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Riyadh Real Estate Market Overview - Q1 2015

​Riyadh’s real estate market has remained largely stable over the first quarter of 2015 with no major change in either supply levels or performance.

•The residential sector has seen a continued shift towards renting as a result of the new mortgage regulations. This has contributed to a marginal decline in the average sale prices for villas.
•Continued delays in the delivery of megaprojects has stabilized performance and vacancies in the office market.
•Strong retail spending and the announcement of multiple malls reflects continued confidence in the retail market.
•The hotel market saw a marginal improvement in ADR’s but this growth is likely to be short lived given high levels of supply due to enter the market later in 2015 and 2016. 

The major news during Q1 2015 was the Saudi Cabinet’s announcement of a new tax on undeveloped land within urban areas. This is a bold move, being the first real estate tax in the Kingdom. The proposed tax is designed to address the shortage of affordable housing resulting from the current preference of many land owners to trade undeveloped sites rather than undertaking development. As no details of the timing, level, method of calculation, administration or enforcement of the tax have yet been released, it is difficult to estimate the extent to which this proposal will increase development activity or reduce residential prices in Riyadh.

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