According to a recent report, demand for Saudi Arabia’s residential market grew strongly, with Riyadh seeing a 77% year-over-year increase in sales transactions in the first quarter.
Residential transactions in Jeddah increased by 92.9% year over year in the first three months of this year, while in Dammam, they increased by 28.0% year over year, according to global consulting firm CBRE.
“Whilst we have seen strong performance across commercial sectors within Saudi Arabia in the recent past, something which continues to date, we are now beginning to see the residential sector also register a significant surge in demand. This is, in turn, underpinning performance in the sector,” Taimur Khan, head of research MENA, said.
According to him, they anticipate that demand will continue to exceed supply for some time to come as long as fresh stock is still being delivered.
“However, we also expect that there might be some bifurcation in performance within the residential sector, with new quality assets likely to register record rates,” Taimur Khan added.
In Riyadh, Jeddah, and Khobar, the price of a villa increased by 3.6%, 0.2%, and 3.1%, respectively. Meanwhile, Dammam experienced a negligible 0.5% decrease.
When compared to the prior year, apartment prices rose by 8.4%, 0.9% and 0.4%, respectively, in Riyadh, Dammam, and Khobar.
However, the average cost of an apartment dropped by 1.1% in Jeddah during that time.
The office sector saw a slowdown in rental growth in all market segments during the first quarter of 2024.
The occupier market in Riyadh saw a 14% increase in prime rents, and 10.3% and 11.8% increases in grade A and grade B rents, respectively.
Grade A rents in Dammam increased by 8.0%, Grade B rents by 6.2%, and Grade A rents in Khobar increased by 4.6%.
As of the first quarter, the Grade A occupancy rates in Dammam and Khobar were 86.3% and 85.2%, respectively, while the Prime, Grade A, and Grade B segments in Riyadh had occupancy rates of 93.8%, 99.7%, and 99.4%.