The first half of the year saw the construction of thousands of new residential units in Jeddah and Riyadh, but this didn’t stop Saudi Arabia’s property values and rental rates from rising.
According to a report by real estate consultancy JLL, between January and June, the two largest cities in the country saw a total of 27,500 new residential unit additions, increasing the residential stock to roughly 1.5 million units in Riyadh and 891,000 units in Jeddah.
Despite this flood, Riyadh’s residential sales prices increased by 10% on an annual basis, while rents went up by 9%. Prices in Jeddah increased by 5% during the same time that rents increased by 4%.
By year’s end, an additional 16,000 units are anticipated to be delivered to both cities. However, several issues, including increased competition for land, capacity limitations in the area, unstable costs associated with the state of the global economy, and growing shipping costs, have made the outlook for the residential construction industry more uncertain.
The amount of office space available in Riyadh also expanded; in the first half of the year, 52,000 square meters were added, bringing the total to 5.2 million square meters.
There is expected to be a further 249,000 square meters of office space added to Riyadh in the second half of the year, and 48,000 square meters added to Jeddah. In the first half of 2024, there is expected to be no new supply.
