will lead to increased number of female owned businesses coupled with higher spending power. Increasing retail supply along with a slow conversion rate is expected to cause retail oversupply to reach ~ thousand Sq M. of gross leasing area by 2021.
Key Topics Covered in the Report:

  • Overview of The Retail Real Estate Market in Saudi Arabia
  • Factors influencing the sector of retailing in Saudi Arabia
  • Retail Demand-Supply and Supply Gap Analysis in Riyadh
  • Retail Mall Categories and Average Retail Rental Rates in Riyadh
  • Future Retail Demand-Supply, Supply Gap Analysis and Key Upcoming Malls in Riyadh City


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1. Executive Summary
Introduction
Retail Demand and Supply
Retail Mall Categories
Average Rental Rates
Future Retail Demand and Supply
2. Research Methodology
2.1. Market Definitions
2.2. Abbreviations
2.3. Market Sizing and Modeling
Consolidated Research Approach
Limitations
3. Saudi Arabia Retail Real Estate Market
3.1. Overview
3.2. Factors Influencing the Sector of Retailing in Saudi Arabia
Retail Spending Trends
Increasing Growth and Expenditure by the Youth Population
Rising Disposable Income
Increasing Presence of Hypermarkets and Supermarkets
Easing Government Regulation
Riyadh's Annual Shopping Festival
Lack of Recreational Activities
Climate Conditions
Rental Practice and Lease Term Contracts
4. Riyadh Retail Real Estate Market
4.1. Retail Demand and Supply, 2012-2016
4.1.1. Retail Supply
2012
2013
2014
2015
2016
4.1.2. Retail Demand
2012
2013
2014
2015
2016
4.1.3. Supply and Demand Gap, 2012-2016
4.2. Retail Mall Categories, 2016
4.2.1. Average Rental Rates, 2012-2016
4.3. Future Retail Demand and Supply, 2017-2021
Future Retail Supply
Major Retail Projects
Future Retail Demand (2017-2021)
Key Upcoming Malls in Riyadh City
4.3.1. Future Outlook and Future Supply and Demand Gap, 2017-2021
5. Analyst Recommendations
6. Case Studies
6.1. Khurais Mall
6.2. Othaim Mall (Eastern Ring Road)
6.3. Othaim Mall (Khurais Road)
6.4. Al Sadhan Mall (Khurais Road)
Disclaimer
Contact Us

Figure 3-1: Retail Spending in Saudi Arabia by Food Retail and Non-Food Retail Sales in SAR Billion, 2012-2016
Figure 3-2: Total Population of Saudi Arabia in Million and Growth Rate in Percentage, 2012-2016
Figure 3-3: Saudi Arabia Disposable Income in SAR Billion and Growth Rate in Percentage (%), 2012-2016
Figure 4-1: Major Existing and Future Retail Malls, Riyadh (As of 4th Quarter, 2012)
Figure 4-2: Major Existing and Future Retail Malls, Riyadh (As of 3rd Quarter, 2013)
Figure 4-3: Major Existing and Future Retail Malls, Riyadh (As of 1st Quarter, 2014)
Figure 4-4: Riyadh Retail Real Estate Market Demand and Supply on the basis of Gross Leasing Area (GLA) in Thousand Square Meters, 2012-2016
Figure 4-5: Supply and Demand Gap in Riyadh Retail Real Estate Market on the basis of Gross Leasing Area (GLA) in Thousand Square Meters, 2012-2016
Figure 4-6: Retail Mall Categories in Riyadh Real Estate Market by Retail Supply on the basis of Gross Leasing Area in Percentage (%), 2016
Figure 4-7: The Annual Average Retail Rental Rate in Riyadh Real Estate Market in SAR per Sq M, 2012-2016
Figure 4-8: Riyadh Retail Real Estate Market Demand and Supply on the basis of Gross Leasing Area (GLA) in Thousand Square Meters, 2017-2021
Figure 4-9: Future Supply and Demand Gap in Riyadh Retail Real Estate Market on the basis of Gross Leasing Area (GLA) in Thousand Square Meters, 2017-2021
Figure 6-1: Ground Floor Layout of Khurais Mall
Figure 6-2: First Floor Layout for Khurais Mall
Figure 6-3: Façade of Khurais Mall
Figure 6-4: Ground Floor Interior View of Khurais Mall
Figure 6-5: First Floor Interior View of Khurais Mall
Figure 6-6: Second Floor Interior View of Khurais Mall
Figure 6-7: Food Retail Outlet at Khurais Mall
Figure 6-8: Retail Outlets at Khurais Mall
Figure 6-9: Interior View of Billy Beez (Entertainment Zone) at Khurais Mall
Figure 6-10: Ground Floor Layout of Othaim Mall on Eastern Ring Road
Figure 6-11: First Floor Layout of Othaim Mall on Eastern Ring Road
Figure 6-12: Second Floor Layout of Othaim Mall on Eastern Ring Road
Figure 6-13: Third Floor Layout of Othaim Mall on Eastern Ring Road
Figure 6-14: Façade of Othaim Mall (Eastern Ring Road)
Figure 6-15: Parking Layout at Othaim Mall (Eastern Ring Road)
Figure 6-16: Ground Floor Interior View at Othaim Mall (Eastern Ring Road)
Figure 6-17: Retail Outlets at Othaim Mall (Eastern Ring Road)
Figure 6-18: Food Outlets at Othaim Mall (Eastern Ring Road)
Figure 6-19: Interior View of Saffori Land (Entertainment Zone) at Othaim Mall (Eastern Ring Road)
Figure 6-20: Ground Floor Layout of Othaim Mall on Khurais Road
Figure 6-21: First Floor Layout for Othaim Mall on Khurais Road
Figure 6-22: Second Floor Layout of Othaim Mall on Khurais Road
Figure 6-23: Façade of Othaim Mall (Khurais Road)
Figure 6-24: Parking Layout at Othaim Mall (Khurais Road)
Figure 6-25: Façade and Parking Layout at Othaim Mall (Khurais Road)
Figure 6-26: Retail Outlet at Othaim Mall (Khurais Road)
Figure 6-27: Façade of Al Sadhan Mall (Khurais Road)

Table 3-1: Retail Real Estate Market Overview by Cities (Riyadh and Jeddah), 2016
Table 3-2: Youth Population of Saudi Arabia in Million and Growth Rate in Percentage, 2012-2016
Table 4-1: Retail Mall Categories in Riyadh Real Estate Market by Retail Supply and Demand on the basis of Gross Leasing Area in Thousand Sq M, 2016
Table 4-2: Number of Retail Malls by Categories in Riyadh as of June, 2017
Table 4-3: Major Super-Regional, Regional and Community Centers in Riyadh
Table 4-4: Annual Retail Rental Rate in Riyadh by Retail Mall Categories (Super-Regional, Regional and Community Centers) on the basis of SAR/SQM, 2016
Table 4-5: List of Riyadh's Retail Developments Projects in the Pipeline, 2016-2021
Table 5-1: Analyst Recommendation for Existing and New Retail Real Estate Companies in Saudi Arabia
Table 6-1: Retail Profiling of Khurais Mall including Overview, Owner and Operator, GLA, Average Rental Rate, Occupancy Rate and Other Indicators, 2016
Table 6-2: Retail Outlets in Khurais Mall by Categories (Fashion, Cosmetics and Perfume, Jewellery and Watches, Services and Others), 2016
Table 6-3: SWOT Analysis for Khurais Mall
Table 6-4: Retail Profiling of Othaim Mall (Eastern Ring Road) including Overview, Owner and Operator, GLA, Average Rental Rate, Occupancy Rate and Other Indicators, 2016
Table 6-5: SWOT Analysis for Othaim Mall (Eastern Ring Road)
Table 6-6: Retail Profiling of Othaim Mall (Khurais Road) including Overview, Owner and Operator, GLA, Average Rental Rate, Occupancy Rate and Other Indicators, 2016
Table 6-7: SWOT Analysis of Othaim Mall (Khurais Road)
Table 6-8: Retail Profiling of Al Sadhan Mall (Khurais Road) including Overview, Owner and Operator, GLA, Average Rental Rate, Occupancy Rate and Other Indicators, 2016
Table 6-9: SWOT Analysis for Al Sadhan Mall (Khurais Road)

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