Saudi Arabia’s office construction activity, whose Vision 2030 plan contains building millions of jobs and constructing mega projects, has decelerated down over the last year mainly due to the coronavirus pandemic.
Developers in the kingdom rounded up 150,000 square meters of office gross leasable area (GLA) during 2020, providing a 76 percent downfall from the average office space delivered over the last three years, as per JLL’s new report released on Tuesday.
“The office sector witnessed muted activity across Jeddah, Makkah, Riyadh, and Dammam Metropolitan Area (DMA)- the four main cities in Saudi. Construction activity on office developments slowed down,” JLL said.
Moving forward, there are not many uplifting signs that the trend could be altered. As per the JLL, corporates are expected to carry on integrating and optimizing a hybrid working model to make sure their employees’ safety. This contains a combination of remote and office working.
Whereas the office sector was somewhat gloomy, construction activity within the residential sector has been quite active.
Residential supply
In 2020, about 60,000 units were handed over, guiding the country’s residential supply to 1.3 million and 835,000 in Riyadh and Jeddah, respectively. In Makkah and DMA, the whole together stock stands at 400,000 and 363,000, respectively.
JLL noted that demand for the kingdom’s residential properties remained active in the year 2020, all credit goes to the strong support of the government for the sector. This was seen in the high loan rate the previous year.
From January to September 2020, the count of loans increased by 84 percent, whereas the loan values were up 90 percent over the same period a year before.
Buoyant
Overall, JLL said the property market is still expected to remain light this year due to the “government’s focus on balancing growth and stability”.
“Even though there are sectors in KSA’s property market which remain challenged as a result of COVID-19, the government is looking beyond the implications of the pandemic by continuing to support a number of measures and by investing massively in various projects to achieve its Vision 2030 goals,” said Dana Salbak, head of research, Middle East and North Africa, at JLL.
Saudi Arabia’s Vision 2030 finds to detach the domestic economy off oil and raise non-oil revenues to $267 billion by 2030.