Limited stock and affordability constraints underpin fragmented performance in Saudi Arabia’s real estate market, says CBRE

Limited stock and affordability constraints underpin fragmented performance in Saudi Arabia’s real estate market, says CBRE

Riyadh: Saudi Arabia’s real estate market started the year with fragmented performance across cities and asset classes, with limited stock and affordability constraints marking the first quarter of 2023.

Looking at Saudi Arabia’s office sector figures, occupier demand remained strong, despite extremely limited levels of available stock. Grade A offices in Riyadh saw average rental rates increase by 9.3% year-on-year increase in Q1 2023, while Grade B rents rose by 14.0%. As for average occupancy rates in the capital, both Grades A and B stock saw occupancy levels improve slightly to 99.8% and 99.0%, marking annual increases of 1.8 and 2.1 percentage points respectively. In Jeddah, Grade A office rents increased by 13.8% in the 12 months to March 2023, whereas Grade B rents slightly rose by 1.0%. Occupancy rates for both Grade A and Grade B office rose to reach 91.8% and 79.3%. In the Eastern Province, Dammam and Khobar’s office markets saw Grade A rents increase by 9.7% and 8.0% respectively over the year to Q1 2023. Grade A occupancy levels in Dammam and Khobar at the end of the first quarter stood at 82.2% and 81.0% respectively.

In the residential sector, the total number of mortgage contracts issued by