New Business market report from Business Monitor International: "Saudi Arabia Real Estate Report Q1 2014"

Boston, MA -- (SBWire) -- 12/31/2013 --We believe that the real estate sector in Saudi Arabia will remain generally stable in 2014 with the potential for small growth of rental rates in Jeddah and a slight decrease for office rates in Riyadh. We believe that net yields will remain consistent, and that no significant change will come to this market while it is such a state of oversupply.

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 in-country sources and latest data collection 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 and industrial segment.

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Recent Developments:

- The Saudi Ministry of Commerce has been asked to intervene in more than 10 stalled real estate projects in Al-Ahsa, Saudi Arabia, according to Zawya. The projects are said to be worth around SAR5bn (US $1.3bn) and some have been on hold for more than 40 years. Local real estate agents have said government intervention is necessary in order for the money to be returned to investors where relevant and to remedy the housing shortage and upward pressure on residential prices that the stalled projects have caused.
- A third industrial park is being planned for the south of the Saudi Arabian city of Jeddah, according to Zawya. The park will be situated on an 80mn square metre (sq m) site set aside by the Jeddah Chamber of Commerce and Industry. Land has also been allocated for a fourth industrial park to be located in Usfan, which measures 5mn sq m.

Key BMI forecasts

- Rental rates in Riyadh will remain static in the retail and industrial sector in 2014, but are predicted to drop by 3% in the office sector due to extreme oversupply
- Rental rates in Jeddah will increase by 5% in all sectors: office, retail, and industrial
- Net yields will remain static in both Riyadh and Jeddah in all three sectors

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