JEDDAH – Major Saudi cities are forecast to see strong demand for both residential and commercial real estate as local banks look to improve access to property lending, Jones Lang LaSalle has said in a new report. Its first quarter Riyadh and Jeddah Real Estate Overview report, it said an increase in lending to real estate end users will contribute to raised levels of credit and confidence in the country. Jamil Ghaznawi, country head of Saudi offices of JLL, said: “We are witnessing strong demand for residential property and increased demand for commercial space from both the private and public sectors, which is being fuelled by continuing and new large infrastructure projects throughout the Kingdom. “With the Saudi Arabian Monetary Agency (SAMA) issuing licenses to allow leading banks to offer real estate financing, we expect improved access to home ownership in the Kingdom.” According to data from the Ministry of Justice, Riyadh was the most active Saudi market in 2013 in terms of real estate transactions with a total value of SR99 billion ($26.5 billion). The report said residential prices and rentals in Riyadh have continued to increase in most sectors of the Riyadh residential market over the past six months. It said notable increases have been recorded in villa prices to the north of the city and in apartment prices to the east. Rental increases have generally been more modest, typically in the range of one to three percent, the report said. It added that office rents for prime buildings have remained stable in recent months, while those in secondary buildings have declined marginally. JLL said this trend is likely to continue over the rest of 2014 with high levels of new supply increasing the overall market vacancy rate (currently around 20 percent) and exerting downward pressure on rents outside of a limited number of prime buildings. In Jeddah, data from the Ministry of Justice showed real estate transactions totaled $24.2 billion in 2013, with more than 40,132 individual deals. JLL added that Jeddah's office market has the lowest vacancy levels of any major office market in MENA (at around 10 percent), reflecting the active demand for space from both the public and private sectors. Residential prices in Jeddah have continued to increase with apartments (13 percent) recording a greater increase than villas (11 percent) over Q1. The western region remained the preferred residential location, recording the greatest increases in prices, JLL said. “This demand has resulted in rentals growing by around 10 percent for Grade A space over the past six months, with somewhat lower increases reported in secondary buildings,” the report said. — SG/Agencies
