Kuwait Financial Centre “Markaz” MENA REAL ESTATE RESEARCH
Real Estate Market Commentary 09-Dec-12 to 22-Dec-12
KSA -Riyadh: JLL’s Riyadh Q3-12 report revealed that, apartment & villa rentals continued to move higher & increased 1.3% & 2.7%
respectively Q-o-Q. Apartment rents at Warooud, Malaz, Olaya & Sulaimania reportedly witnessed the highest increases due to high
occupancy rates and close proximity of schools and hospitals, while villas in compounds exhibited the highest rental increases due to high
demand. JLL forecasts rents & prices in Riyadh’s residential market to
increase in spite of supply of 101,000 units earmarked over 2013-15. For the office market, it was reported that Grade A & B office rents
declined c.1.9% & 1% respectively on a Q-o-Q basis and that city wide & CBD vacancy rates increased to 15% (Q2-12:14%) & 17% (Q2-12:
16%) respectively, due to oversupply. JLL expects more than 1 Mn sq.m
of supply over 2013 & 14 mainly from ITCC, KAFD & Olaya Towers, and expects this to result in lower rents & higher vacancy rates across
Riyadh’s office market.
Separately Reuters reported that JLL expects the supply of villas in compounds to increase by 50% over 2013 & 14, adding 3,000 units to
market. They however expect the demand to be much higher than supply over this period, due to a huge backlog of demand.
KSA -Jeddah: As per JLL’s Q3-12 Jeddah report, apartment rents
moved up by 3.2% Q-o-Q, while villa rentals grew by 2.2%. Apartment
rents witnessed the higher increases on the Corniche (West), while rents for villas in compounds reportedly increased more than other villas from
expat demand, similar to Riyadh. It was also mentioned that the Ministry of Housing approved five locations of 9.5 Mn sq.m combined, for
development of residential projects. JLL forecasts apartment & villa rents to increase from higher expat demand for apartments & despite
significant supply coming on-stream for villas. For office, vacancy rates
at Jeddah’s CBD reportedly declined significantly to 16% in Q3-12 (Q2-12:27%) due to higher take-up of entire buildings leading average CBD
rents to increase by 7.5%. This development is in line with our findings from our KSA outlook from Nov-12, where we had highlighted that
Jeddah’s office oversupply could be taken up quicker than Riyadh.
Abu Dhabi: According to the Statistics Centre – Abu Dhabi (SCAD)’s Nov release, construction costs remained mostly stable during Nov-12
declining marginally by 0.4% M-o-M and by 0.6% on a Y-o-Y basis.
Average prices of 8 of the 21 building material groups experienced an M-o-M increase during Feb-12, while prices of 11 groups receded.
Notable price increases were reported in glass, cement and concrete while declines were most prominent in labor, wires and power cables.
MENA: In their Dec-12 industrial occupier conditions report, JLL
outlined that industrial demand remains strong in UAE & KSA, due to
lower labor costs and a growing local customer demand base. UAE: Industrial rents in Dubai & Abu Dhabi reportedly remained stable in Dec-
12 as against Jun-12, due to the stable macro environment aided by good infrastructure quality. JLL expects demand to improve further for
Dubai’s industrial supply pipeline, due to better quality and proximity to Al Makhtoum airport & Jebel Ali Port, pushing rents higher. KSA: Rents
for industrial space in Riyadh & Jeddah reportedly moved up by 11.5%
& 14% respectively in Dec-12 as compared to Jun-12, driven by strong demand in construction, food and FMCG sectors. JLL forecasts rents to
move higher in KSA, from higher demand. Moreover JLL also mentioned that most of the upcoming supply is built-to-suit and not speculative.
Research Highlights: A weekly market commentary
Contents Market Commentary
Charts to Note
Activity Monitor: Dubai,
Kuwait,
Riyadh - KSA,
Dammam – KSA
Qatar
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Thomas K. Mathew
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Kuwait Financial Centre “Markaz”
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Developments sourced from various sources including news portals like Gulfbase, Zawya, Reuters, Bloomberg, Trade Arabia, Business 24/7, Arabian Business, The Peninsula, Gulf News, Property Wire, Khaleej Times, Saudi Gazette, KUNA etc and also from published reports of real estate brokers and investment research houses
MENA REAL ESTATE RESEARCH
Kuwait Financial Centre “Markaz” 2
Charts to note
Chart 1: Riyadh residential supply estimates -2011-15
Source: JLL, Markaz Analysis
Chart 2: Jeddah residential supply estimates -2011-15
Source: JLL, Markaz Analysis
MENA REAL ESTATE RESEARCH
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Chart 3: Riyadh office supply estimates -2011-15
Source: JLL, Markaz Analysis
Chart 4: Jeddah office supply estimates -2011-15
Source: JLL, Markaz Analysis
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Chart 5: KSA residential Q-o-Q rental changes (%) – Q3-12 over Q2-12
Source: JLL, Markaz Analysis
Chart 6: KSA office vacancy rates development Q1-12 to Q3-12
Source: JLL, Markaz Analysis
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Chart 7: UAE & KSA industrial rents development – Jun-12 & Dec-12
Source: JLL, Markaz Analysis
Chart 8: M-o-M Building Materials Price Change – Abu Dhabi (Nov-12)
Source: Statistics Centre – Abu Dhabi (SCAD), Markaz Analysis
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Activity Monitor
Dubai Real Estate Transactions (2011 & 2012)
Land Transactions
Villa Transactions
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Apartment Transactions
Source: Dubai Land Department Note: 1) The above table/chart represents transactions as per the registration date and not the transaction date
2) Outliers identified are removed for better clarity.
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Kuwait Real Estate Transactions (2011 & 2012)
Private Residential Property transactions
Investment Property transactions
Source: MOJ, Kuwait
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KSA Real Estate Transactions (2011 & 2012)
Riyadh Real Estate Transactions
Riyadh – Residential transactions
Riyadh – Commercial transactions
Source: MOJ
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Dammam Real Estate Transactions
Dammam – Residential transactions
Dammam – Commercial transactions
Source: MOJ
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Qatar Real Estate Transactions (2011 & 2012)
Source: MOJ
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