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Average rental rates in Riyadh Office Real Estate market: Ken Research

Posted on 13 December 2017 by KenResearch Manufacturing And Construction ,

The rental rate charged by office real estate developers in Riyadh varies across different building categories as well as location. It is evident that average rental rates across major business streets such as King Fahad road and Olaya Street are much higher because of better location and infrastructure facilities. Within these areas the rent may vary depending on net area under lease, whether the company is private or government owned as well as type of company. As reported at the end of March 2013 rental rates were SAR ~for Grade B offices and SAR ~ in Grade A office buildings. Rental rate at the end of 2016 was estimated at the average value of SAR ~. Rentals were lowest in Ayesha bint Abu Bakkar road and maximum on Northern ring road.

Saudi Arabia Office Real Estate Market

Government’s aim to diversify the economy has attracted the development of manufacturing and services sector to open their businesses in Saudi Arabia creating a substantial demand for office spaces in the country. Private participation has further boosted the development and demand of office space in Saudi Arabia. Programs such as Vision 2030 were launched in April 2016 and National Transformation Program (NTP) was launched in June 2016 with an aim to develop different sectors of the economy

and country are expected to give positive boost to the economy. Riyadh will continue to lead the office real estate market in Saudi Arabia followed by Jeddah.

What is the potential of Riyadh office real estate market?

The total office real estate supply in Riyadh increased from ~ million square meters during 2013 to ~ million square meters of gross leasing area during 2016, registering a CAGR of ~% during the same period. Demand during the same period was lower than the supply. Total occupied office space increased from ~ million square meters during 2013 to approximately ~ million square meters during 2016, achieving a CAGR of ~% during the same period. Completion of Alajlan Tower (~ Sq m) and Al Tamaiouz Tower (~ Sqm), Olaya towers, MIG tower made significant contribution to the retail office space during the estimation period of 2013-2016.

Constant oversupply in the market has made the rental stay stable.On analyzing the supply demand gap market in Riyadh office real estate market it was observed that the gap was on constant increase mainly due to addition of more and more office space area even though the demand was less and vacancy of existing properties was on rise. In 2013, the office supply exceeded the demand by ~ thousand square meters which increased to ~ thousand square meters in 2016. Demand was on decline mainly due to fall in oil prices which have badly hit the economy affecting the opening and expansion of business leading to poor demand for office space rentals.

Riyadh office real estate market segmentation by location

Central Business District was the key offices real estate market in Riyadh accounting for ~% (~ Sqm) of the net GLA available for leasing and renting in 2016. Most of the office buildings are located in close proximity to King Fahad Road and Olaya Road. Many Grade A office spaces are located in this region of the city making it a prime office location in the country. The city core area supply ~% of the GLA with the average rentals in the city core which comprises locations like King Saud Road, Salahuddin Ayoubi Road range between SAR ~ to SAR ~ per square meter. The northern part has emerged as the new region for developing office spaces in the Riyadh. In 2016, only ~% of the office spaces in

Future outlook to office demand and supply

Supply of office real estate is expected to increase from ~ million square meters in 2017 to ~ million square meters in 2019 which will further rise to ~ million square meter in 2021 Completion of Riyadh metro will make north a more attractive option for new and upcoming offices. It is expected that completion of KAFD, ITCC and Nakhla tower will add an estimated ~ million square meter. This will make the northern part of Riyadh a key office destination replacing CBD. Majority of the office space developed in this area is of the A and B type. Governments plan to cut down the staff by ~% may have negative impact on the Riyadh office space market, however plans such as Vision 2030 and NTP 2020 is expected to have positive impact on the demand for office spaces in the city.

For more information on the research report, refer to below link:

Source: https://www.kenresearch.com/manufacturing-and-construction/real-estate/riyadh-office-real-estate-market/142284-97.html

Contact Us:
Ken Research
Ankur Gupta, Head Marketing & Communications
ankur [@] kenresearch.com
+91-9015378249
www.kenresearch.com

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Riyadh Office Real Estate Supply Registered CAGR of 6% during 2013-2016: Ken Research

Posted on 06 December 2017 by KenResearch Manufacturing And Construction ,

Saudi Arabia office real estate market (purchase/lease, Manufacturing and service sector contribution, Contribution of Oil and Gas Sector); Regulatory environment and Investment structure; Riyadh office real estate market by (demand and supply, Average rental rate, by location); Case Study on (Elegance Tower, Al Saedan Towers, Tijan Plaza, Hamad Tower, Tatweer Tower) 

December 2017 |Riyadh News 

  • Constant supply of office space in the market will keep the rental at constant level with very little fluctuation.
  • Demand for office space is expected to rise as contribution of banking, insurance, tourism and business processes in services sector rise in the economy.
  • Government initiatives to ease FDI and promote private participation in finance of real estate and other businesses is expected to boost the supply as well as demand market in the Riyadh office real estate market. 

Supply of office real estate is expected to register constant increase with positive CAGR during 2017-2021. As grade A and B office space development have concentrated primarily on King Fahad and Olaya roads in Al Olaya district traffic congestion, lack of parking spaces and increasing rents has led the upcoming developments scattered along different arterial roads predominantly on northern side of the city. Completion of Riyadh metro will make north a more attractive option for new and upcoming offices. It is expected that completion of KAFD, ITCC and Nakhla tower will add over a million square meters. This will make the northern part of Riyadh a key office destination replacing CBD. Majority of the office space developed in this area is of the A and B type. Governments plan to cut down the staff by 20% may have negative impact on the Riyadh office space market, however plans such as Vision 2030 and NTP 2020 are expected to have positive impact on the demand for office spaces in the city.

Demand for office real estate is expected to remain positive however rental rates will register fluctuation remaining almost constant at around its 2016 level. Governments focus on promoting financial inclusion, connectivity services and manufacturing sector will create majority of the future demand for office space in the city. Riyadh employs more than quarter of the workable population in Saudi Arabia and will continue its dominance in workforce employment creating huge demand in future. 

Ken Research in its latest study, Riyadh Office Real Estate Market by Major Projects (Elegance Tower, Al Saedan Towers, Tijan Plaza, Hamad Tower, Tatweer Tower) -Outlook to 2021, observed that North will emerge as the new centre for office real development. Dedicated areas catering to specific set of industries will boost the development of clusters which will create well defined demand for specific type of offices. Government role in easing norms for foreign investment and way of living for expats in certain areas will help it to attract best talent to develop the country and business.

Riyadh office real estate market is estimated to register a positive CAGR during 2017-2021. The report provides information on the supply and demand of office space in Riyadh along with explanation for supply and demand gap. It also covers the distribution of office space by major regions in the city and average rental rates for different types of buildings.

To know more, click on the link below:

https://www.kenresearch.com/manufacturing-and-construction/real-estate/riyadh-office-real-estate-market/142284-97.html

Contact Us:
Ken Research
Ankur Gupta, Head Marketing & Communications
ankur [@] kenresearch.com
+91-9015378249
www.kenresearch.com

 

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Office Real Estate Market in Riyadh Led by Demand from Private Sector of Economy: Ken Research

Posted on 06 December 2017 by KenResearch Manufacturing And Construction ,

Focus on diversification of economy, promotion of manufacturing and services sector and demand from services related to rising number of industrial unit led the growth in demand for office space in Riyadh.

Saudi Arabia is a key oil exporting country in the world and in the past few years has witnessed significant rise in other form of industries and services including energy, education banking and other service. This diversification of economy has created a significant rise in demand for office spaces across the country and especially in the capital city of Riyadh. Private players are the key participants in the rental office real estate market with small contribution coming from government agencies.  During the period 2013-2016 office real estate market has registered constant increase in demand and supply with supply exceeding the demand all the time. Rentals have remained nearly constant for most of the period and were dependent on type and area of the office. Demand was maximum in the central business district which occupies the major portion of the office space supply in the the city of Riyadh.

Rising share of private participation in the economy, entry of large number of foreign companies and positive developments in services and manufacturing sector along with growing participation of Saudi and women workforce promoted the demand for office space which is expected to continue in future. Demand for office space in Riyadh may face stiff competition from office space development in Jeddah and other cities. Government support will continue to play a key in creating new jobs and diversification of economy from oil and gas creating additional demand for office space in the city.

The report titled Riyadh Office Real Estate Market by Major Projects (Elegance Tower, Al Saedan Towers, Tijan Plaza, Hamad Tower, Tatweer Tower) -Outlook to 2021by Ken Research suggested that a Total occupied office space increased from 1.9 million square meters in 2013 to approximately 2.2 million square meters during 2016, achieving a CAGR of 4.4% during the same period. In 2016, the supply demand gap continues to exist even though the delay was observed in delivery of mammoth office spaces in KAFD

Source: https://www.kenresearch.com/manufacturing-and-construction/real-estate/riyadh-office-real-estate-market/142284-97.html

Contact Us:
Ken Research
Ankur Gupta, Head Marketing & Communications
sales@kenresearch.com
0124-4230204

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