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JLL, the world's leading real estate investment and advisory firm, today has released its first quarter (Q1 2015) Riyadh Real Estate Overview report that asses the latest trends in the office, residential, retail and hotel sectors in Saudi Arabia's largest city.
Commenting on the Riyadh market report, Mr Jamil Ghaznawi, National Director and Country Head of JLL's KSA, said: "In the first quarter of 2015, the Riyadh real estate market experienced continued growth in the hotel, retail and residential rental sectors, balanced by stabilisation in the residential sales and office markets. Recent changes to the mortgage regulations have resulted in a shift in demand away from residential sales to rentals. For the first time in the past few years, the hotel sector saw a marginal improvement of 2% in average daily rate (ADR) and a subsequent improvement of 2.5% in revenue per available room (RevPAR) to USD162. With high levels of new supply scheduled to enter the market in 2015 and 2016, this improvement may be short lived with JLL expecting a softening of future performance.
Confidence in the retail market remains strong, as reflected in the announcement of multiple new malls, which will add approximately 750,000 sq m to the market in 2018 and 2019. King Salman Bin Abdul Aziz's awarded all state employees a two month salary bonus, leading to an increase in point of sale transactions for the months of January and February by around 20% compared to the same months of 2014."
Mr Ghaznawi added: "Continued delays in the delivery of major projects have stabilized performance in the office market. The delivery of some of the buildings within the King Abdullah Financial District (KAFD) has been further delayed to 2016, and the Information Technology and Communication Complex (ITCC) is expected to be completed later this year. JLL expects that office rentals will remain unchanged until this additional space enters the market in late 2015 and early 2016 and leads to a softening of the market."
Sector Summary Highlights - Riyadh:
Riyadh prime rental clock
This diagram illustrates where JLL estimates each prime market is within its individual rental cycle as at the end of the relevant quarter.
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