Saudi Arabia’s office rentals have seen a year-on-year decline, according to a recent report released by real estate consultancy CBRE.
Primary and secondary office locations in the Saudi capital Riyadh have dropped by 4% and 7% year-on-year, respectively, Arabian Business reported, citing the US firm said.
But landlords’ rising incentives, discounts for long-term leases, energy efficient units and unique design offerings would be the silver lining for the Saudi market’s declines, the report titled ‘Market Snapshot for 2018’ added.
On the other hand, a strong demand for SME office space in Riyadh has been emerged on the back of the Saudi government’s mass privatisation schemes, CBRE noted.
Total office stock in Riyadh amounted to 4.2 million square metres of gross leasable area (GLA) by the end of 2018, with a further 870,000 sqm of GLA projected to be delivered by 2022, according to the report.
The report also finds a growing trend towards office supply as part of mixed-use projects.
The Los Angeles-based real estate firm also signalled the growth of the Saudi hospitality sector in view of the kingdom’s fledgling entertainment sector.
It forecast more than 5,000 rooms to be delivered to the market by 2022.
“The recent economic and social initiatives and legislation introduced by the Saudi government have already had an extremely positive impact on the country’s real estate sector,” Simon Townsend, head of strategic advisory at CBRE MENAT and general manager, commented.
He added that the Saudi government’s burgeoning spending on large-scale infrastructure and mega-projects is projected to further spur the overall market.
The US company’s figures reveal a current supply of 1,252,000 residential units with an expected delivery of 130,000 additional units by 2022.
The Saudi retail sector’s rental rates have declined – with super regional and regional mall rental rates down 7.5% year-on-year, according to CBRE.