Saudi residential market heats up even as affordability takes a hit: Knight Frank

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Updated 14 September 2022

Saudi residential market heats up even as affordability takes a hit: Knight Frank

Saudi residential market heats up even as affordability takes a hit: Knight Frank

RIYADH: Apartment prices in Saudi Arabia have increased by 32 percent, while villa prices rose by 21 percent in the last 12 months, according to the global real estate consultancy Knight Frank. 

“Villa and apartment prices in Saudi Arabia are rising faster and touching the peak levels of 2016,” Faisal Durrani, Knight Frank’s partner and head of research in the Middle East, told Arab News at the Euromoney Saudi Arabia Conference.

The Kingdom’s residential real estate transactions have increased by 20 percent year over year, said Durrani.

The increase in property prices has also taken a toll on the affordability of villas. People in Riyadh and Jeddah must cough up more than eight and 13 times their annual income, respectively, to buy a villa. 

On the other hand, apartments are reasonable as people need to spend four times their annual income to buy one.

“Four to six times is considered affordable,” said Durrani, indicating that apartments are a preferred option over villas in Saudi Arabia.

There has also been a socio-cultural transition among Saudis, who are more open to living in apartments.

“We see a structural shift in the market. It is more socially acceptable to live and raise a family in an apartment,” he said.

Infrastructure development

Durrani said that Saudi Arabia will become the world’s fastest-growing economy this year as the Kingdom pushes its ambitions articulated in its Vision 2030 blueprint.

He explained that a core part of the blueprint is the provision of world-class housing, which is why residential real estate is a critical component of all the giga-projects announced thus far.

“The Kingdom is positioning Riyadh as the new commercial nerve center, but NEOM will be the real crown jewel of Vision 2030,” said Durrani.

NEOM is radically redefining urban living in resource-poor regions, he added.

The futuristic city is expected to house 9 million residents across 300,000 new homes once the project reaches completion, making it the largest giga-project announced to date.

The massive supply has already drawn a ripple of excitement, with a recent Knight Frank research highlighting that one in five Saudis wants to buy a home in NEOM.

“There is already huge excitement among the population to be part of NEOM,” he said.

Commercial interests

Over 9,000 investment licenses were issued to international companies to work and operate in the Kingdom during the first half of 2022, Durrani said. “A lot of them want to be based in Riyadh,” he added.

In fact, the commercial interests in Riyadh are so high that office occupancy in the city is an astounding 97 percent, reported a recent Knight Frank study.

“The King Abdullah Financial District, for example, is fully leased, so there is no space available. We are in a situation where if there is even a slight increase in demand, office rents will rise more,” he said.

Clearly, there is a considerable demand for more offices, making it an attractive asset class for investors. 

“There is a demand, and therefore there is a strong investment case for building more offices and investing in that asset class,” added Durrani.

Knight Frank witnessed about SR7.5 billion ($2 billion) in foreign direct investment into Saudi Arabia in the first quarter of 2022, an increase of 10 percent. In attracting FDI, the Kingdom ranked 14th out of the G-20 countries.

Durrani, however, stressed the importance of developing an asset class that can attract global institutions as it is one of the things the region has not yet been able to do successfully.


Global Markets: Asian equities hit 9-month high as recession fears wane

Global Markets: Asian equities hit 9-month high as recession fears wane
Updated 18 sec ago

Global Markets: Asian equities hit 9-month high as recession fears wane

Global Markets: Asian equities hit 9-month high as recession fears wane

SINGAPORE: Asian stocks rose on Friday and were poised for their fifth straight week of gains after data highlighted a resilient US economy, boosting investor sentiment ahead of next week’s slate of central bank policy meetings.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose as much as 0.55 percent to hit an almost nine-month high of 562.10, and was last at 559.39.

The index, which fell nearly 20 percent last year, is up nearly 11 percent so far this month and is on course for its best-ever January performance. Japan’s Nikkei rose 0.05 percent.

European stock futures indicated that stocks were set to rise, with the Eurostoxx 50 futures up 0.3 percent, German DAX futures 0.28 percent ahead and FTSE futures up 0.16 percent.

The US economy grew faster than expected in the fourth quarter as consumers boosted spending on goods, data showed, but it could be the last quarter of solid GDP growth before the lagged effects of the Federal Reserve’s jumbo interest rate hikes are fully felt.

A separate report showed that labor market remains tight and could lead the Fed to keep interest rates higher for longer.

Ashwin Alankar, head of Global Asset Allocation at Janus Henderson Investors, said the headline GDP suggested robust economic activity and if a recession were to materialize it would be a shallower one.

“Overall GDP data was a ‘tale-of-two cities’ – good overall growth stemming from less-than-ideal drivers and prices mitigating but at a rate that is worrisome.”

Thursday’s set of data has raised investor hopes of a soft landing — a scenario in which inflation eases against a backdrop of slowing but still resilient economic growth.

Futures are pricing in a 94.7 percent probability of a 25-basis-point hike next Wednesday and see the Fed’s overnight rate at 4.45 percent by next December, or lower than the 5.1 percent rate Fed officials have projected into next year.

Data on US personal consumption expenditures due at 1330 GMT will provide further clues on inflation.

“The disinflation impulse is likely to stretch further, as has been evident from CPI releases lately, likely continuing to build a case for a 25 basis point rate hike by the Fed next week,” Saxo strategists said.

Next week will also feature Bank of England and European Central Bank meetings that will indicate the monetary policy path those central banks are likely to take.

Hong Kong’s Hang Seng Index was little changed after surging more than 2 percent on Thursday. Mainland China markets are due to resume trading on Monday after the Lunar New Year holiday.

Elsewhere in Japan, core consumer prices in Tokyo, a leading indicator of nationwide trends, rose 4.3 percent in January from a year earlier, marking the fastest annual gain in nearly 42 years.

The Japanese yen strengthened 0.1 percent to 134.04 per dollar as the data reinforced market expectations that quickening inflation could nudge the Bank of Japan to move away from its ultra-easy policy.

“We still think the policy change is a long way off,” ING regional head of research Robert Carnell said. “The spring salary negotiations are key to watch as wage growth is a prerequisite for sustainable inflation.”

The dollar index, which measures the US currency against six other peers, rose 0.23 percent, while the euro fell 0.22 percent to $1.0866.

Sterling was last trading at $1.23805, down 0.25 percent on the day.

Oil prices rose on expectations of a boost to demand from China’s reopening and after the strong US data. US West Texas Intermediate crude rose 0.41 percent to $81.34 per barrel and Brent was at $87.83, also up 0.41 percent on the day.

Oil Update: Prices advance on US growth, Chinese recovery hope

Oil Update: Prices advance on US growth, Chinese recovery hope
Updated 13 min 16 sec ago

Oil Update: Prices advance on US growth, Chinese recovery hope

Oil Update: Prices advance on US growth, Chinese recovery hope

SINGAPORE: Oil prices edged ahead for a second session on Friday, buoyed by stronger-than-expected US economic growth and hopes of a rapid recovery in Chinese demand as COVID-19 cases and deaths plunged from last month’s peak levels.

Brent futures gained 30 cents, or 0.34 percent, to $87.77 a barrel by 0321 GMT, while US crude rose 34 cents to $81.35 per barrel, a 0.42 percent gain. Both benchmarks had gained more than 1 percent on Thursday.

“Oil might have trouble making any substantial moves to finish the week as many traders will wait to see what happens with next week’s two massive events; the OPEC+ virtual meeting on output and the FOMC decision,” said Edward Moya, senior market analyst at OANDA.

OPEC+ delegates will meet next week to review crude production levels, amid steady support for crude prices from strong demand for jet fuel and diesel. The US Federal Reserve will decide on another rate hike, as inflation cools and gross domestic product improves.

Gains on US crude were limited by a 4.2 million barrel build in stocks at Cushing, the pricing hub for NYMEX oil futures, earlier this week.

Still, oil markets were boosted by broad optimism on the first day of the return of Chinese stock markets as China’s reopening still plays a main role in boosting the demand outlook, said Tina Teng, analyst at CMC Markets.

Critically ill COVID-19 cases in China are down 72 percent from a peak early this month while daily deaths among COVID-19 patients in hospitals have dropped 79 percent from their peak, pointing to a normalization of the Chinese economy and boosting expectations of a recovery in oil demand.

“The short-term bullish factor is that the recent outage in the US refineries helped push up gasoline prices, though the US crude inventories hit a 16-month high,” Teng said. 

11 agreements signed during global medical biotechnology summit in Saudi Arabia

11 agreements signed during global medical biotechnology summit in Saudi Arabia
Updated 27 January 2023

11 agreements signed during global medical biotechnology summit in Saudi Arabia

11 agreements signed during global medical biotechnology summit in Saudi Arabia
  • Delegates at the two-day event discussed biotech developments with the aim of shaping a modern and innovative healthy industry, organizers said
  • The speakers included international experts who highlighted the importance of global collaboration and industrial-academic cooperation to overcome health sector challenges

RIYADH: Eleven agreements were signed during the Riyadh Global Medical Biotechnology Summit 2023, which concluded in the Saudi capital on Thursday.

Delegates discussed a number of topics, ideas and ambitions related to the biotech sector during the two-day event, with the aim of helping to develop the field and enhance industrial and investment trends to build a modern and innovative healthy industry, organizers said.

The speakers included local and international experts and specialist researchers who explored topics that highlighted the importance of international collaboration and global industrial-academic cooperation to overcome unprecedented challenges in the health sector.

They stressed that investment in biotechnology will help to develop new products and achieve economic growth through global health solutions that advance scientific progress and innovation in industrial technology.

Eleven memorandums of understanding and cooperation agreements were signed during the summit between leading figures in the medical biotech sector, government agencies, and international and national companies.

An exhibition took place on the sidelines of the event, featuring local and international drug and vaccine manufacturers, along with research agencies and universities in the Kingdom. The participants showcased their latest research and innovations relating to drugs and vaccines, and their goals for enhancing drug security.

The summit was organized by the Ministry of National Guard Health Affairs, King Abdullah International Medical Research Center, and King Saud bin Abdulaziz University for Health Sciences, in cooperation with the Ministry of Investment. It took place under the auspices of Crown Prince Mohammed bin Salman and was inaugurated on his behalf by Minister of the National Guard Prince Abdullah bin Bandar.

Organizers said the aim of the two-day event was to highlight the importance of integration between ministries and other government organizations to improve quality in fields related to medical biotechnology.

Philippines 2022 GDP growth quickest in over 4 decades, but outlook challenging

Philippines 2022 GDP growth quickest in over 4 decades, but outlook challenging
Updated 26 January 2023

Philippines 2022 GDP growth quickest in over 4 decades, but outlook challenging

Philippines 2022 GDP growth quickest in over 4 decades, but outlook challenging
  • Pent-up demand, reopening, spur growth — planning secretary
  • Says China reopening to provide boost

MANILA: The Philippine economy ended 2022 with the fastest growth in over four decades underpinned by a robust final quarter, but analysts and policymakers warn that a global slowdown and soaring inflation will make for a difficult year ahead.
Manila’s fourth quarter forecast-beating annual growth of 7.2 percent reported by the statistics agency compared with the 6.5 percent pace expected in a Reuters poll, and brought full-year expansion to 7.6 percent, the fastest since 1976 and above the government’s target of 6.5 to 7.5 percent.
Economic Planning Secretary Arsenio Balisacan attributed the stellar fourth-quarter performance to strong domestic demand, rise in jobs, and “revenge” spending following the lifting of pandemic curbs and full reopening in the last three months of the year.
“We are confident that we will remain in our high growth trajectory,” Baliscan told a media briefing on Thursday.
He said China’s reopening will be a boon for the Philippine economy, while protecting the purchasing power of Filipinos and ensuring food security would remain priorities for the government as the public grapples with high inflation.
On a quarter-on-quarter basis, GDP growth came in at 2.4 percent in October-December, compared with expectations for a 1.5 percent rise and the previous quarter’s upwardly revised 3.3 percent expansion. Balisacan said the government was sticking with its 6.0-7.0 percent growth target for 2023, but that is not without risks, with the global economy expected to slow further this year roiled by the Ukraine conflict while rising inflation could lead to further policy tightening.
Like the rest of the world, the Philippines is battling red-hot inflation, currently running at 14-year highs, which if not tamed could crimp domestic consumption, a major driver of growth.
Government data showed household spending slowed for a third straight quarter in the October-December period, growing at an annual rate of 7.0 percent from 8.0 percent in the third quarter.
“We expect a difficult year ahead for the Philippines,” Capital Economics said in a note, citing the impact of high inflation and tighter monetary policy on domestic spending. For 2023, Capital Economics is expecting growth of 5.5 percent.
Elevated inflation, plus the need to maintain interest rate differentials between the US and the Philippines, have forced the Bangko Sentral ng Pilipinas (BSP) to embark on an aggressive tightening cycle last year.
Its governor hinted on Thursday of further policy actions depending on what the US Federal Reserve does.
Speaking at an economic briefing in London, Bangko Sentral ng Pilipinas Governor Felipe Medalla reiterated the central bank stood ready to act to bring inflation, which hit 8.1 percent in December, back to its 2 percent-4 percent target this year. 

UAE banks’ investments hit 13-month high in November

UAE banks’ investments hit 13-month high in November
Updated 26 January 2023

UAE banks’ investments hit 13-month high in November

UAE banks’ investments hit 13-month high in November
  • Abu Dhabi’s ADX expects increased listings this year
  • IHC considers bidding for Adani Enterprises

RIYADH: UAE banks’ investments exceeded 511 billion dirhams ($139 billion) at the end of November 2022, the highest level in 13 months, according to the Central Bank of the UAE.

The CBUAE’s statistics also showed an annual increase of 7.7 percent, equivalent to 36.6 billion dirhams, reaching a total of 511 billion dirhams at the end of November, compared to 474.5 billion dirhams in November 2021.

According to the figures, securities that are debts to third parties, or bonds, accounted for the largest share of banks’ investments by more than 49.1 percent, reaching 250.9 billion dirhams at the end of November, an increase of 4.5 percent on a monthly basis, compared to 240.1 billion dirhams in the previous year.

The share of banks’ investments in securities held to maturity amounted to some 39.3 percent of total investments, reaching 200.8 billion dirhams at the end of November 2022.

This was an annual increase of 76 percent compared to 114 billion dirhams in November 2021, and a monthly increase of some 2.9 percent compared to 195.1 billion dirhams in October 2022.

The banks’ investments in stocks totaled 12.2 billion dirhams in November 2022, a monthly increase of around 4.3 percent, compared to some 11.7 billion dirhams in October 2022. It also decreased on an annual basis by around 12.9 percent.

The statistics also showed that the other banks’ investments totaled 47.2 billion dirhams at the end of last November.

This was an annual increase of 4.7 percent, compared to 45.1 billion dirhams in November 2021, and a monthly increase of 0.85 percent, compared to 46.8 billion dirhams in October 2022, as well as an increase of 10.8 percent over the first 11 months of 2022, compared to about 42.6 billion dirhams in December 2021.

ADX listings

The Abu Dhabi stock exchange expects an increase in listings this year, even as global economies grapple with high inflation and rising interest rates, its chairman said.

“We have a healthy pipeline of IPOs and listings with aspirations to surpass 2022. There will always be challenges, but also opportunities,” Hisham Khalid Malak, chairman of the Abu Dhabi Securities Exchange told Reuters on Wednesday.

The global picture is “starting to look better than expected, with a soft landing now forecast in the United States,” he said, adding that “Europe is also starting to look better and China is opening up.”


UAE conglomerate International Holding Company is considering bidding for Indian billionaire Gautam Adani-led Adani Enterprises’ 200 billion rupee ($2.45 billion) follow-on sale of shares that began on Wednesday, the company’s spokesman said.

“IHC is considering the opportunity of bidding for stock purchase in the Adani Enterprise FPO (follow-on public offer); however, should anything materialize, IHC will inform the market as per the governance rules and regulations,” IHC spokesman Ahmad Ibrahim told Reuters.