Saudi Arabia’s office market needs more high-quality space

Demand in Riyadh is flat, with only a handful of properties such as Al-Faisaliah tower, right, retaining high occupancy levels. (Shutterstock)
Updated 05 December 2018
0

Saudi Arabia’s office market needs more high-quality space

  • Saudi Arabia’s major cities and business hubs continue to suffer from a lack of the high-quality grade A stock
  • Rents for the lower-end and increasingly dated grade B space have softened, with potential renters put off by issues such as poor accessibility or lack of parking

LONDON: Office space rents remain under pressure in Saudi Arabia this year due to subdued occupier demand and a sluggish economy, according to a new report.
While the Kingdom recorded a pick-up in economic growth in 2018 due to improved oil prices, declines recorded in late 2017 still drag on the office-space rental market, the research published on Tuesday by real estate consultancy Knight Frank found.
Saudi Arabia’s major cities and business hubs continue to suffer from a lack of the high-quality grade A stock most sought-after by private and public companies.
Rents for the lower-end and increasingly dated grade B space have softened, with potential renters put off by issues such as poor accessibility or lack of parking. “The slowdown in the office market continued in 2018, as subdued occupier demand weighs on market-wide rents and occupancy levels; while key prime schemes continue to perform better than the average market as a result of limited stock of high quality assets,” said Raya Majdalani, research manager at Knight Frank.
Demand could recover in the longer term as reforms under the government’s National Transformation Plan and Vision 2030 begin to feed into the economy, the report said.
Economic growth is projected to reach 2.2 percent this year and 2.3 percent in 2019, according to the International Monetary Fund (IMF) estimates.
Urban regeneration initiatives such as mixed-use communities will act as a “catalyst” for the sector, Knight Frank said.
Demand in the capital city of Riyadh remains flat, with only a handful of grade A properties such as Kingdom Tower, Al-Faisaliah tower and Business Gate retaining high occupancy levels, the report found.
The King Abudullah Financial District is set to hand over phase 2 stock after 2021, which is expected to boost supply of quality space.
Average third-quarter Riyadh rents for grade A property stood at SR1,550 per square meter per year, while grade B rents stood at SR775 per square meter.
Renters in Jeddah are also waiting for a fresh supply of high-end office space, with the planned Jeddah Gate project, from the Dubai-based developer company Emaar, set to deliver about 230,000 square meters of high-quality office space in a mixed-use environment.
Knight Frank said that it remained “cautious” about the “timely delivery” of scheduled projects, adding it expects further delays given market conditions.
Grade A rents in the Red Sea city declined by 4 percent year-on-year and Grade B rents fell by 13 percent.


UAE gives 6,800 investors permanent residency under new ‘Golden Card’ system

Updated 21 May 2019
0

UAE gives 6,800 investors permanent residency under new ‘Golden Card’ system

  • Permanent residency will be granted to foreign investors after they invest a combined $27 billion in the Gulf state
  • The UAE cabinet also approved providing renewable 10-year visas to foreigners with investments in the UAE of at least 10 million dirhams

DUBAI: The United Arab Emirates said on Tuesday it will grant 6,800 foreign investors permanent residency under a new “Golden Card” system after they invested a combined 100 billion dirhams ($27 billion) in the Gulf state.
Typically, foreigners have renewable visas valid for only a few years, often tied to employment, but the government announced plans last year to ease its visa policy.
“We launched a new ‘Golden Card’ system to grant permanent residency to investors and exceptional doctors, engineers, scientists and artists,” Sheikh Mohammed bin Rashid Al-Maktoum, the ruler of Dubai and the vice president and prime minister of the UAE, said in a tweet on Tuesday.
“The first batch of 6,800 investors with 100 billion dirhams worth of investments will be granted the ‘Golden Card.’“
In May last year the Gulf Arab state announced plans to grant long-term permits to investors, senior scientists and entrepreneurs, in an effort to support its economy and real estate market, which had been hurt by low oil prices, but had not mentioned the Golden Card.
Economic growth has slowed since a slump in oil prices in 2014 and white-collar professionals are seeing stagnant or even falling employment.
“The permanent residency ‘Golden Card’ will be granted to exceptional talents and everyone who positively contributes to the success story of the UAE,” Sheikh Mohammed said his tweet.
Last year, the UAE cabinet also approved providing renewable 10-year visas to foreigners with investments in the UAE of at least 10 million dirhams, if non-real estate assets account for at least 60 percent of the total. Investors can bring spouses and children into the country.
It also approved five-year residency to owners of UAE real estate worth at least 5 million dirhams.