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.


DP World first-half profit dips 2.1%

Updated 16 August 2018
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DP World first-half profit dips 2.1%

  • ‘The near-term trade outlook remains uncertain with recent changes in trade policies and geopolitical headwinds in some regions continuing to pose uncertainty to the container market’
  • DP World recently won a 30-year concession for the management and development of a port project at Banana in the Democratic Republic of the Congo

DUBAI: DP World, one of the world’s biggest port operators, posted a 2.1 percent drop in first-half net profit on Thursday, and cautioned about geopolitical risks and recent changes to trade policies.
US President Donald Trump is taking a more aggressive, protectionist posture on trade than his recent predecessors, sparking retaliatory measures from other countries such as China.
“The near-term trade outlook remains uncertain with recent changes in trade policies and geopolitical headwinds in some regions continuing to pose uncertainty to the container market,” said the company’s chairman and chief executive, Sultan Ahmed bin Sulayem.
“However, the robust financial performance of the first six months also leaves us well placed for 2018 and we expect to see increased contributions from our recent investments in the second half of the year,” he said in a statement.
Lower export orders and car sales are likely to slow world trade growth in the third quarter, the World Trade Organization said recently, as a global tariff crusade by Trump to protect American jobs begins to bite.
DP World said it posted a net profit attributable to owners of the company of $593 million in the first half of the year, compared to $606 million during the same period a year earlier.
Cash from operating activities was recorded at $979 million in the first half, slightly lower than $1.0 billion a year earlier.
The port operator said capital expenditure guidance for 2018 remains unchanged at up to $1.4 billion with investments planned in the United Arab Emirates, Posorja (Ecuador), Berbera (Somaliland), Sokhna (Egypt) and London Gateway.
DP World recently won a 30-year concession for the management and development of a port project at Banana in the Democratic Republic of the Congo, which currently has no direct deep-sea port despite being Africa’s third-most populous country.