Real estate VAT exemption boosted 2020 market activity

Real estate VAT exemption boosted 2020 market activity
Residential transactions rose by 11 percent in Riyadh with decision to exempt real estate transactions from VAT. (AFP)
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Updated 27 January 2021

Real estate VAT exemption boosted 2020 market activity

Real estate VAT exemption boosted 2020 market activity
  • The review showed that the Kingdom’s private non-oil economy expanded during the last quarter of 2020

JEDDAH: Saudi Arabia’s decision to exempt real estate transactions when it increased value-added tax (VAT) last year to 15 percent helped to boost residential market activity.

The residential market witnessed a 1.6 percent increase in Riyadh apartment-sale prices, a 2 percent decrease in Jeddah prices, and a 0.8 percent rise in Dammam.

However, residential villa prices fell in Riyadh by 2 percent, 3.1 percent in Jeddah, and 5.1 percent in Dammam.

The total volume of residential transactions rose by 11 percent in Riyadh, and 17 percent in Jeddah, which also witnessed a 16 percent increase in the total value of transactions.

The review showed that the Kingdom’s private non-oil economy expanded during the last quarter of 2020, and its December index reading was the highest in 12 months.

However, both retail and office markets softened in the last quarter. Vacancy rates across grades A and B office spaces increased by 1 percent and 3 percent, respectively, from 2019 in Riyadh, Jeddah, and Dammam.

Grades A and B offices rents declined by 0.7 percent and 2.9 percent in Riyadh, respectively, 4.2 percent and 8 percent in Jeddah, and 4.8 percent and 8.6 percent in Dammam.

Within the retail sector, average and super-regional mall rents fell by 2.3 percent in Riyadh, 2.7 percent in Jeddah, and 2.6 percent in Dammam. Community mall rents fell by 3.4 percent in Riyadh, and nearly 3 percent in Jeddah and Dammam.

The highest vacancy rate increases were reported in Jeddah, which was up 7 percent to 17 percent in the year up to the fourth quarter of 2020.

According to the Knight Frank review, the increase was primarily driven by small and medium-sized retailers vacating due to limited concessions being offered to support occupiers.

Riyadh’s retail vacancy rate increased 4 percent to 19 percent, while in Dammam it rose 6 percent to 11 percent.

However, the review noted that vacancy rates had been far lower in malls where landlords had offered incentives, such as rent-free periods and discounted rental rates, in order to retain existing tenants.

Furthermore, travel restrictions and the suspension of international Umrah and Hajj impacted the country’s hospitality market. The report said average revenue per available room decreased by 25.8 percent.

Taimur Khan, associate partner at Knight Frank Middle East, said: “Whilst Saudi Arabia’s real estate market will face challenges in parts, particularly its hospitality and retail sectors, the fundamentals underpinning its real estate market remain steadfast for the long-term.”


Dubai real-estate transactions surge 43% in March as sector rebounds

Dubai real-estate transactions surge 43% in March as sector rebounds
Updated 46 min 20 sec ago

Dubai real-estate transactions surge 43% in March as sector rebounds

Dubai real-estate transactions surge 43% in March as sector rebounds
  • The value of property transactions jumped 40 percent YOY in March
  • Real-estate agents earned 392 million dirhams in commission in Q1

RIYADH: Dubai real-estate transactions jumped 43 percent year over year in March 2021 to 6,590 as investors flooded back into the sector.

The value of sales rose 40 percent to 22.9 billion dirhams ($6.2 billion), according to the real estate bulletin issued by Dubai Land Department (DLD), WAM reported. The number of transactions was the second highest monthly total since February 2017.

The bulletin highlighted continued attractiveness of the real estate sector to new investors, with 5,683 entering the market in Q1 2021, representing 64 percent of the total number of investors in the period.

The value of commissions achieved by active real estate brokers reached 392 million dirhams in Q1 2021, while 143,374 rental contracts were recorded in Q1 2021, 57 percent of which were new contracts and 43 percent were renewed.

The bulletin highlighted the top five areas for investor attractiveness. In villa sales, Hadaeq Sheikh Mohammed Bin Rashid topped the list in Q1 2021, followed by Wadi Al Safa 5, Wadi Al Safa 7, Nad Al Sheba 1, and Al Thanyah Fourth. In apartment sales, Dubai Marina, Palm Jumeirah, Business Bay, Burj Khalifa, and Al Merkadh topped the list in Q1 2021.

Sales of luxury villas, sea-view apartments and second-hand family houses jumped in March, re-energizing a property market that saw a sharp fall in activity at the height of the pandemic and had been in a five-year slump prior to that, Reuters reported at the time.

S&P Global credit analyst Sapna Jagtiani does not expect Dubai’s real estate market to recover to pre-pandemic levels until next year, the agency said.


Red Sea Project uses smart light systems as it seeks dark sky accreditation

Red Sea Project uses smart light systems as it seeks dark sky accreditation
Updated 23 April 2021

Red Sea Project uses smart light systems as it seeks dark sky accreditation

Red Sea Project uses smart light systems as it seeks dark sky accreditation
  • Smart systems help reduce waste and minimize light pollution
  • Red Sea Project wants to be certified by the International Dark Sky Association

RIYADH: All Red Sea Project assets, including resorts, hotels and facilities, run through smart control systems that allow enough light as needed while being careful to save energy consumption and reduce waste, said Myriam Yaniz, director of lighting management at the company.

Red Sea Project is using the technology as it looks to be certified as an International Dark Sky Place by the International Dark Sky Association.

The company reviews different scenarios to know the adequate amount of lighting required during different times of the day and during the different seasons, Yaniz told Al Eqtisadiyah paper, during the World's Earth Day celebration on Thursday.

"At the design stage and during the first meeting of any destination project, our night vision is conveyed to our team of consultants and provided with our list of criteria to ensure that the work is carried out accordingly," she said.

Red Sea Project is a land and property development on Saudi Arabia’s Red Sea coast announced by the Saudi Crown Prince Mohammad bin Salman in July 2017.


Saudi bank deposit growth accelerated to 11-month high in February

Saudi bank deposit growth accelerated to 11-month high in February
Updated 23 April 2021

Saudi bank deposit growth accelerated to 11-month high in February

Saudi bank deposit growth accelerated to 11-month high in February
  • Bank deposit growth was the fastest since March 2020

RIYADH: Bank deposits in Saudi Arabia grew during February at the fastest pace since March 2020 as the economy continued to rebound from the coronavirus pandemic.

Deposits reached SR1.96 trillion ($522.5 billion) at the end of February, an increase of 1.83 percent, the most since the previous March’s 1.92 percent gain, Al Eqtisadiah reported, citing SAMA data.

On an annual basis, bank deposits in Saudi Arabia increased by 10.2 percent, or SR180.47 billion. Individual and corporate deposits, which made up 74.6 percent of total deposits, increased by 9.8 percent year over year.

Demand deposits increased 14.2 percent to SR1.29 trillion in the 12 months to the end of February, making up 88 percent of total deposits with savings and foreign deposits accounting for the rest.


Egypt and Russia agree to resume all flights, including to resorts

Egypt and Russia agree to resume all flights, including to resorts
Updated 23 April 2021

Egypt and Russia agree to resume all flights, including to resorts

Egypt and Russia agree to resume all flights, including to resorts
CAIRO: Egypt and Russia have agreed to resume all flights between the two countries in a call between their presidents, Abdel Fattah El-Sisi and Vladimir Putin, Egypt’s presidency said in a statement.
Flights to resort destinations Sharm Al-Sheikh and Hurghada were suspended after a Russian passenger plane crashed in Sinai in October 2015, killing 224 people.
The Egyptian statement did not specify a timeline for the resumption of flights, but Russia’s Interfax news agency reported this week that flights could resume in the second half of May.
An Airbus A321, operated by Metrojet, had been taking Russian holiday makers home from Sharm el-Sheikh to St. Petersburg in 2015, when it broke up over the Sinai Peninsula, killing all on board. A group affiliated with Daesh militants claimed responsibility.
The decision to resume flights followed “the joint cooperation between the two sides on this issue, and based on the standards of security and convenience provided for visits at Egyptian tourist destination airports,” the statement said.

Egypt raises domestic fuel prices for first time since subsidy reform

Egypt raises domestic fuel prices for first time since subsidy reform
Updated 23 April 2021

Egypt raises domestic fuel prices for first time since subsidy reform

Egypt raises domestic fuel prices for first time since subsidy reform
RIYADH: Egypt’s price-setting committee raised domestic fuel prices on Friday for the first time since it was formed in October 2019 following the completion of subsidy reforms, the petroleum ministry said in a statement.

Prices were last raised in July 2019 when Egypt, a net oil importer, finished phasing out subsides on fuel products as part of a reform program backed by the International Monetary Fund. Prices had remained stable over the past year after being lowered in April 2020 and October 2019.

The prices of 80-octane, 92-octane, and 95-octane fuel were raised by 0.25 Egyptian pounds each, to 6.25 Egyptian pounds ($0.40), 7.5, and 8.5 pounds per liter, respectively, the statement said.

The pricing committee’s mechanism links energy prices to international markets, and takes into account the exchange rate as well as the impacts of the coronavirus pandemic, the statement said.

Egypt lowered fuel prices in October 2019 following several rounds of price hikes as part of an austerity program that triggered discontent, including protests against President Abdel Fattah El-Sisi.