RIYADH: Residential transaction volumes in Saudi Arabia fell 15.5 percent in the third quarter, compared to the same period last year, as lack of stock availability impacted activity levels in the Kingdom’s real estate sector, the latest market report by the global real estate adviser Commercial Real Estate Services revealed.
According to the report, the number of residential transactions in the Kingdom totaled 37,743, amounting to a total value of 25.6 billion in the third quarter, 0.8 percent less compared to the same period last year.
The report pointed out that the Dammam Metropolitan Area was the only region to record growth in residential transaction volumes with an increase of 12 percent in the year to the third quarter.
“Riyadh and Jeddah have maintained their downward trend in their total transaction volumes with their total diminishing by 31.1 percent and 19.3 percent respectively over the same period,” wrote CBRE in the report.
CBRE further noted that average apartment prices in the Kingdom increased by 7.8 percent in the 12 months to September, with prices in Riyadh, Jeddah, Dammam, and Khobar rising by 13.1 percent, 8.9 percent, 5.6 percent and 3.7 percent respectively.
According to the report, the majority of activity in the office sector remained centered in Riyadh in the third quarter, with occupancy levels reaching 99 percent and 98.7 percent for Grade A and Grade B respectively.
“Constrained supply levels have continued to support growth in rental rates, where in the year to September 2022, average Grade A and Grade B rents in Riyadh increased by 5.9 percent and 3.5 percent respectively,” CBRE added in the report.
In Jeddah, average Grade A rents rose by 8.2 percent in the third quarter, compared to the same period in 2021, while Dammam and Khobar registered an increase of 3.9 percent and 8.2 percent respectively.
Saudi Arabia's hospitality sector witnessed a strong rebound in the third quarter, underpinned by a rise in religious tourism, along with the continued growth in the number of entertainment initiatives and business conferences.
In the third quarter, the Kingdom’s average daily rents and average occupancy rate rose by 19.5 percent and 17.6 percent respectively in the year-to-date September 2022, while the revenue per available room also increased by 74.9 percent.
“Whilst real estate market performance across all major sectors and cities in Saudi Arabia remains robust over the course of the third quarter, we are seeing limited levels of suitable stock curtail activity across the Kingdom,” said Taimur Khan, Head of Research, MENA at CBRE.
He added: “We expect this trend to continue in the short-run where activity levels are likely to remain somewhat subdued and performance indicators continue to trend up, almost uniformly across sectors and major metropolitan areas.”