Riyadh apartment prices soar as villas feel the heat

A residential compound in the south of Riyadh. Apartment prices rose sharply in the city last year while villa prices remain under pressure. (Reuters)
Updated 06 February 2018
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Riyadh apartment prices soar as villas feel the heat

DUBAI: Apartment prices in Riyadh leapt by up to 36 percent last year and are set to rise again this year, according to a survey of the Saudi Arabian residential property market by international real estate consultants Knight Frank.
“Demand for residential property is expected to be underpinned by a growing population, the lack of existing good quality stock and a long-term trend toward smaller average household size. These factors should inevitably fuel the demand for residential units in Riyadh,” the report said.
However, the positive outlook in the capital masks a softer market in Jeddah and Eastern Province, as well as declining prices for villa properties across the Kingdom, the report found. The price of villas in the capital fell by 5 percent last year. In Jeddah and Eastern Province, prices fell by 24 percent and 28 percent, respectively.
“A common trend witnessed in sales prices across key cities is that apartment prices have been less affected than villa prices as a result of a shift in demand from villas to apartments due to affordability constraints,” said Raya Majdalani, research manager at Knight Frank.
The Kingdom’s residential market took a big hit in 2016 when the impact of the fall in oil prices was at its most intense, but recovered to some extent last year as crude prices strengthened and government measures helped ease financial pressure on Saudi households.
“While we see current dynamics prevailing in the short term, we remain broadly positive as a result of government initiatives aimed at addressing key challenges restraining the residential sector,” Majdalani said.
Recent initiatives include the release of regulations for the introduction of a 2.5 percent tax on undeveloped land plots, approval of regulations for the use and listing of real estate investment trusts, the introduction of a new mortgage law to boost home ownership, the development of the Sakani home-building program by the Ministry of Housing, the launch of the Wafi online program to grant off-plan sales, and the creation of a real estate refinance company by the Public Investment Fund.
In Riyadh, the volume of residential transactions increased by 15 percent, but their value was down 3 percent on average. In Jeddah, volume was flat but value dropped 21 percent, while in Eastern Province volume fell slightly (2 percent down) and value slipped by 9 percent.
Apartments in the north of Riyadh, near the Northern Ring Road, were the most expensive, while Al-Aziziya and Al-Shifa were the lowest valued, Knight Frank said.


Morocco’s sole oil refinery battles for survival

Updated 24 June 2019
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Morocco’s sole oil refinery battles for survival

  • SAMIR refinery was set up in 1959 by the Moroccan government and sold in 1997 to the Corral group
  • The firm was liquidated in 2016 after it was unable to honor some €4 billion

RABAT: Three years after it was liquidated for racking up billions of euros worth of debt, Morocco’s sole oil refinery and the one-time economic flagship is struggling to attract a buyer and survive.
A self-declared “national front” — comprising employees, economists and union leaders — is leading the charge to salvage refining company SAMIR, while a trade court desperately seeks a new owner.
They face a tough battle, including a court deadline of July 18 to seal the refinery’s fate.
The firm was liquidated in 2016 after it was unable to honor some €4 billion ($4.5 billion at current prices) in borrowing.
The refinery was set up in 1959 by the Moroccan government and sold in 1997 to the Corral group, a Saudi-Swedish enterprise that holds a majority stake of more than 67 percent.
Work at the refinery, which had a capacity of more than 150,000 barrels a day, had already wound down a year before it was dissolved.
But nearly 800 employees remain on the payroll, albeit on slashed salaries scratched together from company coffers and creditors.
The workers’ fate now hangs in the balance, according to staff representative Houcine El-Yamani, who has spearheaded efforts by the “national front” to salvage the facility.
“We have made tremendous efforts” to pressure the state into reviving SAMIR since work stopped in 2015 at the plant in Mohammedia, between Rabat and the economic hub Casablanca, El-Yamani said.
Such efforts include sit-ins and press conferences.
“We still have hope of finding a solution,” he added.
A “national front” report submitted last year to Moroccan authorities denounced the 1997 privatization of the refinery as a “big sham” and the sale to Corral as “totally lacking in transparency.”
“The Corral group did not respect any of the terms of the contract (including pledges to invest funds to develop the refinery), dragging the sole national refinery into an infernal spiral,” said the report.
The drop in global oil prices in 2014 affected SAMIR, but the “national front” says bad management was the main factor behind the firm’s woes, as debts mounted and attempts to satisfy creditors failed.
After its liquidation in March 2016 by a Casablanca court, a committee of trustees was set up to find a buyer and safeguard jobs for employees.
“Around 30 international groups showed an interest,” but nothing materialized, El-Yamani said.
The “national front” also said the government could have been more pro-active.
“In the absence of any government action, the refinery’s assets risk being sold to scrap by the kilogram,” the coalition of employees, economists and union leaders said in its report.
Minister of Energy and Mines Aziz Rebbah dismissed claims that the government has no interest in salvaging the oil refinery.
“We have nothing against it,” he said. “If a buyer comes forth we will examine the proposal,” he added.
Morocco is totally dependent on oil imports and the winding up of SAMIR’s operations has left the North African country more reliant than ever on imports of refined oil products.
A report earlier this year by the International Energy Agency noted that “the closure of the country’s only refinery... has clear implications for the security of oil supply” in Morocco.
The court that liquidated SAMIR three years ago has extended a deadline to keep the refinery open a dozen times.
The last extension expires on July 18, when SAMIR will know if it has a buyer or if it will be sold “in bits and pieces,” according to Moroccan media reports.