Office space demand rises in Riyadh due to growth of start-ups

Total office stock in Saudi Arabia’s capital stood at 4.2 million square meters of gross leasable area by the end of 2018. (Getty Images)
Updated 12 February 2019
0

Office space demand rises in Riyadh due to growth of start-ups

  • Economic and social initiatives and legislation have had a positive impact on the country’s real estate sector

RIYADH: Riyadh is seeing rising demand for office space that caters specifically to small businesses and startups despite a strong supply pipeline, according to a new report.
Total office stock in Saudi Arabia’s capital stood at 4.2 million square meters of gross leasable area (GLA) by the end of 2018, according to broker CBRE, with an additional 870,000 square meters expected to be delivered by 2022.
It follows a number of Government-led initiatives aimed at stimulating private-sector growth and promoting a spirit of innovation and entrepreneurship in line with Vision 2030, CBRE said.
The broker’s Market Snapshot for 2018 also highlights a growing trend for office supply as part of mixed-use development. Rents remain under pressure in the Saudi capital with both the primary and secondary office rents down by about 4 percent and 7 percent year-on-year respectively.
But increased incentives by landlords, discounts for long-term leases, and other tenant perks could help to mitigate declines in the market.
“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,” said Simon Townsend, head of strategic advisory at CBRE MENAT and General Manager, CBRE KSA.
“Meanwhile, the increased government spending on large-scale infrastructure and mega-projects is expected to further stimulate the overall market, with a positive trickling-down effect on all key sectors.”
The opening up of the entertainment industry in Saudi Arabia could also boost the hospitality sector, which has traditionally been driven by corporate demand in Riyadh.
However in the short term at least, CBRE expects daily rates to remain under pressure.
According to CBRE’s Market Snapshot, more than 5,000 keys are expected to be delivered to the market by 2022.
In the residential sector, CBRE estimates expected delivery of 130,000 additional units by 2022 to add to the existing inventory of about 1.25 million units.
The government wants to increase the availability of affordable housing throughout the Kingdom and has signed a number of public private partnerships to spur development.


Hong Kong economy stalls amid US-China trade dispute: finance chief

Updated 17 February 2019
0

Hong Kong economy stalls amid US-China trade dispute: finance chief

  • ‘The impact of China-US trade frictions on Hong Kong’s exports has clearly emerged at the end of last year’
  • Economic growth in the semi-autonomous Chinese city for the last quarter of 2018 was less than 1.5 percent

HONG KONG: Hong Kong’s economy stalled last year as the ongoing China-US trade dispute and retail woes dragged down local business, the city’s financial chief said Sunday.
Beijing and Washington have already imposed duties on more than $360 billion in two-way trade, roiling global financial markets and weighing heavily on manufacturing output in both countries.
“The impact of China-US trade frictions on Hong Kong’s exports has clearly emerged at the end of last year,” said finance secretary Paul Chan.
Economic growth in the semi-autonomous Chinese city for the last quarter of 2018 was less than 1.5 percent — the weakest since the first quarter of 2016 and a “significant slowdown” from the average growth rate of 3.7 percent in the first three quarters, Chan wrote on his official blog.
The slowdown brought last year’s growth rate to an estimated three percent, down from the higher-than-forecast 3.8 percent recorded in 2017, he added.
“It was almost ‘zero-growth’ for commodities exports in the fourth quarter, which was a sharp drop compared to the average 6 percent growth in the first three quarters,” he wrote.
Chan said consumer sentiment had also dampened with retail sales rising only 2.1 percent year-on-year in the fourth quarter, a far cry from the more than 12 percent increase in the first half of the year.
“The external political and economic situation remains unclear ... Therefore, we repeatedly stress the need to support enterprises, safeguard employment, stabilize the economy and benefit people’s livelihoods,” he wrote, hinting at the ongoing trade negotiations between the world’s top two economies.
Chan is expected to deliver the Hong Kong budget on February 27.