Riyadh office occupancy levels hit 98% as demand rises 

Riyadh office occupancy levels hit 98% as demand rises 
The average lease rates for prime office space in Riyadh have increased by 18 percent over the past 12 months to approximately SR1,775 ($472) per square meter. (Shutterstock)
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Updated 14 November 2022

Riyadh office occupancy levels hit 98% as demand rises 

Riyadh office occupancy levels hit 98% as demand rises 

RIYADH: Saudi Arabia's capital city Riyadh continues to witness increasing demand for prime office space, with Grade A office occupancy levels rising by 4 percent year-on-year to reach 98 percent, according to global property consultant Knight Frank.  

The heightened level of requirements means landlords are firmly in the driving seat, said Knight Frank, adding that office lease rates continue to climb in the wake of growing demand.  

The average lease rates for prime office space in Riyadh have increased by 18 percent over the past 12 months to approximately SR1,775 ($472) per square meter, it said. 

“As the Kingdom’s economic transformation plan unfolds, business activity is rising at an extraordinary pace,” said Knight Frank Partner- Head of Middle East Research Faisal Durrani.  

He added that 70 firms have now committed to relocating their regional headquarters to Riyadh, including Aldeham Education Group and French rolling stock manufacturer Alstom. 

Foreign investment licenses issued during the second quarter of the year were nearly up by 700 percent compared to last year. This has been led by retail, construction, manufacturing, hotels, food and beverage, and business services companies, it said. 

On a separate note, foreign direct investment in the Kingdom has hit SR3.5 billion across 49 deals during the second quarter, up from 37 in the prior quarter, Knight Frank noted.  

This alone has created 2,000 new jobs “which will inevitably filter through to the office market in the form of new space requirements,” Faisal Durrani said.  

He added that Grade B rents have also seen an increase. 

“Average Grade B rents are up 10 percent in the last year,” said Durrani adding that high requirement levels in prime commercial locations such as King Fahad Road and Olaya Street have lifted Grade B rents here by 6 percent.  

“While city-wide Grade B occupancy levels now stand at 75 percent; the highest level in at least five years,” he added.  

Meanwhile, Jeddah’s office market is also experiencing a “resurgence” in requirements as multinational and domestic businesses ramp up their presence in Saudi Arabia’s second-largest city.  

As is the case elsewhere in the world, the focus is on best-in-class Grade A offices, however, Knight Frank said the lack of supply and rising costs mean “many businesses are exploring Grade B space as well.” 

Grade A office rents in Jeddah stand at around SAR 1065 psm, reflecting a 6.5 percent increase on this time last year, according to the global consultancy firm. It added that Grade B rents too have increased by 8.5 percent over the same period. “Vacancy levels continue to edge downward, standing at 8 percent for Grade A offices and 20 percent for Grade B buildings,” it added. 

This comes as the positive economic sentiment has also impacted office demand in the Eastern Province. Knight Frank noted that rising requirements for offices in the Dammam Metropolitan Area have driven up lease rates for Grade A space by 5 percent in the last 12 months to SR950 psm. 


GCC stocks finished November lowest in a year as TASI continues to be under 11K level

GCC stocks finished November lowest in a year as TASI continues to be under 11K level
Updated 12 sec ago

GCC stocks finished November lowest in a year as TASI continues to be under 11K level

GCC stocks finished November lowest in a year as TASI continues to be under 11K level

RIYADH: The equity markets in the Gulf Cooperation Council region were dragged to the lowest in one year in November 2022, as Saudi Arabia’s main index slipped 6.6 percent below the 11,000 mark, according to a report by Kamco Invest.

TASI slipped below 11,000 on Nov. 21 and has been hovering under that mark since then.

In November, Arabian Drilling Co. topped the TASI chart with a gain of 18.0 percent followed by Abdul Mohsen Al-Hokair Tourism and National Co. for Learning and Education with gains of 17.4 percent and 16.2 percent, respectively.

On the decliners’ side, Middle East Paper Co. topped with a fall of 26.8 percent followed by Rabigh Refining and Petrochemical Co. and Fitaihi Holding Group with declines of 24.9 percent and 24.3 percent, respectively.

In the report, Kamco Invest noted that Oman was the best-performing market in November with a gain of 5.7 percent, followed by Kuwait and Abu Dhabi where stocks rose 3.6 percent and 1.3 percent respectively.

According to the report, the steep decline in November also affected the GCC markets' year-to-date performance, with the index closing the month in red for the fourth time this year.

“Saudi Arabia was the only market in the GCC that closed November 2022 with a year-to-date decline of 3.4 percent,” said Kamco Invest in the report.

The report added: “Abu Dhabi continued to lead in the region with a year-to-date gain of 24.3 percent followed by Oman and Kuwait with healthy gains of 11.7 percent and 7.7 percent, respectively.”

According to the Kamco Invest report, almost all the sectoral indices closed in the red during the month of November.

The report further pointed out that capital goods, hotels, restaurants and leisure, and real estate indices showed marginal positive performance during the month while the rest of the benchmarks receded.

The pharma and biotech index was the worst-performing index during November as it registered a decline of 10.6 percent followed by the consumer durable and apparel and materials index with declines of 10.4 percent and 9.6 percent, respectively, the report added.

The report went on to point out that the utility index in the GCC region also witnessed a decline of 9.6 percent during November. 


Oil Updates — Crude dips ahead of OPEC+ meeting; Russia says price cap will not curb oil demand 

Oil Updates — Crude dips ahead of OPEC+ meeting; Russia says price cap will not curb oil demand 
Updated 04 December 2022

Oil Updates — Crude dips ahead of OPEC+ meeting; Russia says price cap will not curb oil demand 

Oil Updates — Crude dips ahead of OPEC+ meeting; Russia says price cap will not curb oil demand 

RIYADH: Oil futures slipped 1.5 percent in choppy trading on Friday ahead of a meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, on Sunday and an EU ban on Russian crude on Monday. 

Brent crude futures settled down $1.31, a 1.5 percent drop, at $85.57 per barrel. US West Texas Intermediate crude CLc1 futures fell $1.24, or 1.5 percent, to $79.98 per barrel. 

Both contracts dipped in and out of the negative territory, but notched their first weekly gains at around 2.5 percent and 5 percent, respectively, after three consecutive weeks of drops. 

Russia says price cap is dangerous 

Russia said on Saturday it would continue to find buyers for its oil, despite what it said was a “dangerous” attempt by Western governments to introduce a price cap on its oil exports. 

A coalition of Western countries led by the Group of Seven nations agreed on Friday to cap the price of Russian seaborne oil at $60 a barrel, as they aim to limit Moscow’s revenues and curb its ability to finance its invasion of Ukraine. 

Russian President Vladimir Putin and high-ranking Kremlin officials have repeatedly said that they will not supply oil to countries that implement the price cap. 

In comments published on Telegram, Russia’s embassy in the US criticized what it said was the “reshaping” of free market principles and reiterated that its oil would continue to be in demand despite the measures. 

“Steps like these will inevitably result in increasing uncertainty and imposing higher costs for raw materials’ consumers,” it said. 

“Regardless of the current flirtations with the dangerous and illegitimate instrument, we are confident that Russian oil will continue to be in demand.” 

Zelensky says level of price cap on Russian oil isn’t serious 

The $60 price cap on seaborne Russian oil agreed by G7 nations and Australia is not serious and will do little to deter Russia from waging war in Ukraine, President Volodymyr Zelensky said on Saturday. 

The EU is now set to approve the cap after the G7 and Australia struck a deal on Friday. The measure aims to reduce Russia’s income from selling oil, while preventing a spike in global prices. 

“You wouldn’t call it a serious decision to set such a limit for Russian prices, which is quite comfortable for the budget of a terrorist state,” Zelensky said in a video address. 

“It’s only a matter of time before stronger tools will have to be used anyway. It is a pity that this time will be lost.” 

Andriy Yermak, head of Zelensky’s administration, said earlier that the cap should be set at $30 “to destroy the enemy’s economy quicker.” 

Zelensky complained the world had shown weakness by setting the cap at $60, which he said would swell Russia’s budget by $100 billion a year.

“This money will ... go toward further destabilization of precisely those countries that are now trying to avoid serious decisions,” he said. 

(With input from Reuters) 


NEOM faces no obstacles to making The Line a reality as KSA has the vision: Top official     

NEOM faces no obstacles to making The Line a reality as KSA has the vision: Top official      
Updated 04 December 2022

NEOM faces no obstacles to making The Line a reality as KSA has the vision: Top official     

NEOM faces no obstacles to making The Line a reality as KSA has the vision: Top official      

RIYADH: NEOM is facing no difficulties or obstacles in materializing The Line, the 170-kilometer smart city, as Saudi Arabia is determined to make it a reality, according to a top official.   

In an exclusive interview with Arab News on the sidelines of the World Travel and Tourism Council Global Summit in Riyadh last week, Peter Fitzhardinge, head of Tourism Marketing at NEOM said that the developmental works in NEOM are progressing steadily, and the $500 billion project is becoming a reality.   

“The development is being done. NEOM is becoming a reality. I live in NEOM, and I see developments every minute of every day. You have to come to NEOM to see the future of livability in the world,” said Fitzhardinge.

Peter Fitzhardinge, head of Tourism Marketing at NEOM. (Supplied)

He added: “I have traveled over The Line. I do not think there are any obstacles for the Line, as we have the vision, will and determination. The Line will take the center stage in the vast beautiful 26,000 square kilometers.”  

According to Fitzhardinge, the 2029 Asian winter games at Trojena will showcase how NEOM will use innovation to carry out the event in a meticulous manner.   

“NEOM is all about innovation. I think now, not only we have to launch Trojena to show the vision, but we have to also showcase how we can bring Asian winter games into reality for people to come and participate in winter sports in NEOM,” he added.   

It should be noted that Trojena, which is due to be completed in 2026, is an area where winter temperatures drop below zero and year-round temperatures are generally 10 degrees cooler than the rest of the region.  

He added: “We are not talking about a shopping mall here. We are talking about beautiful high mountains, outdoors at 26,000 meters high. Trojena will be a great adventure playground for the world to come.”   

He further pointed out that NEOM will not be just about tourists, but Saudis will also play a crucial role in running and managing the tourism sector in the megacity.   

“NEOM is a place where everybody will be included. It is very much about inclusivity,” said Fitzhardinge.   

Earlier, Nadhmi Al-Nasr, CEO of NEOM, during his speech at the Summit said that the hanging stadiums within NEOM will make tourists reimagine and visualize the future.   

“In The Line, we want people to come and see how sports stadiums are built, and where they are built. The sports stadiums in NEOM are 300 meters high, loose and hanging in the air,” said Al-Nasr. 

 


Full reliance on SAF beyond reach of current aviation technology

Full reliance on SAF beyond reach of current aviation technology
Updated 04 December 2022

Full reliance on SAF beyond reach of current aviation technology

Full reliance on SAF beyond reach of current aviation technology
  • The high cost of SAF will affect its utility when compared with conventional jet fuel, according to KAPSARC

RIYADH: Although aircraft manufacturers and airlines have all aimed to increase energy efficiency over recent decades, the move to find alternatives to fossil-based fuels has been a struggle.

While the International Air Transport Association and the International Civil Aviation Organization are pushing the industry to adopt sustainable aviation fuel, the goal might be beyond the reach of current technologies, noted Riyadh-based King Abdullah Petroleum Studies and Research Center.

SAF is a term the aviation industry uses to describe nonconventional fossil-derived aviation fuel. It uses various sustainable resources, including carbon captured from the air and green hydrogen mixed with traditional jet fuel “with no changes needed to the aircraft or infrastructure,” according to Amsterdam-based SAF producer SkyNRG.

It adds that these green fuels cut emissions by 70 to 80 percent per flight.

Brian Moran, the vice president of global sustainability policy and partnerships for Boeing, explained that SAF is made from different feedstock such as biomass residue, cooking oils, or waste gases.

Brian Moran, the vice president of global sustainability policy and partnerships for Boeing.

Different pathways have been created to convert recycled carbon by combining it with hydrogen to produce a new fuel, Moran told Arab News in an earlier interview.

He added: “It’s not one silver bullet, but sustainable aviation fuel and low carbon fuels on the road to sustainable aviation fuels play a really vital role. And that’s why we’re so invested there.

“In the next 20 years, the world needs 43,000 new airplanes. So it’s on us to make sure that we continue this descend of emissions reduction that we have been on.”

High demand

IATA says the main challenge of SAF producers is meeting the airline demand for alternate fuel.

In 2021, airlines had ordered 14 billion liters of SAF, which “addresses the issue of whether airlines will buy the product,” added Willie Walsh, the director general of IATA, in an interview with CNBC.

The aviation sector has the second-highest energy demand in the transportation industry after the roads sector.

Willie Walsh, the director general of IATA.

Reports show that airlines are slowly moving to adopt SAF, with Qatar Airways and Emirates among them.

Qatar Airways has said 10 percent of its flights will use the fuel by 2030, while Emirates signed a memorandum of understanding with America’s GE Aviation in November 2021 to conduct an Emirates Boeing 777-300ER test flight using 100 percent SAF by the end of the year.

Pan-European aircraft manufacturer Airbus announced that all its aircraft are certified to fly with a mix of up to 50 percent SAF blended with kerosene. The aim is that all of its planes will be able to fly solely using SAF by 2030.

HIGHLIGHT

While the International Air Transport Association and the International Civil Aviation Organization are pushing the industry to adopt sustainable aviation fuel, the goal might be beyond the reach of current technologies, noted Riyadh-based King Abdullah Petroleum Studies and Research Center.

“I think quantity is the main issue at the moment. Governments should intensify the production of SAF. The reality is that airlines used every single drop of sustainable fuel that was available to us in 2021,” Walsh said in an interview issued by the association.

Even though about 100 million liters of SAF were used last year, according to Walsh, “that’s a very small amount compared to the total fuel required for the industry.”

Boosting supplies

Before 2021, only two companies globally produced SAF commercially: Finland-based Neste and Boston-based World Energy, according to the US Global Investors, a Texas-based investment adviser.

Other companies entering the field in 2021 and 2022 include Spain’s Repsol, France’s TotalEnergies, the UK’s BP, Phillips 66 and California-based Fulcrum BioEnergy.

IATA expects to see SAF production hit 7.9 billion liters by 2025, which would meet only around 2 percent of the industry’s fuel requirements. (Shutterstock)

Neste has a small annual capacity for 100,000 metric tons of SAF, but it claims to be on track to increase this to 1.5 million tons by the end of 2023 at its facilities in Europe and Singapore.

On the other hand, World Energy is planning to convert a refinery in Houston to a SAF plant, while Boeing is establishing a facility in Japan to begin researching and developing SAF.

In March, Riyadh-based Alfanar announced it had invested £1 billion ($1.3 billion) in a UK project which produces SAF from waste.

The Lighthouse Green Fuel project generates more than 180,000 metric tons annually in the UK, the firm said in a statement.

The cost factor

The high cost of SAF will affect its utility when compared with conventional jet fuel, according to KAPSARC. IATA estimates SAF generally costs twice or four times as much as any aviation fuel.

According to the Air Transport Action Group, this is happening in an industry that saw 1,478 airlines account for 2.1 percent of all carbon dioxide emissions and 12 percent of the transportation sector discharge in 2019.

“We are committed to supporting Saudi Arabia to succeed in open banking. And that is why we’re working the entire ecosystem, be it the fintech, banks or the regulator,” said Abdulla Al-Moayed, CEO and founder of Tarabut Gateway. (Supplied)

That year, the industry spent $186 billion on 95 billion gallons of fuel to fly its passengers worldwide.

Fossil fuel spending will remain a deciding factor for this sector for some time. Commercial aircraft, like trains and heavy-goods vehicles, cannot rely on electric engines, as they do not provide the thrust these power-hungry vehicles demand.

IATA expects to see SAF production hit 7.9 billion liters by 2025, which would meet only around 2 percent of the industry’s fuel requirements. However, by 2050, the association says production would jump to 449 billion liters or 65 percent of the sector’s needs.


Saudi pharmaceutical market size to reach $11bn by 2026

Saudi pharmaceutical market size to reach $11bn by 2026
Updated 04 December 2022

Saudi pharmaceutical market size to reach $11bn by 2026

Saudi pharmaceutical market size to reach $11bn by 2026
  • Bayer aims to keep tapping into local talent to contribute to the Saudi community

RIYADH: The Saudi pharmaceutical market is worth about $8 billion, according to Samer Lezzaiq, Bayer’s managing director for Saudi Arabia.

The market is estimated to touch $11 billion in 2026, almost as big as Egypt and the UAE combined.

“There is absolutely no doubt that the Saudi pharmaceutical market is among the largest in the Middle East,” said Lezzaiq.

“If you look into the markets, you will see that, for example, the UAE’s market is about $3 billion, while Egypt is a little bit more, it’s about $5.5 billion, so Saudi is almost as big as both Egypt and the UAE,” he added.

The German inventor of Aspirin has a 1.4 percent market share in the Kingdom, about 1 percent less than the company’s share globally.

“So our pharma market share globally is 2.4 percent. We are No. 12 in the world when it comes to pharmaceuticals. In Saudi, we have 1.4 percent; the mzarket share is lower than the global average,” he said.

Bayer’s main office in Saudi Arabia is based out of Jeddah, serving the Kingdom and neighboring Gulf countries.

With a team of 170 people, Bayer aims to keep tapping into Saudi talent to contribute to the well-being of the Saudi community.

“We have 170 employees in Saudi Arabia, almost 52 percent of our workforce is Saudi nationals,” said Samer Lezzaiq, Bayer’s managing director for Saudi Arabia

“We have 170 employees in Saudi Arabia, almost 52 percent of our workforce is Saudi nationals,” he said.

Lezzaiq said that Saudi Arabia and the UAE are leading the region in digital health. The company is utilizing digital tools to accelerate its sales in the region; it has recently closed a deal with Amazon to enhance its reach to consumers.

“Our consumer division has some dermatologically tested skin products that were launched recently. So there would be more potential to reach a larger number of consumers by partnering with third parties like Amazon. So digital today is really at the center of our strategy,” he added.

Bayer is a German company with a more than 150-year history and core competencies in healthcare and agriculture.

On March 6, 1899, Bayer AG registered the trade name Aspirin and began distributing the white powder to hospitals and clinics.