Riyadh Outlook: Millenials set to reshape the capital's residential landscape, says JLL
Riyadh's residential real estate market is likely to witness positive change with the growth of millennials entering the workforce and in turn increasingly demanding affordable housing, outlines leading real estate advisory firm JLL.
The evolving social demographic make-up of Saudi Arabia is rapidly shaping the country's real estate landscape with a growing young population having a significant impact on residential urban development. According to JLL, the affordable housing sector will continue to drive Riyadh's overall real estate market as developers align to several government initiatives launched in 2018 to increase home ownership amongst Saudi nationals.
"We are witnessing a push pull effect on the residential market in Riyadh - the government stimulating the market through home ownership incentives and demand being further stimulated by an increasingly young workforce seeking suitable and more affordable residential options in the capital," said Dana Salbak, Associate, JLL MENA.
Developers are now moving away from family focused traditional villas and spacious apartments to mixed unit sizes and layouts catering to the younger millennial population. According to Oxford Business Group 70% of the Kingdom's population are under the age of 30* and while some developers continue to expand their high-end residential offering the majority are catering towards the demand for entry point affordable housing.
"With millennials entering the job market the demand for affordable housing will naturally increase. Developers are responding to the changing dynamics of society by introducing new schemes aimed at facilitating ownership in the near future," she continued.
While Riyadh's residential market is expected to continue softening over the next 12 months, this will be at a slower rate as new supply enters the market. An additional 30,000 residential units a year are expected to be handed over in 2019 and 2020. In 2018 a total of 29,000 residential units were delivered as a result of the government's efforts to provide more housing.
All sectors of Riyadh real estate market continue to remain in the late downturn stage of their cycle, however the residential market appears closer to the bottom where further rental declines may be experienced in the next 12 months. The completion of the Riyadh metro is expected to increase value of residential properties in close proximity to the transit system.
For an overview of KSA's real estate market performance and outlook across the residential, office, retail and hotel sectors download JLL's 2018 year in review report here.