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
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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.


Turkey set to begin oil and gas drilling off Cyprus

Updated 21 February 2019
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Turkey set to begin oil and gas drilling off Cyprus

  • “In the coming days we will start drilling with two ships around Cyprus,” Turkish foreign minister said
  • Turkey and the Cypriot government have overlapping claims of jurisdiction in the eastern Mediterranean

ISTANBUL: Turkey will begin drilling for oil and gas near Cyprus in coming days, state-owned news agency Anadolu reported Foreign Minister Mevlut Cavusoglu saying on Thursday, a move that could stoke tensions with neighboring Cyprus and Greece.
Turkey and the internationally recognized Greek Cypriot government have overlapping claims of jurisdiction for offshore oil and gas research in the eastern Mediterranean, a region thought to be rich in natural gas.
“In the coming days we will start drilling with two ships around Cyprus,” Cavusoglu was quoted as saying in a speech to a business conference in western Turkey’s Aydin province.
“Let those who come to the region from far away, and their companies, see that nothing can be done in that region without us. Nothing at all can be done in the Mediterranean without Turkey, we will not allow that,” Cavusoglu said.
Turkey launched its first drillship “Fatih” in October to drill off the coast of Turkey’s southern Antalya province. It said a second ship that it purchased would operate in the Black Sea, but was diverted to the Cyprus area.
Breakaway north Cyprus, which is supported by Turkey, says any offshore wealth also belongs to them, as partners in the establishment of the Republic of Cyprus in 1960.
The island was divided in 1974 after a Turkish invasion triggered by a brief Greek-inspired coup. Countless peacemaking endeavours have failed, and offshore wealth has increasingly complicated peace negotiations, with Greek Cypriots saying the matter is not up for discussion.