The trends in residential property in Saudi Arabia is shifting towards homes that accommodate remote work facilities and incorporating wellness-centric features, Deloitte said in a report on the kingdom's real estate sector.
The demand for flexible workspace is also witnessing a surge, compelling developers to innovate office designs tailored for hybrid work models. Similarly, the retail and hospitality sectors are also undergoing adaptation to cater to changing consumer behaviors, with a particular focus on experiential spaces.
Transaction volumes in the residential sector have seen a decrease, yet sales prices for villas and apartments continued to ascend in 2023 compared to the previous year. Notably, Riyadh, Jeddah, and Dammam collectively recorded 67,233 residential transactions in 2023, totaling SAR 79 billion (USD 21 billion), reflecting a 15% decrease in value compared to 2022. Sales prices and rents have experienced notable growth across Riyadh and Jeddah.
Saudi Arabia’s tourism industry is on the rebound, attracting 53.6 million visitors in in the first half of 2023, with 14.6 million inbound tourists and 39 million domestic tourists. This influx in tourism is projected to contribute 6% to the country’s GDP in 2023.
Efforts such as the facilitation of tourist visas for GCC residents, the extension of visa on arrival to UK, US and EU residents, has supported the country’s hospitality sector in the post pandemic period.
The KSA occupancy rate averaged 63% in 2023, showing an increase from 58.2% during 2022. Occupancy in Riyadh averaged 64.7% while Jeddah averaged 63.2% in 2023.
Riyadh’s average daily rate (ADR) surged by 18% Y-o-Y during 2023, reaching SAR 797 (USD 213).
Riyadh hotels recorded the strongest occupancy in October and November reaching 80%, meanwhile, Jeddah hotels recorded their highest occupancy performance in May at 79%.
Office supply in the key markets of Riyadh, Jeddah and DMA stood at 5.9 million sqm, 2.1 million sqm and 1.4 million sqm respectively as of end of 2023. Grade A office space rent witnessed an 11% year on year increase in Riyadh, 7% in Jeddah and 4% in Dammam. Notable additions include Hiyazah Gate, Yline, North Yard and Luxury Plaza located in Al Yasmin district of Riyadh. A significant portion of the King Abdullah Financial District (KAFD) office supply has been successfully delivered, demonstrating high pre-leasing/leasing rates.
The launch of four Special Economic Zones (SEZs) in 2023, including King Abdullah Economic City, Jazan, Ras Al Khair, and Cloud Computing in the King Abdulaziz City for Science and Technology, is expected to create new avenues for sustainable business growth. These zones are poised to become global investment destinations, focusing on various sectors such as automobile supply chain, consumer goods, ICT, pharmaceuticals, and logistics.
