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
Political
11
Economic
13
Business Environment
14
Industry Forecast
15
Office
16
Table: Office Forecast Rents (USD/sq m/month)
16
Table: Office Short-Term Net Yield Forecast (%)
16
Table: Office Medium-Term Net Yield Forecast (%)
17
Retail
17
Table: Retail Forecast Rents (USD/sq m/month)
17
Table: Retail Short-Term Net Yield Forecast (%)
17
Table: Retail Medium-Term Net Yield Forecast (%)
18
Industrial
18
Table: Industrial Forecast Rents (SAR/sq m/month)
18
Table: Industrial Short-Term Net Yield Forecast (%)
19
Table: Industrial Medium-Term Net Yield Forecast (%)
19
Construction And Infrastructure Forecast Scenario
20
Table: Construction And Infrastructure Industry Data (Saudi Arabia 2018-2023)
20
Table: Construction And Infrastructure Industry Data (Saudi Arabia 2018-2023)
21
Project Awards Boost Medium-Term Expectations
25
Macroeconomic Forecasts
26
Table: BMI And Bloomberg Consensus Forecasts For Brent, Q114-2016 (USD/BBL)
28
Industry Risk Reward Ratings
33
Middle East And Africa Risk/Reward Ratings
33
Table: Middle East And Africa Real Estate Risk/Reward Ratings
33
Saudi Arabia Risk/Reward Ratings
34
Rewards
34
Risks
34
Market Overview
36
Office
40
Table: Terms Of Rental Contract/Lease - 2013
41
Table: Historic Rents - 2012-2014 (USD/sq m/month)
41
Table: Net Yield, 2012-2014 (%)
42
Retail
42
Table: Terms Of Rental Contract/Lease - H213
43
Table: Historic Rents - 2012-2014 (USD/sq m/month)
44
Table: Net Yield, 2012-2014 (%)
44
Industrial
45
Table: Terms Of Rental Contract/Lease - H213
46
Table: Historic Rents - 2012-2014 (USD/sq m/month)
47
Table: Net Yield, 2012-2014 (%)
47
Competitive Landscape
48
Company Profile
51
Al-Khodari Group
51
Almabani General Contractors
53
Arriyadh Development Company (ADCO)
55
DAMAC Holdings
57
Dar al-Arkan Real Estate Development Company
59
Makkah Construction And Development Company
61
Demographic Forecast
63
Table: Saudi Arabia's Population By Age Group, 1990-2020 ('000)
64
Table: Saudi Arabia's Population By Age Group, 1990-2020 (% of total)
65
Table: Saudi Arabia's Key Population Ratios, 1990-2020
66
Table: Saudi Arabia's Rural And Urban Population, 1990-2020
66
Methodology
67
Industry Forecast Methodology
67
Sources
68
Risk/Reward Ratings Methodology
68
Table: Real Estate Risk/Reward Ratings Indicators
70
Table: Weighting Of Indicators
71

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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