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With the exception of the office market, all other sectors of the Riyadh market remain in the late upturn stage of their property cycle. The market has remained largely stable over the second quarter of 2015, partially due to further delays in the construction of many of the key projects.
The residential sales market continues to witness downward pressure as a result of the new mortgage regulations. Conversely, rental levels continue to grow as more demand shifts from the sales to the rental sector. The office market has seen little change in occupancies or rentals over the past year (or the past quarter). This market is expected to soften as a result of major new completions in the long delayed KAFD and ITCC projects during 2016. Retail remains one of the best performing sectors in Riyadh, as super regional and regional mall performance continues to improve and retail spending remains strong. There is however a significant level of retail supply scheduled to complete in 2016 and 2017. The hotel market shows signs of improvement as average daily rates and revenue per available rooms increase by around 2.5% over the year to May. Similar to the office and retail sectors, there are major levels of new hotel supply scheduled for delivery, which could potentially increase the current room supply by almost 50% over the next 18 months. As with these other sectors, not all of this new supply is likely to complete, as the market continues to be plagued by lengthy construction delays.
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03 August 2015