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

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.


Huawei's third-quarter revenue jumps 27% as smartphone sales surge

Updated 16 October 2019

Huawei's third-quarter revenue jumps 27% as smartphone sales surge

  • American companies, significantly disrupting its ability to source key parts
  • Huawei was all but banned by the United States in May from doing business with American companies

SHENZHEN, SHANGHAI: Huawei Technologies Co. Ltd’s third-quarter revenue jumped 27%, driven by a surge in shipments of smartphones launched before a trade blacklisting by the United States expected to hammer its business.
Huawei, the world’s biggest maker of telecom network equipment and the No. 2 manufacturer of smartphones, was all but banned by the United States in May from doing business with American companies, significantly disrupting its ability to source key parts.
The company has been granted a reprieve until November, meaning it will lose access to some technology next month. Huawei has so far mainly sold smartphones that were launched before the ban.
Its newest Mate 30 smartphone — which lacks access to a licensed version of Google’s Android operating system — started sales last month.
Huawei in August said the curbs would hurt less than initially feared, but could still push its smartphone unit’s revenue lower by about $10 billion this year.
The tech giant did not break down third-quarter figures but said on Wednesday revenue for the first three quarters of the year grew 24.4% to 610.8 billion yuan.
Revenue in the quarter ended Sept. 30 rose to 165.29 billion yuan ($23.28 billion) according to Reuters calculations based on previous statements from Huawei.
“Huawei’s overseas shipments bounced back quickly in the third quarter although they are yet to return to pre-US ban levels,” said Nicole Peng, vice president for mobility at consultancy Canalys.
“The Q3 result is truly impressive given the tremendous pressure the company is facing. But it is worth noting that strong shipments were driven by devices launched pre-US ban, and the long-term outlook is still dim,” she added.
The company said it has shipped 185 million smartphones so far this year. Based on the company’s previous statements and estimates from market research firm Strategy Analytics, that indicates a 29% surge in third-quarter smartphone shipments.
Still, growth in the third quarter slowed from the 39% increase the company reported in the first quarter. Huawei did not break out figures for the second quarter either, but has said revenue rose 23.2% in the first half of the year.
“Our continued strong performance in Q3 shows our customers’ trust in Huawei, our technology and services, despite the actions and unfounded allegations against us by some national governments,” Huawei spokesman Joe Kelly told Reuters.
The US government alleges Huawei is a national security risk as its equipment could be used by Beijing to spy. Huawei has repeatedly denied its products pose a security threat.
The company, which is now trying to reduce its reliance on foreign technology, said last month that it has started making 5G base stations without US components.
It is also developing its own mobile operating system as the curbs cut its access to Google’s Android operating system, though analysts are skeptical that Huawei’s Harmony system is yet a viable alternative.
Still, promotions and patriotic purchases have driven Huawei’s smartphone sales in China — surging by a nearly a third compared to a record high in the June quarter — helping it more than offset a shipments slump in the global market.