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Market Report, "Saudi Arabia Real Estate Report Q3 2013", Published

Recently published research from Business Monitor International, "Saudi Arabia Real Estate Report Q3 2013", is now available at Fast Market Research


Boston, MA -- (SBWIRE) -- 09/11/2013 -- The Saudi Arabia Real Estate report examines the commercial office, retail, and industrial and construction segments throughout the country in the context of a bullish outlook for the economy, its buoyant construction sector and the fledgling weakness in the commercial real estate rental market.

With a focus on the two principal cities of Riyadh and Jeddah, the report covers rental market performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the government-fed construction boom on a market already characterised by oversupply. The key growth areas driven by increasing activity on the part of international investors and the potential of the domestic consumer market are also explored, with corporate growth strategies looking to the kingdom for expansionary opportunities.

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Nevertheless, Saudi Arabia's various real estate sectors are developing in different directions and at varying rates. The commercial market in general suffers from oversupply and is forecast to undergo limited growth in the short term; our most recently collected data from December 2012 do not contradict this long-held view in light of the dynamic supply pipeline. Of the three sub-sectors that we survey there are pockets of growth opportunity, particularly in the retail segment.

Key Points

- Our most recent data collection in December 2012, covering performance over the entire year, has not been encouraging, with demand failing to keep pace with new supply. With no sign of a slowing in the construction pipeline, we anticipate the imbalance to continue to place downwards pressure on the majority of rental rates.
- Saudi Arabia's growth outlook remains broadly positive. Leading indicator data show that the economy is firing on all cylinders, with high oil prices, heavy government spending and buoyant consumer confidence driving robust economic growth. With oil prices continuing to trade at historically high levels in the first half of the year, we see few risks to the country's positive near-term outlook.
- We expect H212 began the intensification of a long construction boom, as Saudi Arabia moves to remedy years of chronic underinvestment in the kingdom. We anticipate acceleration in construction activity in Saudi Arabia over the medium term off the back of a sustained high level of contract awards. This is reflected in our revised outlook for construction industry value real growth and cement production, imports and consumption. We are now estimating growth of 7.5% on average per annum between 2013 and 2017.

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