overview 08
Offices on the up
The country’s leading construction companies, along with the
diversified conglomerates, dominate the commercial real estate
sector and demand for Grade A office space in particular is steadily
increasing, due to an influx of newly established companies.
Commercial growth is expected to continue as the Saudi eco-
nomy opens up and new investment laws attract further foreign
investment. According to the Colliers Q4 2008 report, average
occupancy rates for Grade A office space reached 90 percent.
In Riyadh’s CBD, additional office space supply of 190,000
square metres is currently being delivered, and this represents
37 percent of the country’s total forthcoming supply. The office
market continues to be undersupplied, with vacancy rates in
the Riyadh and Jeddah CBDs at less than five percent. Supply
and demand for office space is expected to balance out with the
delivery of a slew of projects in both cities over the next four
years; and estimates suggest that 400,000 square metres of
commercial space is under development in the capital alone.
Oxford Business Group’s report confirms that the lack of
office space in prime locations, such as Riyadh and Jeddah, has
caused a hike in rental prices, with prime locations such as King
Fahd road in Riyadh almost doubling the square metre price in
12 months. The report also reports, however, that the overall
quality of existing stock is below international expectations and
Grade A space is rarely offered for sale. But despite these factors,
office space across the Kingdom remains highly affordable in
comparison with other regional markets.
Saudi Arabia is the fastest-growing country in
Retail growth
the region, with an estimated US$283 billion
The retail sector is one of the fastest growing in the region due to
worth of projects under construction
the size of the population and high levels of disposable income
boosting demand. By the end of 2010, retail GLA in Saudi Arabia is
expected to contribute 30 percent of the total GCC market, and
Residential prices in Saudi Arabia have consistently climbed retail developments are high on the construction agenda.
over the past five years, although remaining at levels acceptable Colliers Q4 2008 report commented on the Riyadh market
to buyers. About 37.5 percent of the country’s total population is where substantial growth in the city’s GLA is expected over the
renting, of which 14.7 percent are Saudi nationals. This has naturally next four years, with an additional 640,000 square metres of
led to a raft of housing developments and, over the past three retail expected to be delivered in 2012.
years, the Saudi Arabian General Investment Authority (SAGIA) Existing retail destinations in the Kingdom include the popular
has reportedly granted licences to 50 new real estate developers. Kingdom Mall and Al Faisaliah Mall. Dubai-based MAF Shopping
Estimates from SAIF indicate that the number of building permits, Malls has taken its City Centre shopping mall brand into Saudi
which it cites as a measure of real estate activity, will continue to Arabia through a joint venture with Al Ghazzawi Group, and its
exceed 37,000 per year through 2010. first project is a US$293 million shopping centre called Jeddah
Quoting SAIF, the Oxford Business Group’s 2008 Saudi market Riviera Mall. The 93,000-square-metre complex will host over
report stated that small firms account for around 25 percent 300 retail outlets including a Carrefour.
of the housing market while the top 30 housing construction Mall management company Arabian Centres has a network of
companies hold 20 percent market share. SAIF also reports 11 operational malls, managing almost one million square metres of
low entry barriers are the main reason that small developers prime retail real estate. The malls have a combined GLA in excess
continue to dominate the housing market, however this is of 700,000 square metres, which represents around 30 percent of
expected to change as big developers move on to large-scale the total mall GLA in Saudi Arabia. It plans to develop 12 additional
compound projects. malls over the next five years.
PREVIEW Cityscape Saudi Arabia
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31