The residential sector in the Saudi capital Riyadh has witnessed significant activity levels in 2019, according to new data released by global real estate consultancy firm CBRE.

The report reveals that the volume and value of transactions has increased in the Saudi capital by 53 per cent and 63 per cent respectively year-on-year.

Meanwhile, residential mortgages for individuals in the kingdom recorded a growth rate of more than 250 per cent in terms of the number of contracts signed from January to November 2019.

Figures also demonstrate that the value of contracts rose by more than 160 per cent in the same period year-on-year, it stated.

According to CBRE, the Saudi residential sector has been further bolstered by continued government support.

Last October, the Ministry of Housing launched an initiative to support residential renovations by providing financing for housing units which are over 15 years old.

This will likely result in higher activity among existing aging stock within the central districts of Riyadh, stated the property expert.

CBRE’s study also reveals that beneficiaries of the Saudi Ministry of Housing’s ‘Sakani’ initiative aimed at increasing the national rate of home ownership has increased by 14% in 2019, compared to the previous year.

As of the end of 2019, the capital’s residential supply stood at 1.29 million residential units with an expected delivery of 111,000 additional units by 2023, it added.

On the office sector, CBRE said co-working and flexible office working structures have continued to distrupt the global office markets, and in Riyadh too they are expected to reshape the office leasing market.

The kingdom’s unemployment rate declined in Q3 last year to 12 per cent - down from 12.8 per cent in the same period in 2018.

These unemployment rates are expected to continue to decline in the short-term, with a positive impact expected in terms of increased potential office demand, stated the property expert in its report.

Construction on the Riyadh metro continued to progress in 2019, with operations expected to commence this year.

Upon completion, real estate in proximity to key transport hubs will benefit from enhanced accessibility and connectivity.

King Abdullah Financial District is also expected to play a pivotal role in upgrading the capital’s office market. The iconic project will provide a number of Grade A office towers aimed at cementing the district as a local, regional and global financial hub.

According to CBRE, the commercial real estate sector is also due to be further stimulated by increased investment and business activity, as evidenced in the announcement of a number of projects, with total investment of more than $15 billion during the third edition of the Future Investment Initiative in 2019.

Total office stock in Saudi Arabia’s capital stood at 4.3 million sqm of gross leasable area (GLA) in the last quarter of 2019 with an additional 1.66 million sqm GLA expected to be delivered by 2023, it added.

Simon Townsend, Head of Strategic Advisory at CBRE Mena and Turkey and General Manager, CBRE Saudi Arabia, said: "The recent economic and social initiatives and legislation introduced by the Saudi government have already had an extremely positive impact on the country’s real estate sector."

"We are already starting to witness impressive growth across major real estate segments including residential, hospitality and retail, and this upwards trajectory is likely to continue in the short to medium term.  Increased government spending on large-scale infrastructure and mega-projects is expected to further stimulate the overall market, with a positive trickling down effect on other complementary sectors," stated Townsend.

According to him, performance remains soft, and oversupply remains a challenge; however, the innovative spirit employed by the government and private entities alike demonstrates the encouraging direction that the real estate market is moving in and the promising opportunities that are continuing to arise.

"Furthermore, significant infrastructure projects are nearing completion, such as the Riyadh Metro, which will add to the positive sentiment both from an occupier and investor perspective. Overall, the country is making great leaps in its efforts to become a global business hub and world-class tourism destination, and the market is expected to continue to react positively to the efforts of the public and private sectors alike," he added.-TradeArabia News Service