Riyadh – Mubasher: Riyadh real estate sector witnessed an increase in demand in the second quarter of 2016, with the continual growth of population with a rate exceeded the market supply.
Riyadh’s population grew 52% in the last 15 years to reach 6.5 million, while only 500,000 housing units were built during the same period which led to a shortage in the low-cost residential units in the Kingdom, according to Chestertons report.
The Saudi government realise the shortage in the residential units but the continual decline in oil prices led to a decrease in the public spending which affected the government housing projects, Declan McNaughton, managing director of Chestertons MENA in the UAE.
He added that although the rental rates were not affected greatly, but it started with price rise in some of the areas which used to provide good choices for tenants with limited budget in the past.
Average annual rental prices for apartments in Riyadh reached SAR 26,930 ($7,180), while the average rose in Central Riyadh to reach SAR 70,000 ($18,700) in Al Waha area. Moving to the south, the average recorded lower rates reaching SAR 19,000 ($5,070), the report said.
McNaughton noted that although sales witnessed a slowdown, the Saudi Arabian Monetary Agency’s (SAMA) move to control the loan’s rate with the value of the mortgaged real estate would help reviving the market.
Despite the accomplishment of many important projects, there was a delay in the schedule of King Abdullah Financial District (KAFD), the area allocated for rentals is expected to reach about 800,000 square metres by 2018, compared to 160,000 square metres in 2016, McNaughton stated.
