Business Monitor International


Saudi Arabia Real Estate Report

Published 23 July 2014

  • 75 pages
 
$1,295.00
Saudi Arabia Real Estate Report

BMI View:   The Saudi Arabia commercial real estate sector offers considerable long-term investment potential with the Saudi government having only recently cleared the way for private investment by multinationals in the market. The development of the country's non-hydrocarbons economy is expected to drive long-term demand for office and retail space in particular.  

The retail sector in Saudi Arabia is expected to remain generally stable over H214, despite the effects of a slowing economy and hydrocarbons industry. Development in other areas of the economy such as financial services and tourism is helping to support demand for commercial space across much of the kingdom and creating development opportunities for both local and international firms.

The outlook for commercial rental rates and net yields over 2014-2015 is therefore generally favourable across much of the market, however, we caution that heavy oversupply in some areas of the country such as the capital, Riyadh, will remain a key concern for landlords, particularly with a strong pipeline of development activity forecast for the coming months.

Recent Developments:

  • The Saudi government has announced the establishment of a new court solely dedicated to tackling real estate disputes in the country. These courts are likely to be introduced by 2015 in major Saudi cities, according to Al Watan. Issues such as land appropriation disputes, land deeds, differences between tenants and landlords on delayed rents, evictions and complaints about building destruction and other related matters will be handled by these courts.

  • US-based PineBridge Investments, through its GCC Real Estate Fund, is planning to invest around USD400mn in real estate across countries, including the kingdom. The fund, which is focused on the six Gulf Cooperation Council countries, will target sale-and-leaseback deals for shopping centres, warehouses and infrastructure, according to PineBridge CEO for the Middle East, Talal Al...

Table of Contents

BMI Industry View
7
SWOT
9
Business Environment
11
Economic
12
Political
13
Industry Forecast
15
Table: Office Forecast Rents (SAR per m2/month)
15
Table: Office Forecast Net Yield, 2010-2017 (%)
15
Table: Retail Forecast Rents (SAR per m2/month)
16
Table: Retail Forecast Net Yield, 2010-2017 (%)
16
Table: Industrial Forecast Rents (SAR per m2/month)
16
Table: Industrial Forecast Net Yield, 2010-2017 (%)
16
Construction and Infrastructure Forecast Scenario
17
Table: Saudi Arabia Construction Industry Data
17
Table: Saudi Arabia Construction Industry Data
17
Table: Table Headertable:headerSaudi Arabia Cement Forecast
19
Table: Saudi Arabia Cement Forecast
19
Macroeconomic Forecasts
26
Macroeconomic Forecast
26
Expenditure Breakdown
28
Table: Saudi Arabia - Economic Activity
35
Industry Risk Reward Ratings
36
Middle East and Africa - Risk/Reward Ratings
36
Table: Middle East and Africa Real Estate Risk/Reward Ratings
36
Business Environment Outlook
36
Table: BMI Business And Operation Risk Ratings
37
Institutions
37
Table: BMI Legal Framework Rating
38
Infrastructure
40
Table: Labour Force Quality
42
Market Orientation
43
Table: MENA - Annual FDI Inflows
44
Table: Trade And Investment Ratings
45
Table: Top Export Destinations
46
Operational Risk
47
Market Overview
48
Office
55
Table: Historic Rents - 2011-2012 (SAR per m2/month)
57
Table: Net Yield, 2011-2012 (%)
57
Table: Terms Of Rental Contract/Lease - H212
57
Retail Sales Indicators
57
Table: Retail, 2009-2016
57
Retail
59
Table: Historic Rents - 2011-2012 (SAR per m2/month)
61
Table: Net Yield, 2011-2012 (%)
61
Table: Terms Of Rental Contract/Lease - H212
61
Industrial
61
Table: Historic Rents - 2011-2012 (SAR per m2/month)
64
Table: Net Yield, 2011-2012 (%)
64
Table: Terms Of Rental Contract/Lease - H212
64
Competitive Landscape
65
Company Profile
68
Al-Khodari Group
68
Almabani General Contractors
70
Arriyadh Development Company (ADCO)
72
DAMAC Holdings
74
Dar al-Arkan Real Estate Development Company
76
Makkah Construction and Development Company
78
Demographic Forecast
80
Table: Saudi Arabia's Population By Age Group, 1990-2020 ('000)
81
Table: Saudi Arabia's Population By Age Group, 1990-2020 (% of total)
82
Table: Saudi Arabia's Key Population Ratios, 1990-2020
83
Table: Saudi Arabia's Rural And Urban Population, 1990-2020
83
Methodology
84
How We Generate Our Industry Forecasts
84
Construction Industry
85
Bank Lending
86
Real Estate/Construction Business Environment Rating
86
Table: Weighting Of Indicators
87
Sources
89

The Saudi Arabia Real Estate Report features Business Monitor International (BMI)'s market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.

BMI's Saudi Arabia Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Saudi Arabia.

Key Benefits

  • Benchmark BMI's independent real estate industry forecasts for Saudi Arabia to test other views - a key input for successful budgeting and strategic business planning in the Saudi real estate market.
  • Target business opportunities and risks in Saudi Arabia through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).

Coverage

Executive Summary

Summary of BMI's key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.

Industry SWOT Analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.

Market Overview

Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors.

Market Analysis

Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.

Industry Forecast Scenario

Historical data series (2010-2012) and forecasts to end-2017 for the domestic real estate industry and for the local and global finance industry. Indicators include:

Real Estate: Office, retail and industrial real estate yields for all major cities (%); short-term forecasts on minimum and maximum real estate rental prices by sub-sector (US$ per square metre, and local currency per square metre)

Construction: Industry value (US$bn); contribution to GDP (%); employment (`000); real growth (%)

Economy: Economic growth (%); nominal GDP (US$bn); unemployment (%); interest rates (%); exchange rate (against US$)

Business Environment Ratings

BMI's Real Estate Business Environment Ratings provide a country-comparative Risk-Reward Ratings index aimed at investors (real estate vendors, construction companies and financial investors) in the regional real estate market.

The ratings methodology makes sophisticated use of over 40 industry, economic and demographic data points.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses.

The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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