The Saudi government’s drive to increase home ownership for nationals continued to gather momentum in the first quarter of this year, according to JLL, a specialist in real estate and investment management. This is what is reported by TradeArabia as Riyadh, Jeddah record delivery of over 9,000 homes in Q1. One cannot help but wonder if it is Saudi Arabia’s Vision 2030 that wants to break its “addiction” to oil . . . or something else?
With the kingdom’s leadership working on its ambitious plan to boost home ownership to 60 per cent by the year-end, the delivery of residential units for Saudi nationals in Riyadh and Jeddah remained active during the opening quarter.
The Sakani program is being delivered under Vision 2030 and was launched to provide more than 500,000 residential units across the kingdom, costing an estimated SR500 billion.
The aim is to achieve 70 percent home ownership for Saudi nationals by the end of the decade, said the JLL in its Q1 2020 KSA Real Estate Market Performance report.
In Riyadh, a total of 7,500 units had been delivered in the first three months, while in Jeddah, the number had reached 1,800, it added.
“In the short-to-mid term, demand remains supported by the Sakani program and the various mortgage products launched over the past couple of years,” remarked Dana Salbak, the head of research for MENA region at JLL.
“However, in light of the current conditions and with no specific stimulus package in support of the residential market, we can expect somewhat of a slowdown in demand over the coming period,” noted Sablak.
Meanwhile, in the office sector, the drop in oil prices combined with shifts in the work environment towards remote working practices has resulted in a slowdown in demand for office space.
According to JLL, this has reflected on the performance of office spaces in Riyadh and Jeddah, resulting in declines of between four – six percent across both Grade A and Grade B spaces.
The retail sector in the kingdom has enjoyed an improved performance over the past year, however, it is expected to see a prolonged period of lower consumer appetite due to the current global pandemic.
By contrast, demand for retail-driven warehousing will be active as restrictions on movement and trade have led to a shift in consumer behaviour, with online shopping (e-commerce) becoming more popular, it stated.
“This aligns with some of the strategic goals of Vision 2030, which aims to increase the proportion of online payments from a target of 28 per cent this year, to 70 per cent by 2030,” said Salbak.
As with other markets around the world, the hospitality industry in Saudi Arabia kicked off the year strongly, with occupancy rates in Riyadh and Jeddah, registering improvements in the year-to-February 2020 when compared to the same period last year, recording 74% and 58% respectively.
However the period which followed, saw hotel performance levels decline as travel restrictions took effect, pointed out Sablak.
With the suspension of the Umrah season and uncertainty around the Hajj pilgrimage, which begins in late July, the performance of the tourism and hospitality market in the kingdom is likely to remain sluggish for the remainder of this year, particularly in Jeddah, which is considered a transit city for pilgrimages to Makkah and Madinah. he added.-TradeArabia News Service