More than 10.1 million sq m of manufacturing land is set to enter Riyadh’s industrial manufacturing sector, as it showed solid performance over the last year up to the second quarter of this year, said a report.

According to Colliers International’s Riyadh Industrial Market Overview the demand fundamentals combined with increased public and private sector spending pushed up the average sales price of manufacturing land in private industrial cities and average rental rates of dry-storage space, said the Arab News report.

It highlighted the demand will remain strong driven by solid economic fundamentals, a burgeoning population and government plans to increase the economic contribution of the industrial sector, it said.

“Despite Riyadh’s industrial master plan’s large forthcoming supply we expect demand for manufacturing space to maintain solid growth momentum,” Imad Damrah, Colliers International’s MD for Saudi Arabia, was quoted as saying.

“With a population nearing six million and the highest GDP in the kingdom, Riyadh continues to attract and promote investment in industrial and supporting logistics facilities.”

The report indicated that while the influx of supply will have a marginal impact on the market’s take-up level owing to strong fundamentals, it is anticipated that tenants will place more focus on the quality of infrastructure and demand different forms of financing and ownership/leasehold structures.

The supply is also expected to decelerate the rate of growth in sales prices of manufacturing lands which last year witnessed as nine per cent increase from a range of SR550 ($1,450) to SR700 to a range of SR600 to 780 per sq m.

Meanwhile, the warehouses and logistics sub-sector in Riyadh also witnessed a strong performance during the quarter with average rental rates of dry-storage spaces seeing a year-on-year increase of six per cent, rising from SR150 to SR160 per sq m for average-quality facilities featuring standard specifications with a per sq m rental rate ranging between SR130 and SR220, and occupancy levels reaching 91 per cent.