Riyadh set for industrial property building boom

Report forecasts 10mn m2 of space to be added by end of 2018

Riyadh, Saudi Arabia
Riyadh, Saudi Arabia

More than 10.1mn m2 of manufacturing units are set to be built in Riyadh by 2018 on the back of rapid industrial growth in Saudi Arabia's capital city, according to a new report.

Colliers International’s Riyadh Industrial Market Overview said that increased public and private sector investments has pushed up the value of manufacturing land within private industrial space. Average rents are also on the rise.

The firm forecasts that demand for industrial propery is being driven by solid economic fundamentals, a burgeoning population and government plans to increase the economic contribution made by the industrial sector.

Managing director for Saudi Arabia, Imad Damrah, said: “Despite Riyadh’s industrial master plan’s large forthcoming supply we expect demand for manufacturing space to maintain solid growth momentum.

"With a population nearing 6mn and the highest GDP in the Kingdom , Riyadh continues to attract and promote investment in industrial and supporting logistics facilities.”

It argues that the forecasted influx in supply will not significantly damage demand but said it could lead to tenants becoming more discerning and focussing more on the quality of surrounding infrastructure. It is also likely to slow down recent rapid price growth which has seen sale prices increase by 9% last year to a range of SR600-780 ($160-$210) per square metre.

Damrah said: “We see the sector as poised for a period of growth over the coming years as business conditions and consumer spending improves and government spending on infrastructure projects increases."

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